CADE blocks the 12th transaction under Law 12,529/2011

CADE blocks the 12th transaction under Law 12,529/2011

In the 213th Trial Session, held on May 10, 2023, CADE’s Tribunal, by majority vote, blocked the acquisition of Grupo Smile by Hapvida, arguing that the transaction would result in significant concentrations (30%-50%) in health plan markets in municipalities of Alagoas and Paraíba states.

The transaction joins the list of emblematic cases that were blocked by the Brazilian Antitrust Authority (such as Ipiranga/Alesat, Estácio/Kroton and Braskem/Solvay), confirming the intense scrutiny that the health segment has been suffering from CADE. In this sense, it is noteworthy:

(i) the extensive market tests performed in relevant transactions. See, for example, merger cases Hapvida/NotreDame (2021) and Rede D’Or/Sul América (2022);

(ii) the conditional clearance of transactions such as Hapvida/Plamed (2021) and Athena/São Bernardo (2020); and

(iii) the second edition publication of the economic studies “Merger cases in the health insurance, hospital and diagnostic medicine markets – 2022” and “Supplementary Health Care Market: Conducts – 2021” from CADE’s booklets series.

It is expected that the sector will remain under CADE’s surveillance; the Authority is expected to stay attentive to the transactions and to demand more information from the applicants to conduct its analysis, notably due to the importance of the market to the end consumer.

Another relevant factor for CADE’s decision to block the Hapvida case was the lack of consensus between the parties during the negotiation of remedies. This fact was reiterated during the trial session, with commissioners emphasizing that, once the authority express competitive concerns, the parties must proactively propose the appropriate remedies to fit the market context and the dynamics of the parties’ economic activities.

This was another opportunity in which CADE discussed the remedy negotiation procedures, which were also addressed in the recent transaction involving the Catena-X platform.