ConCourt upholds Competition Commission’s appeal in hospital merger

18th October 2021 By: Donna Slater - Creamer Media Contributing Editor and Photographer

The Competition Commission has welcomed a landmark judgment by the Constitutional Court (ConCourt), on October 15, upholding the commission’s appeal against a decision by the Competition Appeal Court (CAC) and setting aside the CAC’s decision in a matter concerning a merger between Mediclinic Southern Africa and Matlosana Medical Health Services (MMHS).

“This is a landmark and path-breaking judgment by the ConCourt in the history of competition law,” says Competition Commission Commissioner Tembinkosi Bonakele.

The commission and the Competition Tribunal concluded that merging ownership of the Mediclinic Potchefstroom, Wilmed Park and Sunningdale hospitals would likely lead to a substantial lessening of competition in the relevant market.

This historic judgment, written by Chief Justice Mogoeng Mogoeng, was handed down by Justice Majiedt, effectively setting aside the CAC judgment and order.

The commission notes that the tariffs of the three implicated hospitals would increase significantly as a result of the merger, in respect of both insured and uninsured patients.

However, the commission also notes that uninsured patients, an important and significant group, do not have the benefit of a medical aid scheme negotiating on their behalf.

In this regard, the commission says such groups are vulnerable considering consumer welfare and the importance of private healthcare in South Africa.

The commission says that, if the merger was approved, lower tariffs provided to uninsured patients at the MMHS hospitals would fall away and that the proposed merger would significantly affect the uninsured patients by limiting their ability to negotiate and switch to cheaper hospitals in the form of the MMHS hospitals.

The commission says the ConCourt judgment essentially answered the question as to whether the CAC, in law, was correct in interfering as it did with the findings of, and remedy given by the tribunal, to prohibit a merger in the private healthcare services sector.

It also affirmed the capability of the tribunal in analysing matters that require economic expertise.

Going forward, the commission has sought leave to appeal to the ConCourt against the decision of the CAC, to determine among other issues whether the CAC had regard to the relevant provisions of the Constitution and Competition Act, and acted in line with them.

This also pertains to whether the CAC paid proper attention to the preamble, purpose and relevant provisions of the Act, high costs in the private healthcare sector, the impact that the merger was likely to have on consumers within the context of considerations of public interest, if the merger was likely to substantially prevent or lessen competition, and the remedy proposed by the tribunal.

Bonakele says the judgment “unequivocally and emphatically vindicates” the commission on two important principles – firstly, the centrality of the Bill of Rights in the interpretation of the Competition Act and, secondly, the principle of deference to the economic expertise of the Competition Tribunal.

“It will certainly pave the way for the commission’s constitutional approach to other areas of competition law, including excessive pricing,” says Bonakele.

He adds that, more importantly, the judgment guarantees choice to the affected uninsured patients who may now be able to negotiate lower tariffs and switch to cheaper hospitals in the form of target hospitals.