The Competition Commission said the proposed merger was likely to substantially prevent or lessen competition in the market.
The Competition Commission on Thursday recommended to the Competition Tribunal that the proposed large merger whereby private hospital group Mediclinic Southern Africa intends to acquire Matlosana Medical Health Services in North West be prohibited.
Matlosana Medical Health Services wholly owns and manages two multi-disciplinary private hospitals in Klerksdorp, the Wilmed Park Private Hospital and Sunningdale Hospital.
While these two hospitals are both multi-disciplinary hospitals, Wilmed is more specialist orientated and Sunningdale is more general practitioner orientated.
Matlosana Medical Health Services also owns and operates a psychiatric hospital, Parkmed Neuro Clinic and also operates a nursing training school, Caerus Nursing School, in Klerksdorp.
As a result, the Commission said the proposed merger was likely to substantially prevent or lessen competition in the market for the provision of private healthcare services in Klerksdorp and the surrounding areas.
The Commission said the merger was likely to result in the merging parties unilaterally increasing hospital prices in the Klerksdorp and surrounding areas.
“Hospital tariffs for the Matlosana Medical Health Services hospitals will immediately increasing when the hospital fee structure is changed from the current National Hospital Network (NHN) based structure, which is used at Matlosana Medical Health Services, to the Mediclinic fee models,” the Commission said.
“Moreover, the increase in prices for insured, regional scheme and private patients will be significant and will take effect immediately after the merger. This would have a negative impact both at the national level for insured patients and at the regional level for private patients.”
The Commission further said the proposed merger raised public interest concerns since it significantly and negatively affected a particular industrial region around Klerksdorp.
The Commission said it had considered potential remedies to address the concerns arising from this transaction, but there was no suitable and efficient remedy to address the concerns that arise from the proposed merger.
Based on this, the Commission concluded that the proposed acquisition was likely to substantially prevent or lessen competition in the market for the provision of private hospital services in the relevant geographic market and therefore recommended a prohibition of the proposed merger.