Yesterday, in a move significant for the whole health sector, the Commerce Commission has for the first time been asked to look at a proposed merger in the sector.

Commission Chairman Peter Allport said that Western Bay Health Limited and Eastbay Health Limited have applied for clearance of what is described in the application as a proposed amalgamation. Western Bay runs Tauranga Hospital and Eastbay runs Whakatane Hospital.

Mr Allport said that the significance of the Commission's decision will be that it will explain how New Zealand's competition law applies to business acquisitions in the health sector.

The Commission expects to make its decision by November 16.

The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets. It also gives organisations involved in an acquisition the right to apply to the Commission for a clearance.

A clearance is granted if the Commission is satisfied that dominance is not acquired or strengthened. If granted, it protects the acquisition from court action under the Act.

To make its decision, the Commission must determine what are the relevant markets and what impact the amalgamation would have on competition in those markets.

The Act gives the Commission 10 working days to make a decision, though it does allow for extensions if necessary.

Background

The health sector was deregulated in 1993. It is a multi-billion dollar a year industry and the Commerce Act applies to it in the same way as it does to all other industries. This is the first time since 1993 that the Commission has looked at an amalgamation in the sector.

The Commission's Business Acquisitions Guidelines, which detail the economic and legal issues the Commission must consider, the public register of applications and full public copies of previous business acquisitions decisions can be viewed on the Commission's website www.comcom.govt.nz

Earlier this year the Commission published guidelines on how the Act applies to the health sector. The guidelines are available in hard copy from Commission offices.

Media contact: Commerce Act Manager Geoff Thorn

Phone work (04) 498 0958

Communications Officer Vincent Cholewa

Phone work (04) 498 0920

Commission media releases can be viewed on its web site www.comcom.govt.nz