Finland: A Large-Scale Healthcare Provider Merger Cancelled
A Large-Scale Healthcare Provider Merger Cancelled in Finland May 25, 2021
There are a few big healthcare companies in Finland and their numbers have decreased in the past years due to mergers and acquisitions. The latest, albeit, failed attempt to merge the two big providers was when Mehiläinen Ltd offered to purchase all the shares outstanding of Pihlajalinna Ltd after their mutual negotiations. The attempted merger fell under the scope of the EC Merger Regulation, and the European Commission transferred the case to Finnish authorities in early 2020.
Finnish Competition and Consumer Authority (CCA) is the competent authority in Finland to investigate the lawfulness of acquisitions and mergers that may hinder or prevent competition. In September 2020 the CCA proposed that the Market Court, which has jurisdiction over competition law cases, rule that the merger is unlawful. The justification is that the merger would hinder competition since it would leave Finland with only two major healthcare providers. The CCA deemed that problems with competition would arise in many metropolitan areas, with the greatest impact on occupational health services and that there would be problems with competition with outsourced public health services as well. CCA stated that even if certain competition problems arising from M&As can be mitigated or avoided with agreements, the ones that Mehiläinen provided were not sufficient to ensure competition.
In the Market Court the CCA argued that the merger was automatically canceled due to missed deadlines. Whereas, Pihlajalinna and Mehiläinen argued that the CCA had, due to procedural errors that extended the time limits in such a manner that Mehiläinen’s purchase offer became obsolete, caused damage to Mehiläinen. Both companies argued that the procedural errors caused the merger to be approved and that it would violate their interests should the court rule the merger unlawful. In late 2020, when the case was underway in the Market Court, both companies issued a statement that the current purchase offer was withdrawn. They, however, did not rule out negotiating a new offer. The Court ruled that, since the purchase of stock offer was withdrawn, the requirements to continue proceedings in the court had ceased, thus the case was dismissed. The companies did not begin to attempt to merge again.
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