Manta Bidco v Mediclinic International PLC (LM106Sep22) [2023] ZACT 18 (24 March 2023)
- Citation
- [2023] ZACT 18
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Posture
- Merger Application / Tribunal Approval With Conditions
- Case number
- LM106Sep22
More details
- Court
- Competition Tribunal
- Posture
- Merger Application / Tribunal Approval With Conditions
- Case number
- LM106Sep22
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed merger between Manta Bidco Ltd and Mediclinic International Plc does not substantially prevent or lessen competition in any relevant market. However, the transaction raises significant public interest considerations, particularly regarding the South African public healthcare sector, skills development, enterprise and supplier development, procurement from Black-owned businesses, capital expenditure, employment protection, and employee benefits. The Tribunal determined that these concerns could be adequately addressed through a comprehensive package of conditions, including commitments to perform pro bono surgeries, fund medical and nursing training, support clinics in underserved areas, procure from Black-owned businesses, and protect employment. Additionally, the Tribunal imposed conditions to mitigate the risk of anti-competitive information sharing post-merger. The merger was approved subject to these conditions, which are designed to ensure tangible benefits to the South African public and safeguard competition.
Court disposition
Merger approved subject to public interest and information sharing conditions.
Orders
- The proposed merger between Manta Bidco Ltd and Mediclinic International Plc is approved subject to the conditions set out in the Tribunal's decision.
- Mediclinic must perform at least 1000 pro bono surgeries in South Africa over the next five financial years.
- Mediclinic must spend at least R22.5 million on medical training at Wits Donald Gordon Medical Centre over three years.
- Mediclinic must sponsor training grants and bursaries for medical training of no less than R30 million over three years.
- Mediclinic must donate no less than R15 million to the National Department of Health Public Health Enhancement Fund or similar institution over three years.
- Mediclinic must cover the full annual tuition costs of no fewer than 1700 nursing students at an approximate cost of R80 million over five years.
- Mediclinic must spend at least R40 million in grants or loans to support Unjani Clinics or similar facilities in underserved communities over five years.
- Mediclinic must spend not less than R5 billion on procuring from Black-owned businesses over five years, including at least R2.5 billion from Black-owned exempted micro-enterprises and/or qualifying small enterprises.
- Mediclinic must incur no less than R5 billion of capital expenditure in its South African operations over five years.
- No retrenchments of permanent or fixed-term contract employees as a result of the merger for a three-year moratorium period.
- Mediclinic Southern Africa must establish an Employee Benefit Scheme within 18 months of the merger implementation date, which will endure on an evergreen basis.
- Mediclinic must comply with conditions imposed to mitigate information sharing risks post-merger.
02
Material facts
Parties
Manta Bidco Ltd
ApplicantMediclinic International Plc
RespondentAmounts and remedies
- Medical Training at Wits Donald Gordon Medical Centre: ZAR 22.5
- Medical Training Grants and Bursaries: ZAR 30
- Donations to Public Health Enhancement Fund: ZAR 15
- Nursing Student Tuition Costs: ZAR 80
- Enterprise and Supplier Development Grants or Loans: ZAR 40
- Procurement From Black Owned Businesses: ZAR 5,000
- Procurement From Black Owned Exempted Micro Enterprises And/or Qualifying Small Enterprises: ZAR 2,500
- Capital Expenditure in South African Operations: ZAR 5,000
03
Procedural history
Posture
Merger Application / Tribunal Approval With Conditions
04
Questions and positions
Legal issues
- 01
Whether the proposed merger between Manta Bidco Ltd and Mediclinic International Plc should be approved under South African competition law.
- 02
Whether the merger raises public interest concerns requiring conditions.
- 03
Whether the transaction poses risks of anti-competitive information sharing post-merger.
Party arguments
- Applicant
- The merging parties argued that the transaction would not substantially prevent or lessen competition in any relevant market. They submitted that the merger would bring significant public interest benefits, including commitments to support public healthcare, skills development, enterprise development, procurement from Black-owned businesses, and employment protection. They contended that the merger would not result in retrenchments and that information sharing risks could be mitigated through appropriate conditions.
- Respondent
- The Competition Commission and other interested third parties raised concerns regarding the potential for anti-competitive information sharing post-merger and the adequacy of public interest commitments. They sought clarification on the enforceability and scope of the proposed conditions, particularly regarding the impact on public healthcare, employment, and supplier development. The Commission recommended approval subject to robust conditions to address these concerns.
05
Court’s reasoning
Legal principles
- 01
Competition Act, 89 of 1998
A merger may be approved subject to conditions that address public interest concerns, including effects on employment, procurement, and enterprise development.
- 02
Competition Act, 89 of 1998
The Tribunal must consider whether a merger will substantially prevent or lessen competition, and if so, whether conditions can remedy such effects.
- 03
Competition Act, 89 of 1998
Mitigation of information sharing risks is necessary to prevent anti-competitive conduct post-merger.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed merger between Manta Bidco Ltd and Mediclinic International Plc does not substantially prevent or lessen competition in any relevant market. However, the transaction raises significant public interest considerations, particularly regarding the South African public healthcare sector, skills development, enterprise and supplier development, procurement from Black-owned businesses, capital expenditure, employment protection, and employee benefits. The Tribunal determined that these concerns could be adequately addressed through a comprehensive package of conditions, including commitments to perform pro bono surgeries, fund medical and nursing training, support clinics in underserved areas, procure from Black-owned businesses, and protect employment. Additionally, the Tribunal imposed conditions to mitigate the risk of anti-competitive information sharing post-merger. The merger was approved subject to these conditions, which are designed to ensure tangible benefits to the South African public and safeguard competition.
Obiter and limits
- The Tribunal notes the importance of ongoing collaboration between private healthcare providers and the public sector to address systemic challenges.
- The conditions imposed on this merger set a precedent for future transactions involving significant public interest considerations.
- The Tribunal encourages the merging parties to engage proactively with provincial health departments and other stakeholders to maximise the impact of the public interest commitments.
Court disposition
Merger approved subject to public interest and information sharing conditions.
- The proposed merger between Manta Bidco Ltd and Mediclinic International Plc is approved subject to the conditions set out in the Tribunal's decision.
- Mediclinic must perform at least 1000 pro bono surgeries in South Africa over the next five financial years.
- Mediclinic must spend at least R22.5 million on medical training at Wits Donald Gordon Medical Centre over three years.
- Mediclinic must sponsor training grants and bursaries for medical training of no less than R30 million over three years.
- Mediclinic must donate no less than R15 million to the National Department of Health Public Health Enhancement Fund or similar institution over three years.
- Mediclinic must cover the full annual tuition costs of no fewer than 1700 nursing students at an approximate cost of R80 million over five years.
- Mediclinic must spend at least R40 million in grants or loans to support Unjani Clinics or similar facilities in underserved communities over five years.
- Mediclinic must spend not less than R5 billion on procuring from Black-owned businesses over five years, including at least R2.5 billion from Black-owned exempted micro-enterprises and/or qualifying small enterprises.
- Mediclinic must incur no less than R5 billion of capital expenditure in its South African operations over five years.
- No retrenchments of permanent or fixed-term contract employees as a result of the merger for a three-year moratorium period.
- Mediclinic Southern Africa must establish an Employee Benefit Scheme within 18 months of the merger implementation date, which will endure on an evergreen basis.
- Mediclinic must comply with conditions imposed to mitigate information sharing risks post-merger.
Source and reliance status
Competition Tribunal
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Competition Tribunal
Judgment
Date of release: 24 March 2023
Competition Tribunal approves Bidco, Mediclinic merger with conditions that will benefit South Africa’s public healthcare sector
The Competition Tribunal (“Tribunal”) has approved the proposed merger whereby Manta Bidco Ltd (“Bidco”) intends to acquire Mediclinic International Plc (“Mediclinic”), subject to a package of public interest-related conditions that will benefit South Africa’s public healthcare sector. These include commitments by Mediclinic to, among others, perform free surgeries to help address surgical backlogs in public hospitals; pay for nurses’ tuition; financially support the upgrading of clinics or mobile health units in underserviced areas; procure from Black-owned businesses; and establish an employee benefit scheme. The Tribunal has also imposed conditions on the transaction that seek to address the risk of information sharing post-merger.
Merging parties
Bidco, incorporated under the laws of England and Wales, is a joint venture (“JV”) company controlled by Remgro Healthcare Holdings (Pty) Ltd (“RHH”) and SAS Shipping Agencies Services S.à.r.l. (“SAS”). RHH, in turn, is incorporated under the laws of the Republic of South Africa and SAS under the laws of the Grand Dutchy of Luxembourg.
Mediclinic is incorporated under the laws of the United Kingdom. It has primary listing on the London Stock Exchange and secondary listing on the JSE and Namibian Stock Exchange. Mediclinic’s shares are widely held and no single firm or individual directly or indirectly controls it. Mediclinic controls several firms, comprising mostly hospitals in various areas including Jersey, UK, Netherlands, Luxembourg and Southern Africa.
Conditions
Following a hearing during which the Tribunal heard submissions from the merging parties, the Competition Commission and other interested
third parties, and following requests by the Tribunal for clarification on certain aspects of the proposed transaction, the Tribunal approved the proposed merger with the conditions as summarised below:
Collaboration with the South African public health sector - Mediclinic will provide support in addressing surgical backlogs in South Africa’s public healthcare sector by performing, with partnering practitioners and specialists, at least 1000 pro bono surgeries at its facilities in South Africa in aggregate over its next five financial years. This will be subject to appropriate practitioners and specialists being available to perform the surgeries in line with healthcare practice. Among others, Mediclinic will consult with relevant provincial health departments where it has a presence regarding the nature and location of the surgeries. Recommendations made timeously by the National Department of Health, to the extent reasonably possible, affordable and practical, will be considered in delivering on this condition.
Doctor engagement programme - In line with Mediclinic’s undertakings to perform the pro bono surgeries, it also undertakes to implement a programme within its network of hospitals to engage with and encourage doctors to assist with pro bono surgeries.
Skills development and corporate social responsibility initiatives - In terms of funding allocations for medical training, Mediclinic will (for the next three financial years): spend at least R22.5 million on medical training at Wits Donald Gordon Medical Centre (Pty) Ltd, a public-private partnership between Mediclinic and Wits University; sponsor training grants and bursaries for medical training of no less than R30 million in aggregate over the period; and will make donations of no less than R15 million in aggregate over the period to the National Department of Health Public Health Enhancement Fund or similar South African medical training focused institution. On nurses’ training, Mediclinic will (for the next five financial years) cover the full annual tuition costs of no fewer than 1700 nursing students at an approximate cost of R80 million.
Enterprise and supplier development - Mediclinic will spend at least an aggregate total amount of R40 million (over the next five financial years) in the form of grants or loans to support Unjani Clinics or similar facilities in underserved communities, in the establishment or upgrading of at least 20 clinics and/or mobile health units, aimed at advancing the South African healthcare sector, particularly in underserviced areas.
Procurement - For its next five financial years, Mediclinic will, in aggregate, spend not less than R5 billion on procuring from Black-owned businesses. This will include spend of no less than R2.5 billion on procuring from Black-owned exempted micro-enterprises and/or qualifying small enterprises.
Capital expenditure - Mediclinic will incur no less than R5 billion of capital expenditure in its South African operations for its next five financial years.
Employment – The merged entity will not retrench any permanent or fixed-term contract employees as a result of the merger during a three-year moratorium period.
Employee Benefit Scheme – By the end of an 18-month period, calculated from the merger implementation date, Mediclinic Southern Africa will establish an Employee Benefit Scheme, in accordance with specified design principles. Qualifying workers will be entitled to receive a share of the profit after tax produced by, or within, the Mediclinic Southern Africa group or constituent components of the Mediclinic Southern Africa group. The Employee Benefit Scheme will endure on an evergreen basis.
Information sharing
In addition to the above commitments by Mediclinic, the Tribunal has also imposed conditions on the proposed merger to mitigate concerns relating to the exchange of competitively sensitive information post-merger.
Issued by:
Gillian de Gouveia, Communications Officer
On behalf of the Competition Tribunal of South Africa
Tel: +27 (0) 12 394 1383
Cell: +27 (0) 82 410 1195
E-Mail: GillianD@comptrib.co.za
Twitter: @comptrib
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