SummarySonic Healthcare Limited proposed to acquire Accord Diagnostics, a pathology business of Endeavour HealthCare Limited in NSW and WA.
Market definitionThe ACCC considered that the relevant markets were the supply of pathology services, excluding services to public hospital in-patients, in Western Australian and New South Wales.
Competition analysisThe ACCC considered that, in the relevant markets:
* barriers to entry and expansion are high and furthermore, the likelihood of new entry to constrain the merged firm is very limited;
* market concentration exceeds the ACCC's thresholds; and
* there are no significant regulatory constraints to the merged entity increasing prices.
However, despite these factors, it does not appear that the acquisition is likely to substantially lessen competition because:
* in the relevant markets Sonic will be constrained by the existence of major national players; and
* the proposed acquisition will not result in the removal of a vigorous and effective competitor.
The ACCC noted that the acquisition of Accord by Sonic may have resulted in a small increase in Sonic's market shares, however, future acquisitions will be closely scrutinised by the ACCC to assess whether such acquisitions would be considered to be of a creeping nature causing a proposed acquisition by Sonic to potentially contravene section 50 of the Trade Practices Act. The ACCC considers all merger factors and where a proposed acquisition is likely to contravene section 50, the ACCC will act to intervene even if the target's market share is small or the commercial value of the proposed transaction is low.