Medi-Clinic Corporation Limited and Curamed Holdings Limited (74/LM/Oct02) [2003] ZACT 12 (4 March 2003)
The Tribunal found that the merger between Medi-Clinic and Curamed would not substantially lessen or prevent competition in the market for private hospital services. The parties do not compete in the same geographic market, and the merged entity's market share in the Gauteng region would remain modest, with...
Source-derived case information.
- Citation
- [2003] ZACT 12
- Parties
- Applicant: Medi-Clinic Corporation Limited; Respondent: Curamed Holdings Limited
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- 74/LM/Oct02
- Procedural Posture
- Large Merger / Approval
- Outcome
- Merger unconditionally approved.
- Judges
- N. Manoim, D. Lewis, U. Bhoola
- Legal Topics
- Merger Control, Market Definition, Public Interest, Empowerment Transaction
Source-derived case record
Summary, issues, holding and outcome
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Parties
Medi-Clinic Corporation Limited
Applicant
Curamed Holdings Limited
Respondent
Procedural Posture
Large Merger / Approval
Legal Issues
- 1 Whether the merger between Medi-Clinic and Curamed will substantially lessen or prevent competition in the market for private hospital services.
- 2 Whether the transaction raises any adverse public interest concerns, including job losses or empowerment issues.
Ratio Decidendi
The Tribunal found that the merger between Medi-Clinic and Curamed would not substantially lessen or prevent competition in the market for private hospital services. The parties do not compete in the same geographic market, and the merged entity's market share in the Gauteng region would remain modest, with significant competitors and independent hospitals present. The transaction would not result in any job losses or other adverse public interest effects. The empowerment aspect of the transaction was considered and found to be positive. Accordingly, the Tribunal agreed with the Commission's recommendation and unconditionally approved the merger.
Court Disposition
Merger unconditionally approved.
Orders
- The merger between Medi-Clinic Corporation Limited and Curamed Holdings Limited is unconditionally approved.
Full Case Text
Judgment text and source record
36 paragraphs
COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 74/LM/Oct 02
In the large merger between:
Medi-Clinic Corporation Limited
and
Curamed Holdings Limited
_______________________________________________________________________
Reasons for Decision
Approval
On 4 December 2002 we unconditionally approved the merger between Medi-Clinic Corporation Limited (âMedi-Clinicâ) and Curamed Holdings Limited (âCuramedâ).
Our reasons for this decision follow.
The parties
The primary acquiring firm is Medi-Clinic, a listed company whoâs controlling shareholder is Industrial Partnership Investments Limited, a wholly owned subsidiary of Remgro Limited. To give effect to the transaction Medi-Clinic and three empowerment partners have created a special purpose vehicle, Tshwane Private Hospitals (âTshwane Hospitalsâ).
The primary target firm is Curamed, a private company, in which the De Muelenaere Family hold 40% of the shares, while the remaining 60% is held by the supporting doctors, medical aids, stakeholders share incentive trusts and the Von Wielligh Family.
The transaction
Tshwane Hospitals will acquire a majority stake in Curamed, initially through the acquisition of 39.98% and later through an offer to the minority shareholders.
Evaluating the merger
The relevant market
Medi-Clinic controls 36 hospitals, which offer a wide range of general and specialized health care facilities and services. Similarly, Curamed operates 6 hospitals in the Pretoria area.
Relying on the Tribunalâs decision in Afrox Healthcare Limited and Amalgamated Hospitals Limited 1 the Commission defined the relevant product market as the market for the provision of private hospital services. Broadly this definition accounts for the provision of both general and specialized health care facilities and services and excludes public hospitals.
In defining the relevant geographic market the Commission based itâs finding on the local market radius of between 20 and 40km, as deliberated but not determined in the Afrox decision. Since Medi-Clinic does not have a presence within 50-60kmâs of any of Curamedâs hospitals, the Commission concluded that the parties do not compete in the same geographic market.
Nonetheless at the hearing of this matter, the Commission provided us with the approximate market shares of participants in the Gauteng region. According to the Commissionâs investigation the merged entity will enjoy no more than 16.3% of the market share for the region. Its major competitors in the region are the Afrox and Netcare Groups. In addition 8 independent hospitals are active in this area.
Effect on competition
Based on its delineation of the geographic market the Commission concluded that no competition issues arise from the transaction.
We accept that the merger will not substantially lessen or prevent competition in the market for the provision of private hospital services, on any definition of the geographic market.
Public interest Issues
The transaction will not result in any job losses and there are no other adverse public interest concerns. The Commission considered the empowerment aspect of the transaction in terms of Section 12A(3)(c).
Conclusion
Accordingly, we agree with the Commissionâs recommendation that the transaction be unconditionally approved.
4 March 2003
N. Manoim Date
Concurring: D. Lewis, U. Bhoola
For the merging parties: Brink Bonsma & de Bruyn Attorneys
For the Commission: J. Mokwana, Legal Services Division, Competition Commission
1 Case no. 53/LM/Sep01. See http://www.comptrib.co.za/