Diagnostic Imaging Acquisition Blocked Over Competition Concerns
On 11 March 2015, CCS issued letters to Parkway Holdings Ltd (“Parkway”) and Fortis Healthcare Singapore Pte. Limited (“Fortis Singapore”) (together known as the “Parties”), informing the Parties that CCS had taken a provisional decision to block the proposed acquisition of RadLink-Asia Pte Limited (“RadLink”) and its subsidiaries by Medi-Rad Associates Ltd, an indirect wholly-owned subsidiary of IHH Healthcare Berhad (the “Proposed Transaction”). In the letters, CCS stated that the Proposed Transaction would result in a substantial lessening of competition (“SLC”) in the affected markets and would infringe section 54 of the Competition Act.
With respect to the provision of radiology and imaging services for private outpatients in Singapore, evidence suggested Parkway and RadLink are each other’s closest competitors; entry barriers in the market are moderate to high, and the bargaining power of customers is weak. The 100% acquisition of RadLink, combined with its 33% shareholding of Positron Tracers Pte Ltd (“PTPL”), would give Parkway substantial market share as the only commercial supplier of radiopharmaceuticals in Singapore. Further investigation also suggested that no new radiopharmaceuticals suppliers are expected to enter the market in the next two to three years, so the merged entity would have the power to restrict competition by controlling the supply, the prices and/or the range of radiopharmaceuticals available to downstream competitors.
On 13 March 2015, Fortis Healthcare Ltd (“Fortis”), parent of RadLink, shared details of CCS’s decision on the National Stock Exchange of India Ltd, and reported that Fortis will “continue to explore alternative strategic opportunities related to RadLink”.
On the same day, IHH Healthcare Berhad announced on Bursa Malaysia and the Singapore Exchange that the Sale and Purchase Agreement entered into between Medi-Rad Associates Ltd and Fortis Singapore in relation to the Proposed Transaction had lapsed and ceased to be of effect.