ACCC won't oppose health fund merger

The Australian Competition and Consumer Commission has issued a media release advising that it will not intervene in the proposed merger of BUPA Australia Pty Ltd and MBF Australia Limited.

ACCC Chairman, Mr Graeme Samuel, said "BUPA and MBF are both registered providers of private health insurance which have a presence in every Australian state and territory. In South Australia and the Northern Territory BUPA operates under the name Mutual Community and in all other states and territories BUPA operates under the name HBA."

"The ACCC conducted a comprehensive review of the proposed merger including extensive market inquiries with interested parties. The ACCC carefully considered the likely effects of the proposed merger on the supply of private health insurance to consumers and on the acquisition of services from private hospitals."

"The ACCC paid particular attention to potential effects in the supply of private health insurance to South Australian consumers due to BUPA's strong position in that state. The ACCC also investigated concerns that the proposed merger may enhance BUPA's bargaining position in negotiations with private hospitals in South Australia."

"In reaching its decision the ACCC found that competition from a number of competing private health insurance providers in South Australia would be likely to continue to constrain BUPA in the foreseeable future."

The ADA Inc. made a submission to the ACCC opposing this merger. In its submission, which members can view in the members' only area of the ADA Inc. website, an analysis of market share was provided:

"Based on the State of the Health Funds Report 2006, published by the Private Health Insurance Ombudsman (www.phio.org.au/documents/SOHFR2006.pdf - extract of the table below) it would be appear that the result of the proposed merger between BUPA and MBF would mean that that entity and its key competitor would have a combined market share of between 45% and 88% in each of the respective States/Territory."