On 11 October 2012, the Australian Competition and Consumer Commission (ACCC) announced its decision to oppose Sonic Healthcare’s then-proposed acquisition of Healthscope’s Queensland pathology business.
On 28 August 2013, the ACCC published its Public Competition Assessment in relation to that decision.
In its assessment, the ACCC considered that there was a separate market for the supply of community pathology services – ie services provided to out-patients referred by general practitioners and specialist and private in-patients at public and private hospitals in Queensland. The ACCC considered that Sonic and Healthscope, together with Primary Healthcare, were the major suppliers of these services, with an aggregate market share of up to 90%.
Although Healthscope’s market share was relatively low (10%), the ACCC’s market inquiry concluded that it imposed a strong competitive constraint on Sonic (35%) and Primary (50%).
Interestingly, in support of that view, the ACCC noted an attempt by Sonic to change its billing policy so as to privately bill a greater proportion of its patients in Queensland in 2009. The ACCC considered that, based on the information provided by Sonic, Healthscope and third parties, Healthscope had played a significant role in disrupting a potentially broader move by Sonic and Primary to privately bill a larger proportion of patients in Queensland.
The ACCC also concluded that none of the smaller pathology providers in Queensland was likely to replicate the competitive constraint provided by Healthscope.
In the same decision, the ACCC cleared Sonic’s acquisition of Healthscope’s pathology businesses in Western Australia and the ACT. In these areas, the ACCC concluded that there would remain a substantial number of pathology providers that would continue to constrain Sonic.