CADE signs agreement in cartel investigation in the market of medical and hospital services provision in the Federal Distric

The Administrative Council for Economic Defense – CADE signed on 29 January 2015 a Cease and Desist Agreement (TCC for its acronym in Portuguese) with Rede D’Or São Luiz S/A (that incorporated and succeeded Hospital Santa Luzia S/A) in the proceeding that investigates a cartel formed by private hospitals of the Federal District to impose price increases in medical and hospital services (Administrative Proceeding no. 08012.006969/2000-75).

According to the investigations, in 2000 the hospitals Santa Luzia, Santa Lúcia, and Anchieta jointly negotiated with health care plan operators to raise prices charged for the provision of medical and hospital services to practically identical levels. Facing the companies’ refusal to accept the price increases claimed, the competing hospitals communicated, in parallel, the termination of contracts or the suspension of services to beneficiaries of the health plans. The conduct would have provoked the raise of prices in the health care plans to a competition level higher than what is considered fair, which harmed the market and final consumers.

As stated in the TCC signed with CADE, Rede D’Or must collect approximately BRL 4 million as a pecuniary contribution. The company recognizes the involvement of Hospital Santa Luzia in the investigated conduct and commits to cease it completely. Furthermore, it also commits not to take any actions that may harm CADE’s investigations.

To the Reporting Commissioner Gilvandro Araújo, the TCC fulfills all legal requirements and meets the criteria of convenience and opportunity that justify its signature.

“The agreement is important for also having a deterrence feature, since Rede D’Or is demanded to communicate all hospitals in its group about the competition problems derived from the investigated conducts in the administrative proceeding”, highlighted the Commissioner.