Picture: 123RF/SAMSONOVS
Picture: 123RF/SAMSONOVS

The Competition Commission has launched an investigation into the merger between a small medical scheme for employees of oil company BP Southern Africa (BPSA) and SA’s third-biggest scheme Momentum Health, after a complaint from BP pensioners alleging the deal will scale back their benefits.

At the heart of the complaint is an allegation that the transaction will end the subsidies they receive from BP, benefits they say were given to them in perpetuity.

Employment, including employee benefits such as medical aid subsidies, is considered a matter of public interest by the Competition Commission, and it has previously imposed merger conditions that sought to protect such benefits.

The Competition Commission’s acting manager for mergers and acquisitions Tamara Paremoer said that if the investigation found  significant changes to employee benefits had not been disclosed during the merger assessment, it might change the commission’s finding.

Medical aid mergers require approval from the Competition Commission and the medical schemes regulator, the Council for Medical Schemes (CMS).

The Competition Commission approved the merger of BP Medical Aid Society (BPMAS) and Momentum on June 13 without conditions, but the transaction was turned down by the CMS on July 30. The CMS said a group of members had raised concerns about its effect on beneficiaries, but did not elaborate.

It has now emerged that a group of “continuation” members from BPMAS  have laid a complaint with the Competition Commission alleging that the merging parties failed to disclose that the transaction would end the generous subsidies they get from their former employer.

“In our view, it was a fraudulent nondisclosure, with the potential to cause financial loss to our members,” said John Bush, spokesperson for the BPMAS concerned members support group.

Continuation members include pensioners, provident fund members and former employees who were retrenched but remained eligible to be members of the scheme. BP provides them with a subsidy equal to half their contribution fees. This subsidy is set out in an agreement between BP and BPMAS and includes everyone who joined the company before September 1 2002.

The agreement, a copy of which has been seen by Business Day, was signed by BP and BPMAS, and says it cannot be terminated by either party. According to Bush, this means the subsidies for continuation members and their dependents were guaranteed for the rest of their lives.

The Competition Commission was not made aware that this agreement was to be replaced by one between BP Southern Africa and Momentum, which limited the continuation members’ subsidies to two years, said Bush. The replacement agreement, which Business Day has seen, says BP Southern Africa will pay a once-off capital injection of R83m to Momentum Health and retain the subsidies, but the agreement holds only  for two years.

Momentum principal officer Toni van den Bergh said Momentum was unaware of the agreement between BPMAS and BP.

“Momentum Health is aware that BPSA has a subsidy policy and has been advised that such a policy will continue to be accessible by current and retired employees. Such subsidies are between BP and its employees,’’ she said.

BPMAS principal officer Thabisiwe Mlotshwa said the scheme was not planning to change any benefits other than those an amalgamation would entail.

“Both current and former BP employees hold employment contracts, which firmly protect their rights and benefits before and after the amalgamation. We continue to work to achieve a successful amalgamation, which we believe to be in members’ best interests,” she said.

kahnt@businesslive.co.za