Commerce Commission authorises merger of Southern Cross and Aorangi Hospitals in Palmerston North
28 July 2011
The Commerce Commission has authorised the merger of the Palmerston North private hospital operations of Southern Cross Hospitals Limited and Aorangi Hospital Limited. If the merger proceeds, there will be only one provider of private hospital services in Palmerston North.
Southern Cross and Aorangi made a joint application under section 67(1) of the Commerce Act for the Commission to authorise the formation of a joint venture between the two. Under the Commerce Act, the authorisation process requires the Commission, in a merger scenario, to weigh the detriments from any loss of competition against any public benefits that would arise from the merger.
"In this case the merger will reduce competition for the provision of private elective surgical services in the MidCentral DHB region and as a result, may lead to some price rises," said Commerce Commission Chair Dr Mark Berry.
"However, the Commission found that the majority of patients would be protected from price increases as their procedures would be funded by ACC or through fixed-price arrangements between insurance companies and the private hospital. In addition, there would be substantial cost savings from the rationalisation of the two businesses that would outweigh the detriments," said Dr Berry.
For these reasons, the Commission concluded that the merger should be authorised.
The written reasons for the decision will be available tomorrow on the Commission's web site at: www.comcom.govt.nz/southern-cross-hospitals-ltd-and-aorangi-hospital
What is an application for authorisation?
Any person who proposes to acquire assets of a business or shares and considers that the acquisition may breach s47 of the Commerce Act, can make an application for an authorisation under s67 of the Act. The Commission must grant authorisation under s 67(3)(b) of the Act if it is satisfied that the acquisition will result, or will be likely to result, in such a benefit to the public that it should be permitted. Otherwise it must decline authorisation.