The Australian Competition and Consumer Commission will conduct a public merger review of the proposed acquisition of Adelaide Pathology Partners (APP) by Sonic Healthcare Limited and its subsidiary, Clinpath Laboratories Pty Ltd, (together, Sonic).
The ACCC will investigate whether the proposed acquisition is likely to have the effect of substantially lessening competition in a market, in breach of section 50 of the Competition and Consumer Act 2010.
“Given the position of Sonic and APP as two of the four biggest suppliers of pathology services in South Australia, the ACCC’s investigation will focus on whether the removal of APP as a competitor would substantially lessen competition between pathology service providers in South Australia,” ACCC Chairman Rod Sims said.
“The ACCC is seeking urgent feedback from interested parties, including competitors and customers of pathology services, who have concerns or may be impacted by this acquisition,” Mr Sims said.
In particular, the ACCC seeks the views of interested parties on the likely impact of the proposed acquisition on:
the degree of bulk billing for the supply of community pathology services in South Australia generally, and by Clinpath in particular; and
the quality of community pathology services in South Australia, such as range of tests and trading hours of collection centres in South Australia generally, and by Clinpath in particular.
The ACCC is seeking responses to the market inquiries letter, which is available on the ACCC’s mergers register by no later than next Friday, 13 November 2015.
While the proposed acquisition has not yet occurred, the ACCC anticipates that it may be completed before the ACCC is able to finalise its review. In these circumstances, no expected decision date for the ACCC's decision following its informal merger review is being announced.
Further information regarding the proposed acquisition is available on the ACCC’s public register.
Background
Sonic, operating as Clinpath Pty Limited, and APP are both suppliers of pathology services in South Australia. Their pathology services are supplied to out-patients and private hospital in-patients that attract a Medicare rebate. Sonic and APP operate over 70 and 60 approved pathology collection centres in South Australia respectively.
The ACCC’s investigation will focus on the impact of the proposed acquisition on competition for the supply of community pathology services in South Australia.
In Australia there are no mandatory requirements for parties to a proposed transaction to notify the ACCC. However, merger parties are encouraged to, and typically do, approach the ACCC well before a merger is completed, if there is any uncertainty as to whether the merger may raise competition concerns.
If a transaction completes without ACCC approval and the ACCC successfully establishes before the court that the acquisition has the likely effect of substantially lessening competition in a market, the court may impose penalties on the merger parties and make other orders including requiring the acquirer to divest the assets or declaring the transaction to be void.