SYDNEY, AUSTRALIA: The Australian Competition and Consumer Commission (ACCC) has expressed significant preliminary competition concerns over Australian Clinical Labs Limited’s (ASX:ACL) proposed acquisition of Healius Limited (ASX:HLS), a rival provider of pathology services.
The ACCC published a Statement of Issues today, outlining its concerns that the proposed acquisition would be likely to substantially lessen competition in Australian pathology services markets, affecting patients, hospitals, and veterinary clinics.
ACL and Healius are two of the top three providers of pathology services in Australia, competing closely with each other and offering services under well-known brands. The proposed acquisition would combine them into the largest provider of community pathology services in every state and territory in which they both operate, owning more than 50 per cent of approved collection centres across Australia.
The ACCC is concerned that the significant reduction in competition could lead to adverse 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 times.
The ACCC is also concerned that the proposed acquisition may reduce competition in public hospital pathology tenders, especially in Victoria, where public hospital pathology is more commonly outsourced to private providers. The combined ACL and Healius may be able to increase prices or reduce service quality in bids for public hospital tenders.
Furthermore, the ACCC is concerned that the proposed acquisition may lead to a substantial lessening of competition in veterinary pathology services. It would combine two important competitors in already concentrated markets for the supply of veterinary pathology services in Victoria and South Australia.
ACCC Commissioner Stephen Ridgeway said: “The ACCC is concerned that the proposed acquisition would be likely to substantially lessen competition in Australian pathology services markets. The proposed acquisition would combine two of the top three providers of pathology services in Australia, significantly increasing concentration in already concentrated markets.”
“Market 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.”
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