Tribunal seeks to block Mediclinic’s acquisition of North West hospitals
The Competition Tribunal is appealing against a ruling allowing the private hospital group’s acquisition of hospitals to proceed
The Competition Tribunal has asked the Constitutional Court for leave to appeal a ruling allowing Mediclinic to acquire hospitals in the North West, the private hospital group said on Friday.
In February the Competition Appeal Court had ruled in favour of the hospital group, after it appealed a decision by the Competition Tribunal to block its acquisition of Matlosana Medical Health Services (MMHS).
Mediclinic’s plans to acquire Klerksdorp-based MMHS had been blocked by the Competition Commission in 2019, which said at the time should the acquisition proceed there would be substantial lessening of competition in the area and prices that were likely to rise.
The tribunal had said if the transaction was approved it would increase costs for both medical scheme members and patients who paid their own bills, and that it had evidence Mediclinic had previously attempted to leverage its dominance in one geographic region where it did not face much competition.
Mediclinic said on Friday it had filed an answering affidavit opposing the application for leave to appeal, and would participate if the matter was set down for a hearing.
The acquisition includes two multidisciplinary hospitals, namely the 185-bed Wilmed Park Hospital and the 62-bed Sunningdale Hospital. In addition, the acquisition includes a 51% share in the 50-bed Parkmed Neuro Clinic psychiatric hospital. This is currently on hold pending the legal process, and Mediclinic has declined to go into details regarding how much it would pay for MMHS.
In a trading update on Friday, Mediclinic said group revenue for its year to end-March was largely in line with expectations. In constant-currency terms, revenue had risen about 4% from the prior comparative period’s £2.9bn (R67bn).
Mediclinic CFO Jurgens Myburgh said on Friday that March was typically a busy month in terms of elective surgeries, and therefore lockdowns related to the Covid-19 pandemic had already had an effect on the group's results.
This is also expected to have a severe effect on its 2021 financial year, the group said.
Mediclinic CEO Ronnie van der Merwe said the group's current priority was dealing with the pandemic, but expected many delayed elective surgeries to be rescheduled once the peak of the outbreak passed.
The group is cutting capital expenditure and other spending to shore up its balance sheet, and suspending its dividend, saying it would give further details during the release of its forthcoming results, scheduled for May.
In afternoon trade on Friday, Mediclinic's share price was down 0.66% to R60.60, having fallen 21.47% so far in 2020. Over the same period of time, the JSE's healthcare index had lost 16%.
Update: April 17 2020
This article has been updated with additional information