South Africa’s competition authorities who ensure that companies are playing according to the Competition Act’s rules may not be able to step in on the issue of the county’s private healthcare sector’s concentrated market.
In a recent inquiry published by the Competition Commission of South Africa (CCSA), it was revealed that there are three major players who basically own South Africa’s private healthcare sector. Moreover, it was discovered that all three of these companies share a common ownership
In other instances, this would be deemed as a contravention of the Competition Act, which promotes free-market share and fair competition but only in the case where there are signs of collusion and abuse of dominance.
However, market concentration presents a problem that ought to be addressed by authorities using remedial actions. That’s why there is a new Bill that has been drafted to amend sections of the Competition Act that prohibit any intervention from authorities in addressing market concentration.
According to the inquiry, 70% of the open medical schemes market is in the control and administration of two players: Discovery Health Medical Scheme and Bonitas.
Discovery Health, along with MMI Holdings and Medscheme, also control a combined market share of 70% of the medical scheme administrators market.
The restricted medical aid schemes are largely controlled by the Government Employees Medical Scheme, with a market share of 47%.
In the case of private hospital ownership, the inquiry revealed that there were only three hospital groups that controlled this market: Netcare, Mediclinic and Life Healthcare.
The two major players, Discovery Health, MMI Holdings, share common ownership, which automatically takes out any other competitor trying to gain a share in the sector.
Analysts have proposed a possible solution to this problem: Divestiture.
A method that has been used to great effect for almost 130 years, the divestiture order allows a giant in any sector to divide itself into smaller constituents, making it easier for other players to compete in the sector.
In the case of Discovery Health and MMI Holdings, these giants corporations would be forced to sell a sizeable portion of their shares to free up the concentration in the market.