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Finland's competition watchdog recommends blocking healthcare deal

HELSINKI, Sept 29 (Reuters) - Finland’s competition authority has recommended blocking Mehilainen’s 362 million euros ($403 million) purchase of rival Pihlajalinna, as the deal would reduce the number of nationwide healthcare companies to just two.

Finland’s Market Court will issue a ruling on the deal within three months of the recommendation from Finland’s Competition and Consumer Authority (FCCA), or by Dec. 29 at the latest.

In November 2019, privately-owned Mehilainen announced a recommended cash offer for Pihlajalinna.

The FCCA said the proposed merger “would significantly impede effective competition in the Finnish health services market,” and reduce the number of nationwide players to two.

Mehilainen said it regretted the FCCA’s decision and would hold talks with Pihlajalinna to decide how to proceed and whether to extend its offer period, due to expire on Oct. 15.

The FCCA described its decision as rare - only the fifth recommendation to block a deal since 1998, when merger control began in Finland.

“The merger would likely lead to significant price increases ... to the detriment of customers and taxpayers,” it said, adding the Finnish healthcare market had concentrated rapidly over the last decade.

Pihlajalinna said in a statement: “We remain committed to the tender offer in accordance with the combination agreement but will prepare for all possible outcomes.”

CVC Capital Partners funds own 57% of Mehilainen.

$1 = 0.8989 euros Reporting by Anne Kauranen; Editing by Mark Potter