ACCC accepts pathology business divestitures in Healthscope Limited/Symbion Health Limited merger

The Australian Competition and Consumer Commission will not oppose Healthscope Limited's proposed merger with Symbion Health Limited after accepting an undertaking from Healthscope to divest a number of pathology businesses in the north-eastern and Gippsland regions of Victoria.

"The proposed acquisition, after taking account of the undertaking, is unlikely to substantially lessen competition under section 50 of the Trade Practices Act," ACCC Chairman, Mr Graeme Samuel, said.

"Competition concerns arose in regions within Victoria where the merged entity would be the sole or dominant provider of community pathology services; namely north-eastern Victoria and Gippsland," he said. "However, Healthscope has undertaken to divest the Gippsland pathology business, Benalla pathology business and Albury pathology business that are operated by Symbion and the Wangaratta pathology business operated by Healthscope, as part of the proposed acquisition."

The undertaking requires that Healthscope sells the divestiture business to a purchaser approved by the ACCC. The undertaking also requires Healthscope to preserve the divestiture business as a separate, fully operational and competitive going concern that is maintained and independently managed until it is sold.
"After extensive market inquiries on the impact of the proposed acquisition on competition in the relevant market and the effectiveness of the undertaking to address the ACCC's competition concerns, the ACCC was satisfied that the undertaking provides for the divestment by Healthscope of sufficient assets to enable a purchaser of those assets to compete effectively in the relevant market."

Healthscope's undertaking will appear on the ACCC's public register shortly. The ACCC will also issue a Public Competition Assessment on its decision which will be available on the ACCC website, under Mergers.

Background

Healthscope and Symbion each operate pathology businesses in markets for the provision of community pathology services and a market or markets for the provision of pathology services to public hospitals in Australia.

Healthscope proposes to acquire Symbion's pathology, medical centre and imaging businesses in Australia. Relevantly, Symbion's pathology businesses compete with Healthscope in markets for the provision of community pathology services.

The proposed acquisition is to be implemented by way of a scheme of arrangement under which all of the shares in Symbion will be acquired by Healthscope Investments, a wholly owned subsidiary of Healthscope. The scheme was announced by Healthscope and Symbion to the Australian Securities Exchange on 29 May 2007.

Immediately after implementation of the scheme, agreements will be entered into between Symbion and companies ultimately jointly owned by funds managed and advised by Ironbridge Capital and Archer Capital for the sale of Symbion's consumer products group and Symbion's pharmacy services and distribution group. The only businesses previously operated by Symbion that will remain in the control of Healthscope are Symbion's pathology, medical centre and imaging businesses.

The businesses to be divested by Healthscope are as follows:

The Gippsland business, which includes five category 'B' Accredited Pathology Laboratories, one category 'G' APL and 27 Approved Collection Centres. The Gippsland business employs four FTE pathologists, one casual pathologist and two pathologist registrars. The Gippsland pathology business also comprises Symbion's veterinary pathology business in Victoria and employs a veterinary pathologist.

The Albury business which includes one category 'G' APL and 9 ACCs.

The Benalla business which includes one category 'B' APL and three ACCs.

The Wangaratta business which includes one category 'B' APL and two ACCs.

In total, Healthscope has agreed to divest as part of the divestiture package 41 ACC licences.

A category 'G' APL is an unrestricted category laboratory where the full suite of pathology tests can be performed.

A category 'B' APL is an unrestricted category laboratory where the full suite of pathology tests can be performed, but which must have a documented agreement with a category 'G' APL to ensure that the range of pathology tests provided and the standard of work in the category 'B' APL is under the direction and control of a designated supervising pathologist or senior scientist of a category 'G' APL.