Tribunal to decide on healthcare merger

The Competition Tribunal will hear closing arguments on Monday, June 18 and decide whether to approve the potential merger between Life Healthcare Group‚ a wholly owned subsidiary of Life Healthcare Group Holdings‚ and Joint Medical Holdings‚ with conditions or prohibit the deal outright.

The Tribunal said Friday it had heard witnesses from the commission and from the merging parties about the potential impact of the merger.

The Competition Commission has already recommended that the Tribunal prohibit this merger‚ the commission said in a statement.

Life Healthcare is one of the three largest private health care groups in SA. Its facilities include hospitals‚ rehabilitation units‚ occupational health clinics and facilities that care for chronically ill patients.

Joint Medical Holdings‚ the target in the merger‚ owns five hospitals in and around the Durban area‚ namely City Hospital‚ Ascot Park‚ Maxwell Clinic‚ Isipingo Hospital and Durdoc Hospital.

The commission assessed the proposed merger and concluded that‚ if approved‚ it would cause “a substantial lessening of competition”.

It found that the combination of these two hospital groups “would create regional dominance in and around the Durban area with the result that funders would not be able to pit the groups against each other in the creation of managed care arrangements and would thus be unable to stimulate competition between the hospital groups”.

Moreover‚ the commission found that the barriers to enter the private hospital space were high because of the significant investment needed to start up a healthcare facility and because of the licensing requirements.

Life Healthcare already has a share of Joint Medical Holdings but intends to increase its holding from 49% to 70%.

According to the merging parties the proposed transaction will have no anti-competitive effects in the health care industry‚ as it will not significantly change the current structure of this market. - I-Net Bridge