Yet another ban on merger overturned
Tribunal rules against cartel watchdog
ANOTHER decision of the Competition Commission has been overturned by the Competition Tribunal, leading to the unconditional approval of the merger between Life Healthcare and Joint Medical Holdings.
Competition experts attribute the commission’s setbacks at the tribunal and its decisions being taken on review by merging parties to internal leadership issues, antipathy against big business and its pursuance of other policy agendas through competition law.
But commissioner Shan Ramburuth said yesterday no internal leadership issues were affecting its decision-making processes.
“There is nothing extraordinary outside the normal that affects our decisions. We run a very complex organisation. There are issues in the organisation all the time, but certainly nothing that impacts negatively on its decisions,” he said.
Mr Ramburuth said the com- mission was receiving more complex transactions to review.
He denied there was a trend of increased prohibitions: “Statistically it is too early to say there is a trend. Each merger is assessed on its own merits.
“It is not as though we sit down every January and say should we prohibit three or seven mergers … after we had three last year.”
The commission has lacked a head of mergers and acquisitions since the end of last year and has been rotating staffers in the position to grow their experience.
“It is certainly undesirable to have the position vacant. Given our desire to have the right person for the job, it has meant an extended recruitment process,” Mr Ramburuth said.
The commission opposed the Life Healthcare transaction on the grounds that it would result in reducing competition in the Durban area and higher costs for patients without medical
aid. The merging parties argued that the transaction simply meant that Life Healthcare would obtain sole control after having joint control of the two entities.
They also said it would not result in higher prices since Joint Medical Holdings’ hospitals were already included in Life Healthcare’s tariffs and designated service provider arrangements.
Nicola Theron, MD of Econex, said the commission seemed set to continue with a case of pricefixing against Life Healthcare and Joint Medical Holdings. She said that the commission had tried to force the tribunal to decide on the price-fixing issue during the merger proceedings. The tribunal declined, and considered the merger separately.
The commission has accused the parties of colluding on prices since 2004. It said claims that joint control entitled them to set prices and arrange market conditions jointly was incorrect.
Mr Ramburuth said the commission would wait for the tribunal’s reasons before deciding how to pursue the price-fixing case.
Robert Wilson, partner at law firm Webber Wentzel, who represented Life Healthcare and Joint Medical Holdings, said such transactions occurred in complex markets.
“They are on the fringes of regulated markets and the interplay between competition policy and regulatory policy is still an undeveloped debate in this country.”
The matter highlighted the “challenges and extensive litigation procedures” parties faced in opposed merger proceedings before the competition authorities.
It took nearly a year from the date the merger was notified for it to be considered and approved.
In the silica merger between Thaba Chueu, a subsidiary of Silicon Smelters, and SamQuarz, a subsidiary of Petmin, the tribunal overturned the commission’s proposed prohibition and approved the transaction with conditions.
The commission’s prohibition of the takeover of Cellulose Derivatives by Senmin, which is controlled by AECI, has also been taken on review before the tribunal, which has not yet decided on the matter.