The Competition Authority has today annulled the merger involving the acquisition of Fastus ehf. by Veritas Capital hf. Veritas Capital is the parent company of firms operating in the healthcare sector. Veritas operates, among others, the subsidiaries Medor ehf., which sells medical devices, Vistor, which sells, among other things, pharmaceuticals wholesale, and Distica ehf., which specialises in the distribution of pharmaceuticals and other products for the healthcare sector. Fastus sells medical devices, as well as consumables for the hotel and restaurant sector.
The transaction in question thus involves a merger between the competitors Medor and Fastus. This merger affects the market for the sale of medical devices to hospitals and other healthcare providers. The term medical devices covers various types of machines, instruments, substances and single-use products which are used, among other things, to diagnose, treat and alleviate diseases in humans. Examples include resuscitation equipment, diagnostic imaging equipment, laboratory equipment, operating theatre equipment, hospital beds and disposable needles.
The merger will create a company with a dominant market position in the sale of complex medical devices. The combined company will have more than double the market share of its nearest competitor and will enjoy a financial advantage. The combined companies would have a very strong position in related fields, e.g. in the distribution of medicines and other healthcare products, where Distica has a market share of around 70%. The Competition Authority also notes that there are significant barriers to entry for new players wishing to establish themselves in the market for the import and sale of medical devices. Furthermore, a detailed investigation by the Authority concluded that Landspítalinn and other customers do not possess sufficient buyer power to mitigate the strength of the combined company. The merger is therefore considered to seriously harm competition in a significant market.
The merging parties submitted proposals for conditions to remedy the competition concerns that the Competition Authority considers arise from the merger. As is justified in the Competition Authority's decision, these proposals are insufficient and the Authority therefore annuls the merger in its decision today.
Competition is vital in the public interest
The Competition Authority considers that the markets in this case are important for the public. Although the purchasers of the product are usually public bodies, it is ultimately the public who both benefits from the healthcare service and bears the resulting costs, in one way or another. It has recently emerged that the equipment of the National University Hospital and other healthcare institutions in the country is in many cases outdated due to austerity in equipment purchases in recent years, not least in the wake of the financial crash. It is estimated that the hospital will have to significantly renew its equipment in the coming years, in addition to the considerable expenditure that the construction of a new National University Hospital will entail. Therefore, effective competition in the medical equipment trade can safeguard taxpayers' interests, which amount to substantial sums.
See the decision for details No. 23/2012 (PDF document – 114 pages).
