CADE signs agreement with Wellhub

On 18 December, the Administrative Council for Economic Defense (CADE) signed a cease and desist agreement with GPBR Participações, operator of the Wellhub digital platform, former Gympass. The agreement was signed as part of an administrative inquiry investigating alleged economic violations related to the adoption of exclusivity and Most Favoured Nation (MFN) clauses in the digital health club platforms market.

The investigation was launched after a complaint filed by TotalPass in September 2020, which pointed to a potential abuse of dominant position resulting in market foreclosure and higher entry barriers. According to the Office of the Superintendent General at CADE (SG), the imposition of exclusivity and MFN clauses could restrict the activities of rivals and limit the gyms’ freedom to contract. Subsequently, a similar complaint was submitted by Ynegócios Soluções Tecnológicas (Yoooup), reporting similar effects on competition in the sector.

During the investigation, the SG established a preliminary enquiry, issuing an interim measure to prevent the signing of new exclusivity agreements, and to terminate MFN and "quarantine" clauses, as well as the communication of the new terms to partner gyms. The measures sought to clarify the facts and mitigate competitive risks, while the merits of the investigation were analysed.

In 2022, CADE signed a cease and desist agreement with former Gympass, establishing limits on exclusivity clauses upon proof of economic efficiencies, restricting these obligations to up to 20% of the gym base per municipality or zone, prohibiting advantage clauses and the imposition of exclusivity in contracts with corporate clients, besides daily fines in case of non-compliance.

Under the new cease and desist agreement, Wellhub assumes commitments that go beyond the previous agreement by significantly reducing the percentage and absolute number of gyms subject to exclusivity agreements. Furthermore, the new agreement limits the maintenance of these obligations, and forbids practices that may constitute exclusivity, such as discriminatory treatment or economic inducements without competitive justification.

In addition, it provides for more effective monitoring mechanisms, as well as the presentation of a communication plan aimed at reinforcing their commitment to free competition and freedom to contract with rival platforms.

The Tribunal of CADE concluded that the agreed obligations meet the legal and regulatory requirements, and are adequate to address the competition concerns identified in the market. According to the decision, the cease and desist agreement preserves competitive conditions in the health club aggregator platforms market, while reinforcing the effectiveness of CADE’s preventive and corrective measures.