CADE challenges DaVita’s acquisition of Brasnefro

The Office of the Superintendent General of CADE (SG) submitted the case to the Tribunal of CADE. The transaction involves DaVita’s acquisition of Brasnefro.

DaVita is a Brazilian subsidiary of DaVita Inc, a U.S.  company which operates in Brazil providing dialysis services in clinics and hospitalised kidney patients. On the other hand, Basnefro is part of the Fresenius Medical Care (FMC) Group, a German conglomerate in the health market that provides dialysis services for chronic and hospital patients in the Brazilian states of Rio de Janeiro, São Paulo, Minas Gerais, Bahia, Paraíba, Pernambuco, and the Federal District. In addition to these services, the FMC Group also provides equipment for dialysis treatment in Brazil.

The transaction would result in horizontal overlaps, when the economic agents operate in the same relevant markets; in this case, offering dialysis services to acute and chronic patients.

Regarding dialysis services provided to acute patients, who are hospitalised, CADE defined the Brazilian states as the relevant markets with overlaps in the states of Bahia, Minas Gerais, Paraíba, Pernambuco, Rio de Janeiro, and São Paulo, in addition to the Federal District. In these markets, CADE concluded that the transaction is not capable of causing negative effects on the competitive environment. The Brazilian antitrust authority noticed the entry of new competitors in the affected markets and enough rivalry elements to mitigate any worries of abuse of market power.

However, regarding the market for dialysis services for chronic patients, CADE considered patients’ commuting to the specialised clinics, which happens a few times a week. Thus, the authority defined the geographic market using the territorial limits of the municipalities.

Nine out of ten markets analysed in the sector of services for chronic patients had high market concentration in the hands of the applicants, entry barriers and low rivalry, both in terms of number of competitors and their capacity to be competitive in the market.

Therefore, considering the potential impacts of this transaction, the SG submitted the case to the Tribunal of CADE. After the case submission to the Tribunal’s final decision, the proceeding will be assigned to a commissioner of the collegial body for close analysis and subsequent adjudication.