The importance of competition law in franchise constructions in the healthcare sector

Last year, on 9 March 2010, the Netherlands Competition Authority (NMa) adopted the third version of its Guidelines for the healthcare sector. In the aforementioned Guidelines, the NMa provides an explanation of the application by the NMa of the competition law rules to the healthcare sector. It is the intention that healthcare providers, health insurers and other parties in the healthcare sector assess themselves on the basis of the Guidelines whether intended forms of cooperation are permitted under competition law. Many situations are unique and require an individual assessment.

The healthcare sector occupies a special position, given the public interests that play an important role in this. In view of these public interests, the Guidelines therefore see high-quality care and its affordability as important objectives. In the Guidelines, the NMa acknowledges that many forms of collaboration, perhaps especially in the healthcare sector, are desirable from a quality or efficiency point of view. If the behavior of, and in particular cooperation between, companies does not impede competition or will possibly impede it, it will not be in conflict with the Competition Act. Even when competition may be impeded, certain agreements between companies may be permitted if they have a minor impact on the basis of the so-called bagatelle regulation. In addition, there may be agreements aimed at cooperation between companies that yield benefits for consumers (care recipients) that outweigh any disadvantages for competition. Such agreements are also permitted under certain conditions.
The NMa and in certain cases also the Dutch Healthcare Authority (NZa) supervise the Competition Act. The aforementioned authorities will intervene if the behavior of and between companies in the healthcare sector impedes competition and freedom of choice for patients or insured persons. If a violation of the Competition Act is detected, (high) fines may be imposed. It is therefore important in proposed franchise constructions within the healthcare sector to consider whether and to what extent the intended agreements are expected to be permissible under competition law.

In concrete terms, the above entails, in short, the following in intended franchise constructions in the healthcare sector. First of all, it is important whether the intended franchisor can be regarded as a competitor of the franchisee, whether or not in certain respects. This will in particular be the case if the franchisor, in addition to his activities arising from franchising, carries out the same activities as the franchisees. If this is the case, it has competition law consequences, since agreements between competitors may not go as far as agreements between non-competitors. However, even if it could be established with 100% certainty that the intended franchisor and the franchisee will not/could not be regarded as each other’s competitors, caution is required with regard to the intended agreements. After all, the franchisees can be regarded as competitors of each other anyway. For example, the Guidelines indicate limits to the extent to which information may be exchanged within a franchise construction, including the exchange of information by means of a database, which in franchise constructions is usually managed by a franchisor. In short, no competitively sensitive information may be exchanged. It is also important that competition law does not allow competitors to negotiate jointly with health insurers. Various other agreements that may be envisaged should also be assessed on their competition law merits, such as making agreements about observation, drawing up protocols, joint purchasing and any intended agreements in the context of tendering, which agreements may be at odds with competition law . Franchisor and franchisee would be wise to take competition law into account (also) when setting up a franchise construction in the healthcare sector.  

Ludwig & Van Dam franchise attorneys, franchise legal advice