Approval follows agreement to limit dominance in chronic dialysis market and protect public healthcare system patients.
Brazil’s antitrust watchdog CADE has approved, with conditions, the acquisition of Brasnefro, part of Fresenius Medical Care (FMC), by DaVita. Both companies operate in the dialysis sector, including service provision for Brazil’s public healthcare system, SUS. CADE’s technical staff had initially recommended blocking the deal due to the risk of excessive market concentration in certain regions and its potential to raise SUS costs. The final decision was unanimous.
The approved deal differs from the version initially reviewed by CADE’s technical team. Following a negative recommendation from the General Superintendence, the companies negotiated a Merger Control Agreement (ACC) with CADE’s tribunal, a mechanism used to resolve complex antitrust cases through negotiated remedies. The terms of the agreement were not disclosed by the case’s rapporteur.
Member Gustavo Augusto said during the session that a key component of the agreement involves divestitures. The remedy is split into two packages: the first includes units in São Paulo, João Pessoa, Recife, Brasília, and two clinics in Rio de Janeiro, which must be sold to one buyer. The second includes four clinics in Rio de Janeiro state, which must be acquired by a separate company. “The post-remedy scenario is better than the current one,” he said.
“The decision will benefit patients who rely on dialysis, as more competition in the market leads to better care,”
said the case’s rapporteur, José Levi.
Although no buyers have yet been identified, the divestment process will be monitored by a trustee and follow procedures set in the agreement.
CADE found no competitive issues in the hospital-based dialysis market, where hospitals either contract service providers through tenders or provide the service themselves. The concern lies with chronic dialysis patients, where private clinics are accredited by SUS or health insurance providers to deliver treatment.
Due to potential market concentration in this segment, CADE’s technical body recommended blocking the merger, citing risks in João Pessoa, the Recife metropolitan area, Brasília, São Paulo, and several municipalities in Rio de Janeiro state—including Niterói, Nova Iguaçu, São João de Meriti, and the capital.
Competitors Nefrostar and Diaverum argued that DaVita had been systematically acquiring rivals and that the deal would further increase its market share and bargaining power with private insurers and SUS. They warned this could lead to competitors being pushed out of the market. They also pointed out that 70–80% of chronic dialysis patients in Brazil are treated through SUS, which relies heavily on contracts with private clinics.
DaVita’s attorney, Daniel Andreoli, countered that SUS reimbursements cover only 70% of dialysis costs—posing a much greater challenge to small clinics than to DaVita. He also criticized the government’s delays in increasing payment rates. “More than ten states currently supplement SUS reimbursements,” he said.
Mr. Levi acknowledged that the General Superintendence had reached a reasonable conclusion based on the information available at the time—particularly because no remedies had been proposed yet. He said that the remedies presented afterward were shaped through dialogue with both CADE councilors and their advisors.
“This case demands our full attention,” Mr. Levi said. “There are many nuances. Acute patients are one matter; chronic patients are another.”
He emphasized the high level of market concentration, but added that the Merger Control Agreement had the potential to improve the current landscape.
Source: Valor International
