Commerce Commission reaches preliminary view to approve Palmerston North private hospital merger
Published01 Jul 2011
The Commerce Commission has reached a preliminary view that it should allow Southern Cross Hospitals Limited and Aorangi Hospital Limited to merge their Palmerston North private hospitals.
The Commerce Commission has reached a preliminary view that it should allow Southern Cross Hospitals Limited and Aorangi Hospital Limited to merge their Palmerston North private hospitals.
The Commission has today published its draft determination on the application made under the Commerce Act for authorisation of the proposed merger.
The Commission's preliminary view is that the proposed acquisition would substantially lessen competition in the markets for the provision of private elective surgery in Palmerston North. The Commission also considers there would be the potential for Southern Cross and Aorangi to raise prices after the merger because of the loss of competition between the hospitals.
"However, at this preliminary stage, the Commission considers that the majority of patients would be protected from price increases as their procedures would be funded by ACC and through fixed-price arrangements between insurance companies and the hospital. Also, there would be benefits such as cost savings that would outweigh the loss of competition," said Commerce Commission Deputy Chair Sue Begg.
The Commission is seeking submissions on its draft determination by 15 July 2011. Submissions will be posted on the Commission's website. The Commission will release the final determination on the proposed merger by 29 July 2011.
Any person who proposes to acquire assets of a business or shares and considers that the acquisition may breach s47 of the Commerce Act can make an application for an authorisation under s67 of the Act.
Section 67(3)(a) of the Act requires the Commission to give clearance for a proposed acquisition if it is satisfied that the proposed acquisition will not have, and would not be likely to have, the effect of substantially lessening competition in a market. If the Commission is not so satisfied, clearance must be declined, although it may still grant an authorisation under s 67(3)(b) of the Act if the Commission is satisfied that the acquisition will result, or will be likely to result, in such a benefit to the public that it should be permitted.
If the Commission is not satisfied that the acquisition will result, or will be likely to result, in such a benefit to the public that it should be permitted, it must decline an authorisation under section 67(3)(c).
