Netherlands: A Sick Man Walking; ACM'S Market Definition For Ambulant Infusion Pumps Quashed By The Court And Its Merger Decision Annulled

On 24 March 2023, the Rotterdam District Court annulled the Dutch Competition Authority's ("ACM") decision to block the merger of Mediq and Eurocept Homecare. Mediq Nederland B.V. intended to acquire Eurocept Homecare B.V. and its subsidiaries. The ACM refused a license for the merger, because of concerns that it would significantly eliminate competition in the market for the supply of ambulatory electronic infusion pumps in home care. The Court found, however, that the ACM incorrectly defined the relevant product market and could not have concluded that the notifying parties' joint market share would amount to 80-90%.

Phase I & II assessment by the ACM

Mediq Nederland B.V. is part of Mediq Holding, which provides medical supplies, foodstuffs, home-treatments, medication and disposables. Eurocept Homecare B.V., through its subsidiaries, supplies medical aids, foodstuffs, home-treatments and specialistic disposables. In February 2021, Mediq notified the acquisition of full ownership of Eurocept and its affiliate company Excellent Clinics to the ACM under the Dutch merger regime. Following the notification, the ACM conducted investigations into two affected relevant markets: the product market of enteral nutrition, nutrition-pumps and supplies, and the product market of ambulant infusion pumps for patients that receive care at home. The ACM only found competitive issues in the latter market and found no impediments to competition as a result of the merger in the former.

In May 2021, the ACM required Mediq to apply for a concentration license and received the request in June 2021 which kicked off the phase II investigation. On 23 December 2021, the ACM decided not to grant Mediq with a license for the acquisition. This concentration - allegedly leading to an 80 to 90% market share of Mediq - would significantly impede competition in the market for ambulatory electronic pumps for home care use.

During the phase II investigation, Mediq had argued that elastomeric and ambulatory electronic infusion pumps are interchangeable and thus part of the same product market. Unlike the ACM, Mediq argues that both pumps can administer similar medication without large differences in their infusion capabilities. That elastomeric are less sophisticated is considered as an advantage by Mediq. Ambulatory infusion pumps require more maintenance, despite additional safety features.

In its decision, the ACM identified three different types of infusion pumps for home care use: ambulatory electronic infusion pumps, elastomeric pumps and stationary infusion pumps. Stationary infusion pumps are not considered by the ACM and the parties as a real alternative to ambulatory electronic infusion pumps. These pumps are primarily used in hospitals where patients are not necessarily mobile. Elastomeric pumps were also not considered by the ACM to be practical substitutes for the ambulant electronic pumps - mainly due to the inability to administer similar medication through both pumps and insufficient precise dosage possibilities of the elastomeric pumps.

Appeal operation succeeded; patient has died

The District Court found that the ACM had not conclusively established that elastomeric pumps were not potentially substitutable due to the similar medication which can be infused. It held that the ACM had insufficiently investigated which medication could be administered by which infusion pumps. The District Court further concluded that the ACM had not sufficiently demonstrated that stationary infusion pumps were not (partly) interchangeable with ambulatory electronic infusion pumps. The District Court thus ruled that the ACM had not accurately defined the relevant market. This undercut the cornerstone of the ACM's analysis. As the court was not able to conduct the required investigation to re-assess the effects of the notified merger, it annulled the ACM's decision.

However, the court victory comes too late for the notifying parties. In January 2022, the parties announced that the merger was off as a result of the ACM's refusal to approve the transaction. Following the court decision, the owner of Eurocept stated in the Dutch media that while it was gratifying to have the court confirm that the ACM was wrong to refuse the merger, this judgement would not alter the decision to abandon the merger.

Court ruling confirms relevance of market definition

In view of the newly proposed Market Definition Notice, this judgment does not appear very surprising. Nonetheless, it gives a significant warning to the ACM to step up its game in market definition if that is the critical reason for prohibiting mergers.

In recent years, the ACM has critically scrutinized horizontal concentration notifications. Within just one and a half years, the ACM blocked two mergers, and a phase II investigation in a third case is ongoing. The most recent is the prohibition of the RTL/Talpa merger. Here, the ACM refused to approve a merger between two Dutch TV advertising, channel distributing and content-producing companies. RTL and Talpa disputed the relevant markets defined by the ACM and argued for a broader definition including online advertising and other forms of media. It will therefore be very interesting to closely watch what Dutch (appeal) courts may say about the definition of markets by the ACM in other merger cases. Also, it is a warning sign for the ACM's assessment of the acquisition of Dutch meat producer Stegeman by its Belgian rival company Ter Beke, in which market definition will undoubtedly play a critical role.

Originally published Apr 18 2023

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