Late last week the Competition Tribunal approved a consent order in terms of which Life Healthcare Group and Joint Medical Holdings agreed to pay a R10 million fine for implementing a merger without approval.
The case follows the 2012 merger application made by the parties when Life Healthcare Group applied to increase its shareholding in Joint Medical Holdings from 49% to 70%. What became clear during the merger hearing was that Life Heathcare Group had practically controlled Joint Medical Holdings, including negotiating prices for it, since it increased its shareholding in Joint Medical Holdings from 25% to 49%.
While the fine is making headlines because it is the largest fine imposed for implementing a merger without approval, the really interesting thing about the consent order is the fate of the Competition Commission’s price fixing allegation. Fixing a buying price is as much a contravention of the price fixing prohibition as fixing a selling price. Indications are that the healthcare market enquiry may recognise that collective negotiation of buying prices may have pro-competitive benefits. One wonders if that is the reason for the Competition Commission’s willingness to let go of a price fixing case which historically has proved to be the easiest and most newsworthy of its prohibitive practice prosecution. It seems that market enquiries may have the potential to do more than establish the status of a market, they have the potential to shape policy.
Halfway through March 2016 the enquiry announced that it was rescheduling the second phase of its public hearings. The new schedule has still to be announced. The saga continues…….