| Tue 11 Mar 2008, 7:30 | | NTC - Network Healthcare Holdings Limited - Press |
|
NTC
NTC
NTC - Network Healthcare Holdings Limited - Press Release
Network Healthcare Holdings Limited
Registration number 1996/008242/06
Incorporated in the Republic of South Africa
JSE share code: NTC
ISIN code: ZAE000011953
("Netcare" or "the company")
Press Release
The Tribunal today indicated that it would not approve the agreement between
Netcare and the Competition Commission to resolve the issues relating to
Netcare`s relationship with Community Healthcare Group Limited ("CHG").
This agreement arose following the Commission suggesting that Netcare had prior
implemented a merger by assuming control over CHG and that there had been a
contravention of section 4(1)(b) of the Competition Act, because Netcare had
represented CHG as an associated company in negotiations with medical schemes.
Netcare and the Commission had agreed to settle the matter on the basis of the
payment of a sum of R6 500 000.
Originally the majority of the CHG hospitals were owned by the Macmed Group
("Macmed"). Macmed offered the hospitals to Dr A Mokgokong and Mr Joe
Madungandaba and agreed to transfer its hospitals into a new entity, which would
be controlled by Dr Mokgokong and Mr Madungandaba. Dr Mokgokong and Mr
Madungandaba subsequently incorporated the Malesela Hospital Group ("MHG"),
which resulted in the hospitals which had previously been owned by Macmed being
transferred into MHG.
In 1999, Macmed was liquidated. Shortly thereafter, the majority of the MHG
subsidiaries were also liquidated in consequence of the Macmed liquidation.
Following the liquidation of Macmed, Netcare agreed to provide financial
assistance to Dr Mokgokong and Mr Madungandaba to acquire the hospitals out of
liquidation on the basis that it was a black economic empowerment initiative.
Netcare`s financial assistance was utilised to rescue the hospitals from
liquidation and to establish CHG. Moreover, CHG required Netcare`s assistance in
relation to IT systems and infrastructure in order to function effectively.
At the time that Netcare initially acquired the shareholding in CHG it was
advised at that stage the acquisition of the shares in CHG did not constitute a
notifiable merger.
Following the termination of the traditional collective negotiations between the
BHF, HASA and SAMA, small hospital groups like CHG were not able to negotiate
tariffs independently. Accordingly, given the fact that CHG was reliant on
Netcare for its IT systems and infrastructure, Netcare informed medical schemes
that it would be negotiating tariffs on behalf of CHG. At the time Netcare
engaged with medical schemes on CHG`s behalf, it was transparent about the fact
that it was representing CHG in the negotiations on the basis of the fact that
CHG was considered to be part of the broader Netcare Group and that Netcare had
acquired a significant shareholding in CHG.
Netcare`s conduct in this matter was motivated principally by a desire to assist
black economic empowerment and facilitate the transformation of the private
healthcare sector.
As such, Netcare is disappointed with the decision of the Tribunal not to
sanction the consent order. It is Netcare`s view that the proposed consent order
is a fair resolution of the historical events which ultimately led to the
Competition Tribunal approving unconditionally Netcare`s acquisition of the
entire issued share capital of CHG late last year. In coming to this decision,
the Tribunal concluded that Netcare`s acquisition of control over CHG would not
lead to a substantial prevention or lessening of competition in any relevant
market.
Netcare is currently studying the Tribunal`s decision with a view to engaging
constructively with the Competition Authorities in order to reach a satisfactory
resolution of this issue.
11 March 2008
Sponsor
Merrill Lynch South Africa (Pty) Limited
Date: 11/03/2008 07:30:45 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
