ConCourt ruling will stop medical corporations unfairly monopolising private hospitals

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The Competition Commission of SA says that a landmark decision by the Constitutional Court last week will stop medical corporations from unfairly monopolising private healthcare.

The Constitutional Court last week upheld the commission’s appeal against a decision setting aside its decision in allowing a merger between Mediclinic Southern Africa (Mediclinic SA) and Matlosana Medical Health Services.

Mediclinic SA wanted to acquire two hospitals owned by Matlosana Medical Health Services in the North West: Sunningdale Hospital and Wilmed Park.

Mediclinic SA began the process to acquire the hospitals in 2016.  

“The result of the merger, if it were approved, would be that post-merger Mediclinic SA will own and operate Mediclinic Potchefstroom together with Wilmed Park and Sunningdale hospitals in the area covering the Ditsobotla, City of Matlosana and JB Marks local municipalities.

“This area has five hospitals — Wilmed Park, Mediclinic Potchefstroom, MooiMed, Life Anncron and Sunningdale hospitals. Post-merger, Mediclinic SA will own and operate more than half of the multidisciplinary private hospitals located in this area,” said the commission.

In the  judgment written by chief justice Mogoeng Mogoeng and handed down by justice Steven Majiedt, he called the lack of competition an “over indulgence”.

“It ought never to be acceptable for any of us, including the corporate citizens of this land, to indulge, talk less of over-indulge, in the unconscionable practice of seeking to record the highest profit margin possible by any means necessary, in wanton disregard for what that would do to the rest of humanity. Neither should the historic exclusion of some from meaningful participation, particularly in the mainstream economy, be normalised,” read the judgment.

Spokesperson for the commission Siyabulela Makunga said high levels of concentration in the healthcare sector has led the commission to conducting a healthcare market inquiry report.

The report, which was released in 2019, said there is a worrying lack of competition in the SA private healthcare space.

Makunga said mergers following this decision will be assessed on a case by case assessment.

“Each hospital merger will be treated on its own merits to assess its impact on competition. It will be a case by case assessment. In this case [Mediclinic and Matlosana] there was clear evidence that the merger would lead to tariff increases at the target hospital,” said Makunga.

Competition commissioner Tembinkosi Bonakele said the judgment vindicates the Commission Tribunal as the economic expert on such competition matters. 

“This is a landmark and path-breaking judgment by the Constitutional Court in the history of competition law. 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. 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,” said Bonakele. 

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