NMa fines two cartels in Dutch home care industry

23 January 2009

Natascha Linssen

The Netherlands Competition Authority (NMa) has imposed fines, varying between 611,000 and 4 million Euros, on five home care providers in the Dutch regions of Kennemerland and ‘t Gooi for involvement in cartel activities. These cartels deprived clients of their freedom to choose their own care.

In late 2006, the NMa received indications that major home care providers in the service area of regional health care office Kennemerland had divided the market amongst themselves along geographical lines. They divided the area in two sections, using the North Sea Canal as the boundary line. Dividing the market had been their answer to the introduction of competition in 2004 through the amendment of the Exceptional Medical Expenses Act (AWBZ). They preferred to make arrangements to maintain the status quo rather than to compete with each other for clients. In fact, the home care providers in question referred clients to one another. They were fully aware of the fact that they impeded competition by doing so, as evidenced by documents of the parties involved. They consciously chose to cooperate in this market instead of competing with one another. 

The two home care providers in Kennemerland that are fined are Viva! Zorggroep Foundation (formerly Thuiszorg IJmond Foundation and Partners in de Zorg Foundation), which is fined 4,003,000 Euros, and Zorgbalans, which is fined 800,000 Euros.

The region of ‘t Gooi was also home to a cartel, which consisted of three major home care providers, that significantly impeded competition. Documents reveal that parties called competitive behaviour ‘not productive’, and that managers of these organisations ‘did not prefer’ competition. The home care providers involved delegated various activities to one another, creating a tight distribution of work and sections in the service area of the regional health care office. Unthreatened by the other home care providers, the Thuiszorg Gooi en Vechtstreek Foundation (TGV) offers the most home care service in the entire region, while Vivium Zorggroep Foundation and Hilverzorg Foundation provide home care services to clients in an area within the region. Furthermore, Vivium and Hilverzorg had agreed not to become active in each other’s sections. They referred clients of the three providers to one another in order to maintain the distribution of work and sections.

TGV, Vivium and Hilverzorg are fined 1,621,000, 816,000 and 611,000 Euros respectively.

The cartels in the regions of Kennemerland and ‘t Gooi resulted in clients having their freedom of choice restricted, whereas the AWBZ and the Social Support Act (WMO) were aimed at enabling clients to take part in deciding about their own home care services and about who would provide them. Having made mutual arrangements, the home care providers had no need to be afraid that clients would switch to a competitor. If clients had the opportunity to choose the best offer, then health care providers would be stimulated to satisfy their clients’ needs.

The Dutch home care industry is facing many changes. The fines, totalling almost 8 million Euros, could have been set substantially higher, considering the revenues of these providers (a total of 178 million Euros). However, the NMa sees the transition to a more market-based system, which the industry is currently undergoing, as one of the reasons to mitigate the fines. This transition calls for the home care providers to make major adjustments. The NMa is of the opinion that fines should not be counterproductive to this process. When contemplating mitigation of fines, the NMa also takes into account the fact that a fine should not cause an undertaking to go into bankruptcy.

The home care providers in question announced in early September that they intended to look at their conduct from the perspective of the Dutch Competition Act in order to avoid fines. The NMa considered this announcement to come at too late a stage, and was not concrete enough. Furthermore, such an offer is not opportune when severe violations of the Dutch Competition Act are concerned, such as price-fixing and dividing the market.