The Italian Competition Authority closes a cartel investigation in the health services with a non infringement decision (Sanità privata nella regione Abruzzo)

In the Sanità privata nella regione Abruzzo (Healthcare Private Providers) case the Italian Competition Authority (ICA) has closed by a non infringement decision an investigation against a number of private healthcare providers that were alleged to have implemented a complex bid rigging practice affecting the market for the provision of health services in the region of Abbruzzo (Autorità Garante della Concorrenza e del Mercato or Italian Competition Authority, decision n. 25155 of 22 October 2014, Case I769, Sanitàprivata nella regione Abruzzo). On the basis of the pieces of evidence the ICA could not establish that the conducts of the parties amounted to a prohibited anti-competitive agreement.

The facts of the case

The ICA started the investigation against Synergo, Villa Serena, Di Lorenzo and Villa Letizia following the receipt of a complaint filed by a competitor. The parties are all managers of nursing homes and holders of the authorization to supply healthcare services in the region of Abruzzo, as well as to supply such services on behalf of the national health system under special contractual arrangements. The market concerned is the market for the provision of healthcare services from private operators on behalf of the national health system in the region of Abruzzo. The market has a quasi oligopoly structure, being dominated by a few big-seized players that coincide with the firms under investigation. Synergo, Villa Serena, Di Lorenzo e Villa Letizia jointly account for 67% of the yearly budget allocated by the regional authorities to buy healthcare services from private suppliers. In addition, there exit high regulatory barriers to enter the market. Every year the regional authorities set a budget cap on expenditure to buy healthcare services from each authorized supplier. And the award to authorization to new private operators is currently suspended. Therefore, a healthcare operator wishing to operate in the region of Abruzzo can do only that either by merging with an authorized incumbent or following a reduction in the budget expense allocated to competitors.

Initially, the ICA took the view that the parties put in place a market sharing agreement through a bid rigging scheme. Such scheme concerned the tender procedures called for the sale of three nursing homes (Santa Maria, Sanatrix and Villa Pini) belonging to the Angelini Group, now in receivership. All the healthcare providers to be sold were authorized to supply healthcare services on behalf of the national health system. Among the parties, only De Lorenzo bid for Santa Maria and Villa Letizia, though unsuccessfully. Villa Patrizia made the only offer for Sanatrix, that was sold to it. None of the parties made a bid in response to the first four tenders for the sale of Villa Pini. Only when a competitor made a bid it following the fifth tender, Villa Serena, Synergo and Di Lorenzo formed a joint venture, Santa Camilla, to jointly bid for Villa Pina. Eventually Villa Pina was sold to Santa Camilla that submitted the winning bid. The ICA then believed that such conducts were part of a common strategy by which the parties aimed at sharing the market amongst themselves with the effect to prevent the entry of new operators.

The decision of the Italian Competition Authority

The ICA reached the conclusion that it was not possible to establish a common strategy agreed among the parties with the aim to affect the tender procedures called for selecting the buyers of the nursing homes belonging to the Angelini Group. In that regard, the ICA found that there were alternative plausible explanations for the fact that the parties did not submit any bids for the first fourth tender procedures. First, the tender notice provided for a pre-emption right in favour to the lessor of Villa Pini would put off many potential bidders, considering the costs of the necessary due diligence. A second source of uncertainty was a trial that was pending before an administrative court until November 2012. Third, the basic amount set out in the tender notice of the bid to be submitted was high. Fourth, the funds allocated by the regional authority to Villa Pini.

In addition, the ICA ruled out that the contested conducts give rise to risk of impeding the access of new operators to the new market. The absence of such risk was reflected by the fact that the complainant entered the market by purchasing a nursing home. Moreover, the parties created the Santa Camilla joint-venture for reasons other than a collusive intent. In light of the above, the ICA closed the investigation with a non-infrigement decision.