A combined Australian Clinical Labs/Healius entity would lead to reduced competition and increased costs for patients, the watchdog says.
The Australian Competition and Consumer Commission has expressed âsignificant concernsâ with Australian Clinical Labsâ plans to acquire pathology and diagnostic imaging provider Healius.
On 20 March this year, ACL made an unconditional takeover offer to acquire 100% of the shares in Healius for scrip consideration of 0.74 ACL shares for every 1 Healius share. The Healius board unanimously recommended shareholders reject the offer.
Yesterday the ACCC said that it believed a combined ACL/Healius entity would result in a âsignificant reduction in competitionâ that could lead to âadverse consequences for patients, including reduced levels of bulk billing, higher co-payments for privately billed services, collection centre closures, less frequent collection of samples, or longer turnaround timesâ.
âThe ACCC is concerned that the proposed acquisition would be likely to substantially lessen competition in Australian pathology services markets,â ACCC Commissioner Stephen Ridgeway told the media.
ACL and Healius both supply pathology services to the community, private and public hospitals, and veterinary clinics. They compete closely with one another and offer services under well-known brands familiar to many in the community.
âThe proposed acquisition would combine two of the top three providers of pathology services in Australia, significantly increasing concentration in already concentrated markets,â Mr Ridgeway said.
The combined ACL and Healius would be the largest provider of community pathology services in every state and territory in which they both operate, owning more than 50% of approved collection centres across Australia.
âMarket feedback has identified strong concerns about the impact of this acquisition on community pathology services, and there is the potential for even greater impacts in regional and remote areas,â said Mr Ridgeway.
In Victoria, where public hospital pathology is more commonly outsourced to private providers compared to other states, ACL and Healius are two of only three private providers of public in-patient services.
âThe ACCCâs preliminary view is that the combined ACL and Healius may be able to increase prices or reduce service quality in bids for public hospital tenders, which would particularly affect Victoria,â said the ACCCâs announcement.
âAdditionally, the proposed acquisition may lead to a substantial lessening of competition in veterinary pathology services.
âIt would combine two important competitors in already concentrated markets for the supply of veterinary pathology services in Victoria and South Australia,â Mr Ridgeway said.
The ACCC has invited submissions in response to its Statement of Issues by 10 August 2023.
Other pathology providers in the market include Sonic and 4Cyte, as well as not-for-profit and public pathology providers.
