In the first case where the Commerce Commission has been asked to look at the proposed amalgamation of hospital and health service providers, the Commission today cleared the merger of Western Bay Health Limited and Eastbay Health Limited.

Western Bay provides a range of health services mainly in the western Bay of Plenty, with its main facility being Tauranga Hospital. Eastbay provides a range of health services in the eastern Bay of Plenty region, including running Whakatane and Opotiki Hospitals.

Commission Chairman Peter Allport said that the Commission was satisfied that should the proposed amalgamation go ahead the combined entity would not acquire or strengthen a dominant position in any of the four relevant markets.

In this case, the Commission has defined the relevant markets as those for the provision of:

* primary health care services and facilities in the eastern and western Bay of Plenty;

* acute secondary healthcare services and facilities in the Bay of Plenty;

* elective secondary healthcare services and facilities in the Bay of Plenty; and

* tertiary healthcare services and facilities in the North Island.

The primary healthcare market would remain highly competitive should the proposed amalgamation go ahead, with numerous general practitioners and other health providers operating in the affected markets.

In the market for acute secondary healthcare, Western Bay and Eastbay are the only providers of these services and new entry is highly unlikely. The Commission is satisfied that the Health Funding Authority (HFA) would continue to constrain the combined entity and prevent it acquiring or strengthening dominance in this market.

While Western Bay and Eastbay are the main providers in the market for elective secondary healthcare, the combined entity would remain constrained by the purchasing power of the HFA and the Accident Rehabilitation and Compensation Insurance Commission (ACC).

The proposed amalgamation is unlikely to have any impact on the tertiary healthcare market.

Background

The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets. Parties can apply for a clearance, which the Commission will grant if it is satisfied that dominance is not acquired or strengthened.

A clearance, if granted, protects an acquisition from court action under the Act.

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