The Competition Tribunal on Wednesday heard public interest and unfair competition concerns around the merger of Manta Bidco and Mediclinic International, two large medical industry firms.
This after South African Competition Commission approved the merger with conditions.
Bidco is incorporated in England and Wales and is a joint venture controlled by Remgro Healthcare Holdings and SAS Shipping Agencies Services, while Mediclinic, incorporated in the UK, has a primary listing on the London Stock Exchange and secondary listing on the JSE and Namibian Stock Exchange.
The deal was announced in 2022 with a £3.7 billion price tag (around R82bn currently).
However, Section27, a public interest law centre and other interested parties said yesterday that the Competition Tribunal should enforce conditions stipulated by the Competition Commission and ratified by the two merging entities. These include the training of 1 700 nurses for a period of five years, free surgeries and empowerment of employees.
“It is important that the private healthcare sector be regulated now,” Khanyisa Mapipa of Section27 told a hearing of the Competition Tribunal into the merger of Manta Bidco and Mediclinic International yesterday.
“We don’t oppose the merger but ask that the Competition Tribunal strengthen recommendations of the Competition Commission.”
Section27 was concerned that it would be difficult to enforce the pro bono surgeries that Bidco and Mediclinic have agreed to under the conditions for the merger. However, the two companies, through their joint representative at the Competition Tribunal hearing yesterday, said Mediclinic was already facilitating these, with doctors already committed to the free surgeries.
Alex van den Heever, from the Wits School of Governance, told the Competition Tribunal yesterday that the merger between the two companies presented “systematic risks to the South African health sector”..
This was mainly because the two companies were large entities providing related services. Moreover, Remgro had direct and indirect interests.
“There is no review of the expanded investment that can happen under the merged entity. It is the demand side that needs to be managed,” said Van den Heever.
He suggested that the merged entity be prohibited from “any further expansion of investments in the relevant parts of the industry” or be required to disclose any proposed change in ownership in the relevant parts of the industry so that this can be subjected to approval by the competition commission.
“A merger without conditions that address competition concerns would pose risks to the private health system by leaving the decision to invest strategically in both the supply and demand sides of the health market entirely at the discretion of Remgro and Manta Bidco up until they trigger a merger inquiry,” he explained.
However, the two merging entities told the hearing that the consummated deal to merge them “changes nothing” with respect to Mediclinic’s positioning in the industry and with respect to “investment incentives for Remgro”.
“There are no competition concerns arising as a result of this transaction. The merging parties have come together to produce a package of conditions that advance health care,” the two companies argued.
For example, the condition to set up an employee benefit scheme was seen as an advantage to employees. Workers employed by Mediclinic for more than one year would be incorporated for the benefits while management employees would not be part of the scheme.
The merged entity would also set aside R80 million for the training of an aggregate 1700 nurses, paying their full tuition for a period of five years.
BUSINESS REPORT