About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2014
>>
[2014] ZACT 20
|
|
Mediclinic Southern Africa (Pty) Ltd v Mediclininc Limpopo Ltd (018374) [2014] ZACT 20 (15 April 2014)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: 018374
In
the matter between:
MEDICLINIC
SOUTHERN AFRICA (PTY) LTD
Primary Acquiring Firm
And
MEDICLINIC
LIMPOPO
LTD
Primary Target Firm
Panel
: T Madima (Presiding Member)
: I Valodia (Tribunal
Member)
: A Roskam (Tribunal
Member)
Heard
on
: 26 March 2014
Order
Issued on
: 26 March 2014
Reasons
Issued on
: 15 April 2014
Reasons
for Decision
Approval
[1]
On 26 March 2014, The Competition
Tribunal (“Tribunal”) unconditionally approved the
acquisition by Mediclinic Southern
Africa (Pty) Ltd of an additional
1 % shareholding in Mediclinic Limpopo Ltd.
[2]
The reasons for approving the proposed
transaction follow hereunder.
Parties
to the transaction
[3]
The primary acquiring firm is Mediclinic
South Africa (“MCSA"), a wholly owned subsidiary of
Mediclinic Investments Limited
(“Mediclinic Investments”).
Mediclinic Investments is controlled by Mediclinic International
Limited (“Mediclinic
International”), a company listed on
the Johannesburg Securities Exchange and controlled by several
shareholders.
[4]
The primary target firm is Mediclinic
Limpopo, a company controlled de jure jointly by MCSA and individual
shareholders. The individual
shareholders all hold less than 6% each.
MCSA can appoint 5 out of the 10 directors on the board of directors
of Mediclinic Limpopo.
Mediclinic (Pty) Ltd is a subsidiary of MCSA
and the exclusive manager of Mediclinic Limpopo.
[5]
Mediclinic Limpopo wholly owns
Mediclinic Limpopo Investments (Pty) Ltd. Mediclinic Limpopo is
operated through Limpopo Mediclinic
Trust (“Limpopo Trust”).
The following shareholders are also Trustee’s:
•
Andre
Aemand Oosthuizen (appointed by MCSA)
•
Gerrit
Johann Geertsena (appointed by MCSA)
•
Michael
Bosman (appointed by the doctor shareholders)
Proposed
Transaction and Rationale
[6]
MCSA will acquire an additional share in
Mediclinic Limpopo and post-merger it will own 50% plus 1% shares.
Alternatively the Board
will issue a further share to MCSA and
post-merger MCSA will exercise de jure sole control over Mediclinic
Limpopo.
[7]
According to the merging parties, the
proposed merger arises from the Competition Commission’s
(“Commission”)
price fixing investigation in respect of
certain hospitals controlled by MCSA. Though Mediclinic Limpopo is
not included in that
investigation. The merging parties want to
remove any competition law uncertainties going forward.
[8]
At the hearing, the merging parties were
requested to clarify what the rationale for the transaction was. MCSA
explained that the
Commission is investigating MCSA and some
hospitals in which it holds a minority shareholding but where it
negotiates the tariffs
for those hospitals. The Commission is
concerned that a minority interest in a hospital where MCSA
determines the tariffs is a
problematic issue. To alleviate the
Commission’s concerns a pre-emptive measure is being undertaken
by MCSA to ensure that
it would increase the shareholding to provide
MCSA with an extra share so that it would have de jure sole control
over this hospital.
Relevant
Market and Impact on Competition
[9]
The merging parties are both active in
the market for the provision of private hospital services which
includes a variety of general
and specialised medical services. MCSA
controls numerous day hospitals and multidisciplinary hospitals in
South Africa. MCSA operates
from 3 platforms; Southern Africa,
Switzerland and United Arab Emirates. In South Africa MCSA operates
49 hospitals, this is a
total of 7,436 beds. Mediclinic Limpopo is a
203 bed private multidisciplinary hospital, offering a range of
general and specialised
healthcare services.
[10]
The
relevant market is that of provision for private hospital services
which include a variety of general and specialised medical
services.
[I]
[11]
The Commission found that Mediclinic
Limpopo is servicing the larger Limpopo and parts of eastern Botswana
because the geographic
catchment area of Polokwane, as the economic
hub of Limpopo, is much larger than those of other cities. However, I
agree with the
Commission that it does not affect the outcome of this
transaction whether we define the geographic market as local or
regional
as the transaction does not give rise to any change in
market shares.
[12]
Competitors in the market for provision
of private hospital services that offer a variety of general and
specialised medical services
are:
In
the national market:
•
Netcare
- 32%
•
Mediclinic
(target and acquiring group) - 25%
•
Life
Healthcare Group - 24%
•
National
Hospital Network - 12%
•
Other
Independents - 7%
In
the regional market:
•
Mediclinic
Tzaneen - 129 beds
•
St
Vincent Hospital - 83 beds
•
Zoutpansberg
Private Hospital - 22 beds
[13]
The proposed transaction will not result
in increased tariffs. MCSA currently owns 50% of the issued share
capital of Mediclinic
Limpopo and is the exclusive manager of
Mediclinic Limpopo. Mediclinic acquired Limpopo hospital on 1 July
1998, since then Mediclinic
has openly negotiated tariffs on behalf
of Limpopo Hospital. Mediclinic therefore already determines Limpopo
Hospital tariffs.
[14]
There are no horizontal or vertical
overlaps in the activities of the merging parties because MCSA
already owns shares in the target.
[15]
Countervailing power exists in the form
of administrators who negotiate tariffs and health care service
providers. Administrators
handle the day-to-day services and are
employed by Schemes. The administrator negotiates annual tariff
increases collectively on
behalf of all the schemes that it
represents. Smaller schemes benefit from the countervailing power
resulting from the collective
negotiations. This is regarded as a
powerful countervailing tool in the market.
Conclusion
[16]
In light of the above I conclude that
the proposed transaction is unlikely to substantially prevent or
lessen competition in the
market for private hospital services which
include a variety of general and specialised medical services. In
addition, no public
interest issues arise from the proposed
transaction. Accordingly I approve the proposed transaction
unconditionally.
5
April 2014
DATE
Takalani
Madima
Anton
Roskam and Imraan Valodia concurring
Tribunal
Researcher: Moleboheng Moleko
For
the merging parties: Susan Meyer - Cliffe Dekker Hofmeyr
For
the Commission: Hardin Ratshisusu
[I]
Afrox Healthcare Limited and Amalgamated Hospitals Limited case no:
53/LM/Sep01