Bundeskartellamt initiates proceeding against medical aids associations for coordinated price increases to the detriment of health insurance companies

Several associations of suppliers of medical aids joined forces to demand coordinated price increases in the rehabilitation and care segments from the statutory health insurance companies, which they achieved in some cases. The associations organised themselves under the “ARGE” umbrella and represent in particular health care supply stores and orthopaedic workshops.

Following initial investigations, the Bundeskartellamt initiated a cartel administrative proceeding against the ARGE members.

Andreas Mundt, President of the Bundeskartellamt: “Based on our current knowledge of the case, the collective negotiations of price increases in the ARGE context could constitute an infringement of competition law. Agreements between suppliers and health insurance companies are subject to special regulations under social law, which in some cases allow exemptions from the ban on anti-competitive agreements. However, there is much to suggest that an exemption does not apply in this case. According to our current state of knowledge, ARGE represents the largest part of all suppliers of medical aids for rehabilitation and care on which patients in Germany rely. Our proceeding therefore does not only investigate a potential infringement of the ban on anti-competitive agreements, but also whether there has been an abuse of dominance.”

The associations of suppliers under the ARGE umbrella pointed out in a circular of 7 September 2021 to several health insurance companies the increases of freight, delivery and commodity costs due to the Covid pandemic. They demanded coordinated price increases for existing supply contracts in the rehabilitation and care sectors to compensate for these increases. At the same time, they threatened to terminate their contracts with health insurance companies and in some cases actually terminated them. Several health insurance companies agreed to the price increases in an attempt to ensure a continued supply to their clients.

Irrespective of the question whether price adjustments due to increased supply costs are objectively justified in the specific case, the coordinated approach of the supplier side and the collective general demand for overall price increases for different medical aids and contracts could constitute an infringement of competition law. The Bundeskartellamt will examine in its cartel administrative proceeding whether this is the case.

The authority has already interviewed all ARGE members and approximately 30 of Germany’s largest statutory health insurance companies with regard to ARGE’s demand for higher prices. The next step will be to request further information from the ARGE members.

Collective negotiations in the supply of medical aids

It can be necessary for health care supply shops and other suppliers of medical aids to negotiate collectively through their respective associations with the health insurance companies to ensure a Germany-wide supply of medical aids. However, an additional coordination of all these associations, which was achieved through the creation of ARGE in this case, can lead to a de facto supply monopoly that harms competition and puts the health insurance companies’ statutory supply mandate at risk. Such a development would contradict both competition law and social security law.

The Bundeskartellamt has information to suggest that also other suppliers attempt to achieve a similar concentration with regard to other types of medical aids. The authority will continue to keep a close watch on these endeavours.