ACCC to oppose Sonic’s acquisition of the assets of Delta Imaging Group

17 January 2014

The Australian Competition and Consumer Commission has announced it will oppose the proposed acquisition by Sonic Healthcare Limited (Sonic) of assets of Delta Imaging Pty Limited (in liquidation), Delta Imaging Maitland Pty Limited (in liquidation) and Cscan Asset Pty Limited (in liquidation) collectively, the Delta Imaging Group.

The ACCC concluded that this proposed acquisition is likely to have the effect of substantially lessening competition in the market for the supply of MRI services in Newcastle and Maitland, and the market for the supply of general diagnostic imaging services in Maitland.

Delta Imaging operated two radiology practices in Maitland and Newcastle, providing general diagnostic imaging and MRI services. Delta Imaging also had two Medicare funded MRI units which were operated from its Newcastle practice.

“The proposed acquisition would result in Sonic being the only supplier of Medicare eligible MRI services in Newcastle and Maitland, outside of the public hospital system,” ACCC Chairman Rod Sims said.

“If Sonic acquires the Delta Imaging Group’s MRI units, it will remove a significant competitive constraint on Sonic, particularly in relation to the pricing of MRI scans.”

In Maitland, the proposed acquisition would result in Sonic being one of two private radiology companies that supply general diagnostic imaging services, with Sonic operating four out of five radiology practices.

“The proposed acquisition would remove a significant competitor in an already concentrated market and give Sonic the ability to increase prices charged to patients for services such as X-ray, CT scans and Ultrasounds,” Mr Sims said.

“The ACCC is also concerned that barriers to entry are significant and the threat of new entry is unlikely to constrain Sonic.”

“The ACCC is not satisfied that the public hospital providers of general diagnostic imaging services and MRI services in Newcastle and Maitland impose a sufficient constraint on Sonic to prevent a substantial lessening of competition,” Mr Sims said.

A Public Competition Assessment outlining the ACCC’s reasons for its decision will be available in due course.

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