On 15 October 2021 the Constitutional Court delivered a precedent setting judgement on the role of the competition authorities in promoting and protecting cornerstone socio-economic rights contained in the Constitution.
The judgement in question, Competition Commission of South Africa v Mediclinic Southern Africa (Pty) Ltd and Another, concerned the proposed acquisition by Mediclinic of two private hospitals in the Potchefstroom/Klerksdorp region. Upon consideration of the merger, the Competition Tribunal (Tribunal) prohibited the merger in order to, amongst others, safeguard the right of access to health care for both insured and uninsured patients as, in the Tribunal's view, the merger would have a significant effect on the healthcare costs of both the insured and uninsured patients living in the region. The basis of this argument was that the acquisition by Mediclinic of the two target hospitals would result in those hospitals following the same pricing models as other Mediclinic hospitals, this would then deprive patients of (i) the opportunity to take advantage of the lower tariffs offered by those hospitals, and (ii) the option of looking for and going to cheaper hospitals.
Mediclinic appealed to the Competition Appeal Court (CAC) which overturned the decision of the Tribunal. The Competition Commission then appealed to the Constitutional Court on the basis that the issues at hand concerned the constitutional right of access to health care.
In coming to its decision to uphold the decision of the Tribunal, the Constitutional Court examined the relationship between the Constitution, the Competition Act and the public interest being affected by the merger. It was noted that the right of access to health care is a fundamental human right as enshrined in the Constitution. It was noted further that the competition authorities must always take into account the purpose and objectives of the Competition Act and the duty on all state institutions to give effect to the Bill of Rights.
The analysis of the merger boiled down to a question of public interest, i.e. would the merger be in the best interests of the public. In answering this question, the Constitutional Court considered whether the merger would:
- promote free and fair competition in the health care sector;
- contribute to the greater spread of ownership in the private health care sector (a notoriously centralised sector);
- provide patients with a variety of hospitals at different tariffs in the area;
- lower barriers to entry into this sector in order to allow for greater participation; and
- promote the right of access to health care for patients, particularly those with fewer resources patients.
Finding that the merger would not substantially contribute to the above factors, the Constitutional Court overturned the CAC's ruling and upheld the Tribunal's decision to prohibit the merger.
Of interest in this case is the emphasis put on the duty of the competition authorities to consider and promote the cornerstone rights contained in the Constitution when investigating and determining a merger. While already a duty on all courts, the Constitutional Court made it clear that the competition authorities, in particular, must abide by this duty not only in terms of the Bill of Rights, but also in terms of the Competition Act itself which sets out to address the inequalities (both economic and public interest in nature) that pervade our economy. The result is that the competition authorities, including the Competition Commission, are likely to have a closer look at constitutional imperatives (which extend past healthcare) when considering merger reviews and complaints when reaching their decisions.
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