Concourt blocks proposed merger between Mediclinic and MMHS
A PROPOSED merger between Mediclinic Southern Africa and Matlosana Medical Health Services (MMHS) in the North West, nearly six years in the making, has once again been blocked, this time by the highest court in the land.
The Constitutional Court recently upheld the Competition Commission’s appeal against a decision by the Competition Appeal Court, setting aside the CAC’s decision that would have allowed the merger.
The process was initiated in 2015 when the acquisition was proposed and various approvals were sought in order to proceed.
The commission and its tribunal had initially concluded that putting together Mediclinic Potchefstroom, Wilmed Park and Sunningdale hospitals would likely lead to a substantial lessening of competition in the relevant market.
“The tariffs of the target hospitals would increase significantly as a result of the merger, in respect of both insured and uninsured patients,” the commission said in a statement.
“Uninsured patients do not have the benefit of a medical aid scheme negotiating on their behalf and from a public interest perspective.
“As a result of the merger, the lower tariffs provided to uninsured patients at the MMHS hospitals would fall away. The proposed merger would significantly affect the uninsured patients by limiting their ability to negotiate and switch to cheaper hospitals in the form of the MMHS hospitals,” it said.
After the matter was referred to the CAC, it ruled in Mediclinic’s favour last year which would have allowed the merger to proceed.
The commission then sought leave to appeal to the Concourt against the decision of the CAC, to determine among other issues whether the CAC had regard to the relevant provisions of the Constitution and Competition Act, and acted in line with them.
The Concourt judgment essentially answered the question whether the CAC, in law, was correct in interfering as it did with the findings of, and remedy given by the Competition Tribunal.
The judgement by recently retired Chief Justice Mogoeng Mogoeng read: “The equalisation and enhancement of opportunities to enter the mainstream economic space, to stay there and operate in an environment that permits the previously excluded as well as small and medium-sized enterprises to survive, succeed and compete freely or favourably must always be allowed to enjoy their pre-ordained and necessary pre-eminence.”
The Commission welcomed the judgment. “This is a landmark and path breaking judgment by the Constitutional Court in the history of Competition Law. The judgment unequivocally and emphatically vindicates the commission on two important principles – first, the centrality of the Bill of Rights in the interpretation of the Competition Act, and second, the principle of deference to the economic expertise of the Competition Tribunal,” said Competition Commissioner Tembinkosi Bonakele.
Mediclinic chief executive Koert Pretorius said: “We note the findings of the Constitutional Court and believe that this would have been a valuable opportunity to expand our offering across the continuum of care, with the aim of providing better value and outcomes for our patients.”