Biennial Report XXIII of the Monopolies Commission under § 44(1) ARC, 29 July 2020

With the Covid-19 pandemic, the German hospital infrastructure has increasingly received media and political attention. The hospital landscape in Germany is with its almost two thousand hospitals considered to be comparatively broad, particularly diverse and only concentrated in certain areas. With 34 intensive care beds per 100,000 inhabitants (2017), Germany has higher capacities than many other industrialised nations, which is seen as a significant advantage in dealing with the Covid-19 pandemic. However, for years, criticism has been voiced about the existing hospital structures. In order to improve these structures, there is often a call for faster consolidation of the hospital sector and facilitation of hospital mergers.

As part of the 10th amendment to the Act against Restraints of Competition (ARC), the debate about the structure of hospital care focused on an adjustment of merger control for hospitals. In this regard, the German Federal Government is planning to adjust the requirements for the assessment of hospital mergers and cooperations, which could influence the structure of German hospital care in the future. By defining separate antitrust regulations, hospital mergers that are considered particularly desirable from a health–political point of view are to be given competitive privileges.

In this respect, although bed capacities are extremely high in Germany, these are spread over many small hospitals. The provision of many small hospitals implies that the number of patients in the individual hospitals is typically low. Hospitals with a low number of patients tend to have a lower medical experience, a shortage of personnel and poorer medical-technical equipment. Consequently, a number of indications suggest that hospital mergers (possibly also hospital cooperations) can have quality-enhancing effects, at least in individual cases.

The Monopolies Commission sees great advantages in an effective merger control of hospitals. However, the current form of merger control may partially hinders efficiency-enhancing consolidation and specialisation of German hospitals. Against this background, a frequently discussed area exception for certain hospital mergers from competitive control by the German Federal Cartel Office is not necessary. This can even jeopardise the evident quality assurance of competition protection.

However, effects on the quality of care resulting from a hospital merger should be given more attention in merger control proceedings. On the one hand, it is recommended that the German Federal Cartel Office examine its market definition, which is basically mature, but primarily based on past-related patient flow data on a case-by-case basis in order to determine whether changes in the supply situation will occur as a result of a specific merger project, which could lead to a change in demand behaviour. On the other hand – and much more importantly – merger-related quality advantages should be better taken into account in the overall assessment of the merger effects. The Monopolies Commission therefore recommends that the trade-off between competition-induced quality changes on the one hand and quality advantages resulting from synergy effects on the other hand be included in the Act against Restraints of Competition in the form of an efficiency assessment clause for hospital mergers.