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THEE - The Competition Commission - Competition Commission recommends prohibition of healthcare merger MEDIA RELEASE 19 January 2012 Competition Commission recommends prohibition of healthcare merger The Competition Commission has made a recommendation to the Competition Tribunal to prohibit the acquisition of Joint Medical Holdings Ltd ("JMH``) by Life Healthcare Group (Pty) Ltd ("LHG``), a wholly owned subsidiary of Life Healthcare Group Holdings Ltd. According to the Commission`s assessment, LHG is increasing its shareholding in JMH from joint to sole control. LHG owns various hospitals throughout South Africa whilst JMH owns five hospitals in and around the Durban area. As such, the product overlap occurs in the Durban area. The Commission found that the combination of LHG and JMH creates regional dominance which undermines the ability of funders to stimulate competition between hospitals in the Durban area by pitting them against each other when negotiating terms and conditions of service. The proposed merger is likely to lead to the erosion of the countervailing power of large medical schemes especially in terms of their ability to construct cost-effective Designated Service Provider Networks. Such networks enable medical funders to achieve discounts from hospitals, which translate into lower contribution rates by medical aid members. Furthermore, a shift from joint to sole control of JMH could mean that the countervailing power of the non-LHG shareholders, who are mostly doctors, will be substantially reduced. The proposed merger is likely to substantially prevent or lessen competition in the Durban area and consequently lead to increases in the cost of healthcare. "We are concerned about what seems like creeping concentration and regional dominance of the hospital groups, and assess hospital mergers very carefully", said Shan Ramburuth, the Competition Commissioner. ENDS For further details contact: Molebogeng Taunyane, Coordinator: External Communication 012 394 3289/082 646 8663/ molebogengt@compcom.co.za Date: 19/01/2012 14:41:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
