Life Healthcare hospital group‚ owner of Johannesburg’s Flora Clinic and the Vincent Palotti hospital in Cape Town‚ has been issued the biggest fine ever given by the Competition Tribunal for an illegal merger.

The private hospital group – the third largest in South Africa — has to pay R10 million rand for illegally joining with another hospital group in Durban in 2004 and setting hospital prices together.

The complaint was lodged by another hospital group.

Competition Commission spokesman Itumeleng Lesofe explained that merger regulation was enacted to protect consumers.

“The regulation seeks to prevent the creation of structures that may enhance firms’ ability to abuse their dominance to the detriment of consumers.

“For instance‚ some mergers result in the reduction of the number of competitors in the market and may result in price increases‚” said Lesofe.

Dominique Arteiro‚ director at Werksmans Attorneys‚ explained that “the Competition Act requires parties to notify competition authorities of large mergers so that those competition authorities can assess the competition and public interest effects of the large merger in question before it is implemented.”

In terms of the ruling Life and the other hospital group‚ Joint Medical Holdings‚ have to separate.

André Meyer‚ CEO‚ Life Healthcare Group said: “Life Healthcare Group is committed to complying with the terms of the consent agreement which includes payment of a fine‚ within three months of the date of the confirmation.”

The Competition Commission is currently holding a two-year long inquiry into costs of private healthcare and whether there are factors that distort or prevent competition.

Consumers face above inflation hospital and medical aid premiums every year.