Concerned academics and healthcare activists have urged the Competition Tribunal to impose tighter conditions to the multibillion-rand takeover of Mediclinic by a Remgro-led consortium, citing possible conflict of interest.
The group asked the Tribunal to ensure cross-sharing of information was restricted between the numerous groups in which Remgro holds stakes.
Remgro’s shareholding in Discovery and Momentum Metropolitan Holdings (MMH) was the focus last week of public hearings held by the Competition Tribunal over the multibillion-rand takeover of Mediclinic by a Remgro-led consortium.
Remgro, Johann Rupert’s investment vehicle, already owns 44.56% of Mediclinic. The company, in partnership with Mediterranean Shipping Company (MSC), last year made an offer of £3.7bn to acquire the rest of Mediclinic and delist it from the JSE.
Business Day reports that Mediclinic’s board finally accepted the bid, after turning down three previous ones that it said were too low.
Although the Competition Commission later recommended that the transaction be approved with conditions, the group of concerned academics and civil society organisation Section27, while not totally opposing the merger, said the scale of the merger and the players involved called for deeper interrogation in the context of the systemic challenges highlighted in the health market inquiry.
“We are not opposing the merger, but … whether the structure of conditions is appropriate, given the systemic risks involved with players of this scale,” said Wits professor Alex van den Heever.
Questioning the possible conflict of interest and integrity of the existence of a potential relationship between the healthcare funders and a major hospital group which is in a position to influence demand, they said the owners’ corporate structures allowed for strategic developments, at their discretion, in any part of the SA private health system.
“A merger without conditions that address competition concerns would pose risks to the private health system by leaving the decision to invest strategically on both the supply and demand side entirely at the discretion of Manta and Remgro,” Van den Heever said.
Manta Bidco is a newly formed company owned by a subsidiary of Remgro and a wholly owned subsidiary of MSC.
Remgro also has an 18% interest in the National Healthcare Group, which has a wide variety of provider networks and health insurance, including network formation arrangements.
However, counsel for the merging parties, Michelle le Roux, said there were no competition or public interest concerns arising from the transaction.
She said Remgro holds only non-controlling interests of 7.7% in Discovery and 8.6% in MMH, and that Remgro was not entitled to appoint any directors on those boards, nor was it able to access any confidential information.
“The relationship with Discovery or MMH is not one that could lead to any of the kinds of concerns mentioned in the submissions,” said Le Roux, adding that the company only gets publicly available information from the JSE.
The conditions proposed by the Competition Commission include a moratorium on retrenchments, the creation of an employee benefits scheme, a commitment to procure from local black-owned and emerging businesses over the next five years, and funding of skills development.
The competition watchdog also wants a commitment from Mediclinic to assist in relieving the public healthcare sector backlog of surgeries by performing 1 000 pro bono surgeries over the next five years.
The consortium said the package of voluntary conditions agreed on with the Department of Trade, Industry & Competition and the commission related to its proposed takeover of Mediclinic was sufficient to satisfy merger-specific concerns while the buyout is unlikely to lessen competition in the healthcare sector.
The concerned parties have called for the tribunal to strengthen the recommended conditions by the Competition Commission, namely collaboration with the public health sector and ensuring that the doctor collaboration programmes are enforced.
Business Day PressReader article – Mediclinic bid puts Remgro stakes in focus (Open access)
See more from MedicalBrief archives:
Mediclinic and Remgro reach agreement on buyout offer
Johann Rupert group in Mediclinic takeover bid
Mediclinic board turns down cash bid to buy it out