Belgian Competition Authority confirms jurisdiction for M&A transactions in hospital sector
In a press release of 14 July 2023, the Belgian Competition Authority (BCA) confirmed its jurisdiction to review M&A transactions between hospitals, regardless of whether these hospitals belong to the same hospital network. This BCA’s position brings an end to the legal uncertainty that has existed since 2021.
In 2021, the Belgian legislature amended the Hospitals Act of 10 July 2008 and exempted “the creation of a local-regional clinical hospital network” and “any subsequent change in the composition” of that network from merger control review by the BCA. The question soon arose as to whether an M&A transaction between hospitals already belonging to the same hospital network amounted to a “subsequent change in the composition” of that network (in which case the transaction would be exempt from BCA scrutiny) or whether such a transaction remained within the BCA’s ambit.
In its press release, following an intermediate decision in this sector, as well as in its new enforcement priorities document, the BCA cleared the uncertainty and confirmed its jurisdiction to review such a transaction.
Under Belgian competition law, M&A transactions between undertakings that meet certain jurisdictional thresholds must be notified to and approved by the Belgian Competition Authority (BCA) before their implementation.
In 2021, however, the Belgian legislature exempted the “creation of a loco-regional clinical hospital network” and “any subsequent change in the composition” of that network from the Belgian merger control rules (see Article 2(3) of the Hospitals Act of 10 July 2008 (Gecoördineerde wet op de ziekenhuizen en andere verzorgingsinrichtingen / Loi coordonnée sur les hôpitaux et autres établissements de soins).
Following this amendment, uncertainties arose as to whether an M&A transaction between hospitals already belonging to the same hospital network amounted to a “subsequent change in the composition” of that network (in which case the transaction would be exempt from BCA scrutiny) or whether such a transaction remained within the BCA’s ambit.
In a press release of 14 July 2023, the BCA confirmed that the exemption introduced in 2021 to the Hospitals Act of 10 July 2008 did not cover M&A transactions between hospitals that were already part of the same hospital network. According to the BCA, such transactions are structural in nature, lead to a lasting change in the management of the supply of hospital services, and should therefore remain subject to merger control scrutiny.
Consequently, hospitals that are considering a merger or acquisition must examine whether they meet the following jurisdictional thresholds for a filing to the BCA: (i) the combined turnover in Belgium of the hospitals concerned exceeds EUR 100M; and (ii) the turnover in Belgium of each of at least two of the hospitals concerned exceeds EUR 40M. If both thresholds are met, the transaction should be notified to the BCA.
Hospitals may incur fines of up to 10% of their worldwide group turnover if they implement a merger without prior notification and approval (in other words, they must observe a mandatory ‘standstill period’).
The BCA is currently reviewing a series of M&A transactions in the hospital sector. The press release published on 14 July 2023 by the BCA follows on from an intermediate decision in which the BCA exceptionally approved the execution of the legal deeds required for the completion of a merger between two hospitals in Mons (Belgium), namely the Pôle hospitalier Jolimont ASBL and Centre hospitalier universitaire et psychiatrique Mons Borinage (also known as Hôpital Ambroise Paré). The substantive merger control analysis of this transaction nevertheless remains ongoing and the BCA will adopt a final decision at a later stage.
In the meantime, the BCA published its 2023 Enforcement Priorities, which states that the BCA will allocate additional attention and resources to further consolidation in the hospital sector.
This article was published in the Competition Newsletter of August 2023. Other articles in this newsletter:
