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Competition authority asks court to block Mehiläinen-Pihlajalinna healthcare firm merger

The authority said a merger would "significantly impede effective competition in the Finnish health services market".

Kuvassa on Pihlajalinnan logo.
A view of the logo of private social and health care services company Pihlajalinna in Helsinki, Finland, 06 November 2019. Image: Kimmo Brandt / EPA

The Finnish Competition and Consumer Authority (KKV) has proposed the Market Court prohibit the planned merger of health care firms Mehiläinen and Pihlajalinna, the authority said.

In a press release issued on Tuesday, the authority said an investigation it carried out showed that the merger would "significantly impede effective competition in the Finnish health services market," adding that after such a merger there would remain only two national healthcare firms on the market.

The firms announced the merger last year, a deal worth an estimated 360 million euros.

The third player in the private healthcare sector is Terveystalo, and according to the KKV, Pihlajalinna has been a significant competitor to it, as well as Mehiläinen.

Story continues after photo.

Mehiläinen
Mehiläinen logo on window. Image: Mikko Ahmajärvi / Yle

The competition authority said there is a danger that the healthcare market would become even more concentrated.

"The Finnish healthcare market has concentrated rapidly over the last decade. The three largest players, Mehiläinen, Pihlajalinna and Terveystalo, have multiplied their combined market shares since 2014. This concentration is partly due to these companies acquiring a great deal of their smaller competitors," the authority stated in the release.

Firms' reaction

Meanwhile, Pihlajalinna's CEO, Joni Aaltonen, said in a company statement that he considers the KKV's negative position to be surprising, noting that both firms had clarified aspects of competition laws before the merger agreement was signed.

Aaltonen said the firm was still committed to the agreement, but was "preparing for all options".

Mehiläinen's CEO, Janne-Olli Järvenpää, said he found the competition authority's assessment to be unfortunate.

The Market Court needs to decide on the matter within three months of the KKV's statement, or by 29 December 2020 at the latest. The Market Court granted the authority additional time to make its assessment about the merger in June, at the KKV's request.

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