The Competition Commission of South Africa (Commission) has welcomed a landmark judgment by the Constitutional Court (“ConCourt’’) which has upheld the Commission’s appeal against a decision by the Competition Appeal Court (“CAC”), setting aside the CAC’s decision in the matter concerning a merger between Mediclinic Southern Africa (Pty) Ltd (“Mediclinic”) and Matlosana Medical Health Services (“MMHS”).  This historic judgment, penned by Chief Justice Mogoeng Mogoeng, was handed down by Justice Majiedt on Friday 15 October 2021 and effectively set aside the CAC judgement and order. 

The Commission and the Tribunal concluded that putting together Mediclinic Potchefstroom, Wilmed Park and Sunningdale hospitals will likely lead to a substantial lessening of competition in the relevant market.  The tariffs of the target hospitals would increase significantly as a result of the merger, in respect of both insured and uninsured patients. Uninsured patients, an important and significant group, do not have the benefit of a medical aid scheme negotiating on their behalf and from a public interest perspective. They are vulnerable when one considers consumer welfare and the importance of private healthcare in South Africa. As a result of the merger, the lower tariffs provided to uninsured patients at the MMHS hospitals would fall away. The proposed merger would significantly affect the uninsured patients by limiting their ability to negotiate and switch to cheaper hospitals in the form of the MMHS hospitals

The ConCourt Judgment essentially answered the question whether the CAC, in law, was correct in interfering as it did with the findings of, and remedy given by the Competition Tribunal to prohibit a merger in the private health care services sector. It also affirmed the capability of the Competition Tribunal in analysing matters that require economic expertise. 

The Commission had sought leave to appeal to the ConCourt against the decision of the CAC, to determine among other issues whether the CAC had regard to the relevant provisions of the Constitution and Competition Act, and acted in line with them, and if it paid proper attention to the preamble, purpose and relevant provisions of the Act, high costs in the private health care sector, the impact that the merger was likely to have on the consumers within the context of considerations of public interest, if the merger was likely to substantially prevent or lessen competition, and the remedy of the Competition Tribunal.

“This is a landmark and path breaking judgement by the Constitutional Court in the history of Competition Law. The judgement 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 judgement 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,” says Competition Commissioner Tembinkosi Bonakele.

 

Issued by The Competition Commission of South Africa Spokesperson Siyabulela Makunga