General Superintendence suggests condemnation of cartel in the market of medical and hospital services in the Federal District

The General Superintendence of the Administrative Council for Economic Defense – CADE recommended in an opinion published in 24 June the condemnation of União Nacional das Instituições de Autogestão em Saúde – UNIDAS (National Union for Self-Management Institutions in Healthcare) and three hospitals for infringements to the economic order in the market of medical and hospital services in the Federal District (Administrative Proceeding no. 08012.006969/2000-75).

According to the investigation, in 2000 the hospitals Santa Luzia, Santa Lúcia and Anchieta collectively negotiated with health insurers higher prices for the provision of medical and hospital services in virtually identical levels. After healthcare insurance companies refused to accept the claimed raise of prices, the competing hospitals communicated, in parallel, the termination of contracts or suspension of services provided to healthcare insurances’ beneficiaries.

The General Superintendence understands that the conjoined establishment of prices and other conditions by the three hospitals, which were considered to have higher quality in the Federal District at the time, characterizes the practice of cartel. According to the opinion, the conduct would have caused the increase of prices of healthcare insurances above the competitive level considered healthy, harming the market and the final consumers.

The Administrative Proceeding also ascertained that Unidas negotiated uniformly the acquisition of medical and hospital services on behalf of several competing healthcare insurances linked to it, leaving no room for individual negotiations among the healthcare insurances and services providers.

For the Superintendence, the practice, along with the relevant participation in the insurances’ market of the insurance companies represented by Unidas in the Federal District (approximately 40% of the total beneficiaries in the region) endowed the self-management insurances, in a coordinated way, higher purchasing power in the negotiation of prices for the services providers.

The opinion points out that this strategy could result in the decrease of prices paid for medical procedures to a lower level than the observed in a situation of full competition between the several healthcare insurance issuers. Therefore, the effect would be negative in regards to the quality and to the level of supply of the provided services.

CADE’s General Superintendence proposed to file the proceeding in regards to nine hospitals, one medical clinic, and three representative bodies due to the absence of proof of participation in the investigated anticompetitive practices.

The Administrative Proceeding is to be judged by CADE’s Tribunal, which is responsible for the final decision. The practice of infringements to the economic order subjects the responsible to the payment of fines up to 20% of its turnover, aside from other penalties determined by law.