Hospital reform: New exemption from merger control in the hospital sector

The German Act against Restraints of Competition (“GWB”) already contained an exemption from the obligation to conduct prior merger control proceedings when acquiring hospitals for certain mergers in the hospital sector. However, this exemption was rarely applied in practice. The KHVVG, which recently came into force and is the subject of controversial debate with regard to the German hospital sector’s reorganization, also contains a new exemption from merger control. Thus, certain mergers in the hospital sector will often be exempt from merger control by the Federal Cartel Office in practice.

Extensive exemption from merger control in the hospital sector

Since December 12, 2024, mergers in the hospital sector that are completed by December 31, 2030, are not subject to merger control by the Federal Cartel Office pursuant to Art. 187 (10) sentence 1 GWB if

• the merger concerns a cross-site concentration of several hospitals or individual medical specializations of hospitals, and
• the respective state authorities responsible for hospital planning confirm in writing that they consider the merger to be necessary in order to improve hospital care and that, according to the information available, the merger does not conflict with any other provisions under competition law.

The competent state authorities may issue the written confirmation no earlier than one month after an application for written confirmation has been published by the competent state ministries on their websites. It remains to be seen over the next months whether and at what expense for the hospitals involved the competent state authorities will issue the written confirmation in individual cases. In any case, any affected parties should consult with the responsible state authorities at an early stage.

Not all mergers in the hospital sector benefit from the exemption rule

Mergers that do not involve a concentration across locations, such as the mere acquisition of a majority stake in a hospital or the establishment of a purchasing company by two hospitals, may still be subject to merger control by the Federal Cartel Office if the applicable requirements (existence of a merger and exceeding the relevant thresholds) are met. The same applies if the competent state authorities do not issue the required written confirmation within two months of the application (Art. 187 (10) sentence 5 GWB).

Outlook

Art. 187 (10) GWB contains a far-reaching exemption from merger control in the hospital sector. However, hospitals should continue to examine the issue of “merger control” at an early stage in the event of planned mergers. Even if the exemption from merger control may apply, early consultation with the competent state authorities is advisable.

As a result, the new regulation creates easier opportunities for consolidation in the hospital sector, to the detriment of competition. It is still unclear whether the new regulation will really achieve a genuine simplification and acceleration of procedures for the majority of expected mergers in view of the procedural requirements to be observed.