CELEX: 32013M7058
Language: en
Date: 2013-12-03 00:00:00
Title: Commission Decision of 03/12/2013 declaring a concentration to be compatible with the common market (Case No COMP/M.7058 - EQT VI / TERVEYSTALO HEALTHCARE) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 3.12.2013
C(2013) 8795 final

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|To the notifying party:                                                |

Dear Sir/Madam,

Subject:   Case No COMP/M.7058 - EQT VI/Terveystalo Healthcare
Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1]

    1) On 28 October 2013, the European Commission received a notification  of  a  proposed  concentration  pursuant  to  Article  4  of  Council
       Regulation (EC) No 139/2004 by which EQT VI Limited ("EQT VI", Guernsey, the UK), part of the EQT group of private funds ("EQT"), acquires
       within the meaning of Article 3(1)(b) of the Merger Regulation, sole control of Terveystalo Healthcare Holding Oy ("Terveystalo"), by  way
       of purchase of shares.

       THE PARTIES AND THE OPERATION

    2) EQT VI ("the notifying party") is an investment fund which was launched in 2011 and which makes investment primarily in  Northern  Europe.
       EQT VI is part of the EQT group of private equity funds and [details over the ownership structure of EQT VI].  EQT  VI  is  owned  by  SEP
       Capital BV ("SEP"). [details over the ownership structure of SEP] . SEP is not controlled by any  individual  or  company,  and  does  not
       control any other company except for EQT group of private equity funds.

    3) Terveystalo belongs to the Terveystalo Group of companies ("Terveystalo Group"). Terveystalo is currently  owned  by  European  Healthcare
       S.à.r.l. (owned by limited partnerships comprising Bridgepoint Europe IV Fund which are managed by Bridgepoint Advisers Limited)  and  the
       management of Terveystalo. Terveystalo Group provides healthcare services almost exclusively in Finland;  its  customers  include  private
       individuals, companies and organizations, insurance companies as well as the public sector.

    4) Pursuant to the Share Sale and Purchase Agreement of 7 September 2013, the transaction comprises the acquisition of  […]%  of  shares  and
       sole control of Terveystalo by EQT VI,  and  concerns  the  market  for  healthcare  services  in  Finland.  It  therefore  constitutes  a
       concentration.

       EU DIMENSION

    5) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000  million[2]  (EQT  VI:  EUR  […]  million,
       Terveystalo: EUR 306 million). Each of them has an EU-wide turnover in excess of EUR 250 million (EQT VI: EUR  […]  million,  Terveystalo:
       EUR 306 million), but they do not achieve more than two-thirds of their aggregate EU-wide turnover within one and the same  Member  State.
       The notified operation therefore has an EU dimension.

       ASSESSMENT

    6) EQT VI submits that none of the portfolio companies (solely or jointly) controlled by EQT, in particular those whose  business  activities
       include the healthcare sector are active in the fields where Terveystalo is present. The transaction therefore does not give rise  to  any
       horizontal overlaps.

    7) The notifying party however submits that there are three portfolio companies  in  the  EQT  funds  that  provide  supplies  to  healthcare
       providers, namely BSN Medical, Atos Medical and HTL-Strefa.

    8)  Specifically,  BSN  Medical  manufactures  and  supplies  on  a  global  basis  a  range  of  wound  care,  compression   therapy   (i.e.
       phlebology/lymphology medical garments) and orthopaedics products. Atos Medical supplies ear, nose and throat (ENT) products whereas  HTL-
       Strefa supplies blood micro-sampling devices. Since Terveystalo purchases these types of products, the notifying  party  submits  that  an
       actual or potential non-important vertical link could be deemed to exist between BSN Medical, Atos Medical and HTL-Strefa on the  upstream
       markets for medical products and devices and  Terveystalo  on  the  downstream  markets  for  healthcare  services,  even  if  at  present
       Terveystalo's purchase of this type of products represents a de-minimis part of its total costs.

1 Market definition

1 Upstream activities

1 BSN Medical

Wound care products

    9) The Commission has previously analysed the market for traditional wound care products and advanced wound care products,  as  well  as  the
       market for wound closure products. It has considered that traditional wound care products and advanced wound care products  form  separate
       product markets.[3] Traditional wound care products include wound care products like surgical dressings, fixation products and swabs.  The
       market for advanced wound care products has previously been split in sub-markets consisting of moist wound  care  products,  active  wound
       care products and biologically active wound care products and their sub-categories.[4] The Commission has also  assessed  the  market  for
       wound closure products and considered that the relevant product market for wound closure products could potentially be  segmented  by  the
       respective category of such products but ultimately left it open.[5]  Wound  closure  products  include  sutures,  needles,  strips,  skin
       staplers and topical adhesives (i.e. glues).The product market definition can be left open in this case since the  competitive  assessment
       would not change under any of these alternatives.

   10) As regards the relevant geographic market(s), in previous decisions the Commission left open whether the relevant geographic  markets  are
       EEA-wide or national in scope.[6] The geographic market definition can be left open also in this case since  under  any  plausible  market
       definition no competition concerns would arise.

   Compression therapy products

   11) In previous cases dealing with compression therapy products, the Commission considered that phlebology and lymphology could be part of the
       same product market (although it looked at potential phlebology product segments). Ultimately the product market  definition  was  however
       left open.[7]

   12) As regards the relevant geographic markets, the Commission left it open whether the market  is  EEA-wide  or  national  in  scope.[8]  The
       product and geographic market definition can be left open also in this case since the competitive assessment would not change under any of
       these alternatives.

Orthopaedic products

   13) BSN Medical supplies physiotherapy products (such as adhesives, strapping tapes, cohesive supports and miscellaneous bandaging  products),
       fracture management products (such as plasters, synthetic castings, splints and accessories, stockinettes and  paddings)  and  orthopaedic
       soft goods products in Finland. All these products comprise the orthopaedics products category.

   14) The Commission has previously dealt with the market for orthopaedics products and indicated that different products within  immobilisation
       products form separate product markets.[9] In the same decision, the Commission noted that within  bandaging  products,  there  are  three
       product markets consisting of fixation bandages, support bandages and orthopaedic soft goods.

   15) The notifying party therefore submitted information on all its  orthopaedics  products  as  well  as  on  the  three  sub-categories:  (i)
       physiotherapy products (i.e. bandaging products), (ii) fracture management products (i.e. immobilisation products) and  (iii)  orthopaedic
       soft goods products, in line with BSN Medical’s internal segmentation.

   16) As regards the geographical scope of the market, the Commission indicated that it is national for each segment.[10]

   17) The precise product and geographic delimitation of the relevant markets described above can be left open, as due to the absence of overlap
       between the parties’ activities and the insignificant vertical  relationships  between  them,  the  Transaction  does  not  give  rise  to
       competition concerns irrespective of the exact market definition.

2 Atos Medical

Ear-nose-throat area products

   18) The Commission has previously indicated that ear, nose and throat medical devices (ENT products) could form one product group but left the
       market definition open.[11] As regards the geographical scope of the market, the Commission indicated that it may be EEA-wide or national,
       ultimately leaving it open.[12] The product and geographic market definition can be left open also in  this  case  since  the  competitive
       assessment would not change under any of these alternatives.

3 HTL-Strefa

Blood micro-sampling devices

   19) The Commission has previously indicated that sterile single-use medical devices could constitute one  product  group  within  the  medical
       devices while also noting that sterile single-use medical devices could be further split in a number of  sub-markets,  leaving  ultimately
       the exact market definition open.[13] The notifying party submits that blood micro-sampling devices fall  under  the  sterile  single  use
       medical devices category and provide information separately for safety lancets, personal lancets and  pen  needles  where  HTL  Strefa  is
       active. The product market definition can be left open also in this case since the competitive assessment would not change  under  any  of
       these alternatives.

   20) As regards the scope of the relevant geographic market, the Commission has indicated that it may be either EEA-wide or  national.[14]  The
       geographic market definition can be left open also in this case since under any plausible market definition no competition concerns  would
       arise

2 Downstream activities

1 Terveystalo

Healthcare services

   21) There is no Commission precedent dealing with the Finnish market for healthcare services. However, the Finnish  Competition  and  Consumer
       Authority ("FCCA") has previously examined the healthcare services market in Finland and segmented it by customer type (i.e. who pays  for
       the service):

i) occupational healthcare services produced by private and public service providers (employer as a payer). In Finland, employers  are  under  an
   obligation, regardless of their size, to organise occupational healthcare services for their employees.[15]

ii) healthcare services purchased by public actors from private companies (municipality or other public actor  as  a  payer).  Municipalities  in
   Finland are under a duty to organise healthcare services and within that duty have  full  discretion  to  organise  the  services  themselves,
   jointly with other municipalities or to source them from public or private third-parties. The end-customers are mainly the inhabitants of  the
   municipality in question.

iii) healthcare services purchased by insurance companies (insurance company as  a  payer).  Insurance  companies  sign  contracts  with  private
   healthcare providers for compensating certain physicians' services (i) on the basis of occupational and traffic accident insurances or (ii) on
   the basis of voluntary insurances taken by private persons.

iv) healthcare services offered to private customers that are not referred through any of the channels in  (i)-(iii)  (private  individual  as  a
   payer).

   22) The FFCA considered that these four types of services could possibly be further segmented according to  the  type  of  healthcare  service
       provider (public, private), the size of  customers  (large  public  or  private  organisations  with  a  network  of  offices  in  several
       municipalities vs. companies that operate in a narrower geographical area) or the kind of service rendered (e.g.  physician  vs.  hospital
       services, by specialisation, etc.). Nevertheless, in its previous decision, the FCCA did not have to  decide  on  such  delineations,  and
       therefore left the precise market definition open.[16]

   23) The notifying party submits that the four above mentioned markets are the relevant product markets in this case. As  regards  occupational
       healthcare services, the notifying party states that, in addition to the supply from private and public service  providers,  the  relevant
       market also includes services provided in-house by the employer, since  the  content  of  the  occupational  healthcare  services,  as  an
       obligation from the legislation, does not differ depending on the way they are provided, and since the market is constantly changing  with
       employers being able to switch from one mode to the other.

   24) There are indications from the market investigation that a distinction should be done at least between private and public suppliers, which
       do not necessarily provide the same kind of services.

   25) The market investigation furthermore reveals in addition three basic models of organising occupational healthcare services in Finland: (i)
       fully private, (ii) fully public, (iii) a combined model in which the private healthcare supplier deals with the provision of  staff  only
       and uses third-party facilities (owned by the public (municipality) or sometimes by private companies).

   26) Nevertheless, for the purpose of this case the precise product market definitions can be left open as  the  assessment  would  not  change
       under any plausible definition.

   27) The notifying party submits that the relevant geographic market for each segment of healthcare services is national.

   28) The FCCA has found in its precedent case that none of the relevant healthcare services markets are wider than national in their geographic
       scope[17]. Some of the markets could even be narrower, i.e. regional or local.

   29) The responses to the Commission market investigation were  in  favour  of  considering  narrower  than  national  geographic  markets,  in
       particular in view of the specificities of the tendering processes and the presence of big university hospitals for  the  various  Finnish
       districts. In addition, although some local players appear to ally as a network to compete at a national level, the results of the  market
       investigation showed that there are very few national actors like Terveystalo and that the few players active nation-wide  rather  compete
       with a number of different smaller service providers at regional level.

   30) Since the notified concentration would not raise any competitive concerns on any  plausible  market  definition,  the  precise  geographic
       market definition can be left open in the case at hand.

2 Competitive assessment

   31) On the basis of the above market definitions, the take-over would lead to the following vertically affected markets:

a) occupational healthcare services in Finland, nationally and/or regionally;

b) healthcare services purchased by insurance companies in Finland, nationally and/or regionally;

c) healthcare services offered to private customers in Finland at regional level;

d)  healthcare services that public actors purchase from private companies in Finland at regional level;

e) wound care products (with sub-categories) in Finland/EEA;

f) orthopaedics products (with sub-categories) in Finland/EEA;

g) compression therapy products (with sub-categories) in Finland/EEA;

h) medical products within the ear, nose and throat (ENT) area (with sub-categories) in Finland/EEA;

i) blood micro-sampling devices in Finland/EEA.

   32) According to data submitted by the notifying party on the downstream side of the market, Terveystalo's market shares are below [30-40]% at
       a national level ([30-40]% for occupational healthcare, [20-30]% for healthcare services purchased by insurance  companies,  [10-20]%  for
       healthcare services offered to private customers and [5-10]% for healthcare services that public actors purchase from  private  companies)
       and would remain below 40 % at regional level.

   33) On the upstream side of the market, for each of BSN Medical, Atos Medical and HTL-Strefa, market shares are almost always  below  25%  and
       often below 10%. The only two exceptions concern the Finnish markets for orthopaedic products, where BSN market  shares  are  significant,
       namely (i) physiotherapy products (with [40-50]% market share) and (ii) fracture management products (with [40-50]% market share) but  not
       exceeding [50-60]% at the sub-category level for any of these two markets.

   34) Based on the information submitted by the parties and the responses from the market  investigation,  the  Commission  considers  that  the
       resulting vertically affected markets would not give raise to serious doubts for the reasons explained below.

   35) The notifying party submits that there will be no integration between either Atos Medical or HTL-Strefa, and Terveystalo, since  they  are
       controlled by two different EQT funds and each EQT fund investment is a separate and independent business case involving various investors
       and a separate envisaged exit horizon.

   36) The notifying party furthermore submits that there will be no integration between BSN and  Terveystalo,  despite  belonging  to  the  same
       investment fund EQT VI. It explains that each EQT Funds’ investment is a separate and  independent  business  case  involving  a  separate
       envisaged exit horizon. The notifying party indicates that BSN Medical  and  Terveystalo  are  separate  business  cases,  and  hence  the
       intention is to develop them independently in line with  what  is  best  for  each  company,  and  eventually  to  exit  them  separately.
       Furthermore, from a geographical perspective, BSN Medical is active worldwide while Terveystalo is active almost exclusively  in  Finland.
       As BSN Medical has centralised important parts of its operations, including a central pricing policy for EEA  countries,  any  integration
       with Terveystalo would not be in line with the operating model applied by BSN Medical.

   37) Even if EQT were to instruct Terveystalo and its three portfolio companies BSN, Atos Medical and HTL-Strefa to conclude  exclusive  supply
       and purchase agreements between the two companies, EQT is unlikely to have the ability or incentive to engage  in  input  and/or  customer
       foreclosure in any meaningful way, as will be described below.

   38) The vertical relationship is relatively insignificant since Terveystalo’s purchases from any of  the  three  portfolio  companies  do  not
       exceed 5% of the total sales of these firms in any of the product markets and are less than 5%  of  the  total  market  demand  for  these
       products in Finland.

   No ability or incentive for input foreclosure

   39) There is no ability for an input foreclosure strategy vis-à-vis Terveystalo’s competitors, since the products supplied by BSN  Medical  as
       well as those of Atos Medical and HTL Strefa do not constitute an “important input” for Terveystalo and for its competitors, as  they  are
       rather standard products with relatively low barriers to entry and expansion. This is underpinned by the fact that Terveystalo  itself  is
       not dependent on supplies from any of these three suppliers and is currently purchasing or could purchase from other  suppliers  as  well.
       [18] With respect to Atos Medical and HTL-Strefa, their products are exclusively sold via wholesalers which would not allow discriminating
       against end-customers.

   40) In any event, each of BSN Medical, Atos Medical and HTL-Strefa face competition from  other  large  international  manufacturers  for  all
       products supplied and lack any significant degree of market power in any  upstream  market,  which  would  be  a  prerequisite  for  input
       foreclosure.

   41) HTL-Strefa faces competition from a number of competitors, e.g.  Owen  Mumford,  Sterilance  and  Novo  Nordisk,  whereas  Atos  Medical's
       competitors include Otoplug, Olympus Finland and Medtronic Finland.

   42) Even for products where BSN Medical's market shares are above 25%, such as the two subsegments for orthopaedic products  ([40-50]%  market
       share for physiotherapy and [40-50]% for fracture management), alternative suppliers are active  in  Finland.  Thus,  should  BSN  Medical
       hypothetically try to implement an input foreclosure strategy vis-à-vis  Terveystalo’s  competitors,  these  companies  would  have  other
       readily available internationally active suppliers (for instance, Smith & Nephew ([10-20]% market share in Finland)  and  Mölnlycke  ([10-
       20]%) for wound care products; 3M ([10-20]%) and Lohmann & Rauscher ([5-10]%) for orthopaedics products; Juzo ([10-20]%)  and  Medi  ([10-
       20]%) for compression therapy products).

   43) The Commission has confirmed the existence of valid alternatives to BSN Medical's products by strong competitors in Finland on  the  basis
       of the results of the market investigation. Competitors in the field of medical supplies have indicated  that  similar  products  such  as
       those supplied by EQT's portfolio companies are produced by competitors and easily accessible to customers. In  addition,  there  are  few
       technical entry barriers since these are rather standard products and there are no regulatory provisions that would  impede  suppliers  to
       expanding their offerings in case EQT's portfolio companies would try to raise  prices.  Other  healthcare  providers  purchasing  medical
       products and devices as inputs for the provision of their services confirmed during the market investigation that they were not  dependent
       on any of the EQT portfolio companies for medical supplies. If  needed  they  could  always  find  alternative  suppliers  (amongst  other
       producers or through wholesalers).

   44) Consequently, the risk that Terveystalo’s competitors would be dependent on being supplied by BSN Medical, Atos Medical or  HTL-Strefa  is
       remote.

   45) The incentive to foreclose depends on the degree to which it is profitable to do so and this involves a trade-off between the profit  lost
       upstream and the profit gained downstream. Terveystalo’s purchases are rather limited and do not amount to more than  5%  in  any  of  the
       markets considered. Not supplying Terveystalo’s competitors anymore would entail a very  significant  loss  of  sales  on  these  upstream
       markets. Furthermore none of the inputs provided by any of the three medical suppliers (BSN Medical,  Atos  Medical  and  HTL-Strefa)  are
       critical for Terveystalo's competitors since there are significant alternative suppliers for all these  medical  inputs.  Hence  any  such
       foreclosure strategy would not allow Terveystalo to charge higher prices downstream and recoup the profits lost by BSN Medical or  by  the
       other two EQT medical suppliers on the upstream markets. Therefore such an input foreclosure strategy would be unprofitable.

   No ability or incentive for customer foreclosure

   46) There is also no ability or incentive for a hypothetical customer foreclosure vis-à-vis Atos Medical's,  HTL-Strefa's  and  BSN  Medical’s
       competitors, since none of Atos Medical's, HTL-Strefa's and BSN Medical’s competitors is dependent on selling its products to  Terveystalo
       for any of their product categories. Terveystalo cannot be considered as an unavoidable “important customer” in Finland for the  different
       types of products supplied by Atos Medical, HTL-Strefa and BSN Medical as there are other important healthcare providers that compete with
       Terveystalo and buy medical products and devices such as Mehiläinen ([20-30]% market share), Diacor ([5-10]%), Aava ([0-5]%), Attendo ([0-
       5]%), Pihlajalinna ([0-5]%).

   47) Overall, the EUR […] million total purchases by Terveystalo of medical supplies  in  the  products  categories  where  the  three  medical
       suppliers belonging to EQT are active represent only [0-5]% of the total demand for these products in Finland. The  contestable  share  of
       the medical supplies on the Finnish market is therefore [90-100]%.

   48) Specifically, Terveystalo’s share of purchases of the various product categories that BSN Medical, Atos Medical and HTL-Strefa  supply  to
       it is quite low, which means that Terveystalo does not enjoy  the  downstream  market  power  which  is  a  prerequisite  for  a  customer
       foreclosure strategy. In any of the product markets in which BSN Medical, Atos Medical and HTL-Strefa are active, Terveystalo's  purchases
       represent less than 5% of the total demand in Finland and far less than 1% in the EEA. Moreover, Terveystalo could not rely exclusively on
       the three above-mentioned suppliers because it needs to buy many various types of medical products that the three EQT  portolio  companies
       are not currently offering and would most likely not be able to provide.

   49) The Commission has confirmed the existence of valid alternative customers of medical products and devices excluding Terveystalo in Finland
       on the basis of the replies to the market investigation. Aava, Mehiläinen and Diacor have  been  mentioned  as  large  private  healthcare
       providers and main competitors of Terveystalo. As mentioned above, some smaller players compete effectively on the market  for  healthcare
       services on a regional basis and sometimes ally to compete at a broader level.

   50) Therefore, even if Terveystalo were instructed by EQT to exclusively purchase from BSN Medical, Atos Medical or HTL-Strefa in the  future,
       the customer foreclosure effect for competitors of these three firms would  be  insignificant.  Consequently,  even  in  the  hypothetical
       scenario where Terveystalo were to source products exclusively from BSN Medical, Atos Medical and HTL-Strefa, this would not restrict  the
       access of competitors to these companies to a sufficient customer base.

   Conclusion

   51) The Commission therefore considers that due to the limited scope of the identified vertical relationship, the notified concentration  does
       not raise serious doubts as regards its compatibility with the internal market.

       CONCLUSION

   52) For the above reasons, the European Commission has decided not to oppose the notified operation and to  declare  it  compatible  with  the
       internal market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger Regulation.

For the Commission
(signed)
Joaquín ALMUNIA
Vice-President

-----------------------
[1]   OJ L 24, 29.1.2004, p. 1 ('the Merger Regulation'). With effect from 1 December 2009, the Treaty on the Functioning of the  European  Union
('TFEU') has introduced certain changes, such as the replacement of 'Community'  by  'Union'  and  'common  market'  by  'internal  market'.  The
terminology of the TFEU will be used throughout this decision.

[2]   Turnover calculated in accordance with Article 5 of the Merger Regulation.

[3]   See M.3816 - Apax/Mölnlycke, para 19-24.

[4]   See M.4367 APW/Apsa/Nordic Capital/Capio para 21-23; M.3816 - Apax/Mölnlycke para 21-24.

[5]   See M.6560 EQT VI/ BSN Medical para 14-15; M.1223 - Tyco International Ltd/US Surgical Corp, para 5-8.

[6]   See M.6560 EQT VI/ BSN Medical para 14-15, 27-28; M.4367 - APW/Apsa/Nordic Capital/Capio, para 41-42, 46; M.3816 - Apax/Mölnlycke, para 27-
29; M.1223 - Tyco International Ltd/US Surgical Corp, para 9.

[7]   See M.6560 - EQT VI/BSN Medical para 20-22; M.4229 - APHL/Netcare/General Healthcare, para 35, 47; JV.54 - Smith &  Nephew  /Beiersdorf/JV,
para 23-32, 79-82.

[8]   See M.4229 - APHL/Netcare/General Healthcare, para 35, 47; and JV.54 - Smith & Nephew & Beiersdorf/JV, para 23-32, 79-82.

[9]   See JV.54 - Smith & Nephew & Beiersdorf/JV, para 48-53 and para 48-66.

[10]  See JV.54 - Smith & Nephew & Beiersdorf/JV, para 32.

[11]  See M.4367 - APW/Apsa/Nordic Capital/Capio para 17.

[12]  See M.4367 - APW/Apsa/Nordic Capital/Capio para 45 and 46.

[13]  See M.4367 - APW/Apsa/Nordic Capital/Capio, para 17 and 28.

[14]  See M.4367 - APW/Apsa/Nordic Capital/Capio, para 44 and 46.

[15]  Under the Finnish Occupational Healthcare Act (1383/2001).

[16]  Decision of the FCCA 1116/14.00.10/2010 of 11 May 2011 (Terveystalo / ODL).

[17]  Decision of the FCCA 1116/14.00.10/2010 of 11 May 2011 (Terveystalo / ODL).

[18]  Approximately [80-90]% of Terveystalo's purchases were made via wholesale distributors,  varying  from  [50-60]%  for  compression  therapy
products to [80-90]% for orthopaedic products and [90-100]% for wound care products.

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 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC)  No  139/2004
 concerning non-disclosure of business secrets and other confidential information.  The  omissions  are  shown  thus  […].  Where  possible  the
 information omitted has been replaced by ranges of figures or a general description.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE