Phodiclinics’ Acquisition of New Protector: Increasing Concentration?

Description

Phodiclinics’ Acquisition of New Protector: Increasing Concentration?: Abstract

Phodiclinics’ Acquisition of New Protector: Increasing Concentration? is a case study by John Luiz and Eulalie Metton.

On 31 October 2006, executives at the Council for Medical Schemes (CMS) and private hospital group Netcare were eager to hear the Competition Tribunal’s decision regarding the acquisition of the New Protector Group hospitals by Phodiclinics (Pty) Ltd (a division of the Medi-Clinic Group) and DHJ Defty. Phodiclinics had made the bid in 2005 after New Protector had been placed under provisional liquidation in late 2004. On 3 March 2006, the Competition Commission had recommended to the Tribunal that the transaction be approved without conditions.

Epilogue

Despite the fact that the summary of the Tribunal’s deliberations, with non-confidential information only, ran to some 63 pages, its decision was straightforward. The Tribunal considered that New Protector was a failing firm – “or more precisely, a failed firm, within the meaning of the Competition Act 1998” – at the time of the merger transaction. It considered further that the failing firm consideration outweighed any potential loss to competition that may arise as a result of this transaction.

Multi-part case

• Part A
• Part B: Epilogue (only available with a Teaching license purchase)
• Part C: Competition Commission: 1999–2009 Background Note (only available with a Teaching license purchase)

Teaching objectives

This case is intended to generate learning and discussion about the principles of competition theory, especially as it relates to concentration. It can be used in conjunction with the Competition Commission Background Note that is part of this series. Epilogue This is the epilogue to the case with the same name. It explains the ruling of the Competition Tribunal and should be used in conjunction with the main case.