CADE convicts medical cooperatives of Espírito Santo for anticompetitive practices

On 25 September, the Administrative Council for Economic Defense (CADE) convicted the Brazilian Federation of Cooperatives of Medical Specialties (Febracem) and several other medical cooperatives of the state of Espírito Santo, in addition to four individuals, for coordinating anticompetitive practices that manipulated the market of medical services.

The Evangelical Beneficent Association of Espírito Santo (Aebes) lodged the complaint. The entity alleged that Febracem and the cooperatives used their dominant position to impose harmful commercial conditions, controlling around 75% of the urgency and emergency care in the state.

The investigations revealed that the cooperatives, under the leadership of Febracem, adopted abusive practices, such as refusal to provide medical services, threats to shutdown, boycott, and the creation of entry barriers for new professionals. These tactics aimed to increase bargaining power in negotiations with the government of the state of Espírito Santo, especially with the Health Department.

Additionally, the case involved the participation of the Regional Council of Medicine of Espírito Santo (CRM-ES) and the Brazilian Society of Neurosurgery (SBN), both accused of harassing doctors not affiliated to the cooperatives.

According to Commissioner Gustavo Augusto, rapporteur of the case, the investigation found evidence of coordination between the entities to restrain competition in the market of medical services. Although they were target of CADE’s previous investigations, which resulted in convictions and the signature of cease and desist agreements, the anticompetitive practices continued under the leadership of Febracem.

As a result of the proceeding, CADE imposed several penalties. The Brazilian antitrust authority fined Febracem to pay almost BRL 4 million, besides the prohibition to represent medical cooperatives and sign contracts with the government for 5 years. In turn, the cooperatives received fines ranging from BRL 1.7 million to 14.5 million. The individuals involved are to pay between BRL 27,409.37 and BRL 396,802.89. Overall, the applicable fines totalled more than BRL 40 million.

In addition to the fines, the convicted entities are to publish the ruling in their websites for 30 days and send it to their members, under penalty of the entities paying daily fines of BRL 50 thousand and, the individuals, BRL 10 thousand.

Access case no.08700.002124/2016-10.