Competition Law & Anti-Trust

CCCS raises Competition Concerns on Private Clinical Laboratories Merger

Date: 29 October 2018; Type: Legal News; Source: Competition and Consumer Commission of Singapore

The Competition and Consumer Commission of Singapore (“CCCS”) has completed its Phase 1 review of the acquisition of Innovative Diagnostics Private Limited (“Innovative”) and Quest Laboratories Pte Ltd (“Quest”) by Pathology Asia Holdings Pte. Ltd. (“PAH”), through its subsidiaries (collectively, the “Parties”) and the intended integration of the businesses of Innovative and Quest (the “Transaction”). PAH is part of TPG, a leading global private investment firm founded in 1992.

On 7 September 2018, CCCS received an application from PAH for a decision on whether the Transaction infringes section 54 of the Competition Act (Cap. 50B), which prohibits mergers that have resulted, or may be expected to result, in a substantial lessening of competition within any market in Singapore. Innovative and Quest overlap in the provision of In-vitro Diagnostic (“IVD”) tests in Singapore, which are tests done on samples such as blood or tissue that have been taken from the human body.

CCCS has raised competition concerns with PAH on the Transaction, based on information furnished by PAH and third-party feedback from customers and other suppliers. Innovative and Quest, being two major private independent clinical laboratories for the provision of IVD tests or clinical laboratory services by private laboratories in Singapore, are generally seen as the closest competitors to each other pre-Transaction.

Third-party feedback revealed concerns about the extent to which alternative suppliers to the Parties, e.g. private hospital clinical laboratories, are able to exert sufficient competitive constraint on the merged entity. This is given that private hospital clinical laboratories may primarily focus on serving their patients’ laboratory testing requirements, and access to their services by third parties, and the capacity to which they can provide these services to third parties may have certain limitations. In respect of other private independent clinical laboratories, concerns have been raised that some of these laboratories may not meet certain needs of customers as they supply a less comprehensive range of IVD tests than the Parties, and, as such, may not present as suitable alternatives. Third-party feedback also indicates that public hospital clinical laboratories primarily focus on serving the public healthcare sector’s laboratory testing requirements. In view of these concerns, CCCS will need to consider in more detail the effect of the Transaction in a Phase 2 assessment.

At this stage, the Parties may offer commitments to address the potential competition concerns that may arise as a result of the Transaction, or the merger will proceed to a detailed Phase 2 review upon CCCS’s receipt of the relevant documents from PAH. Commitments may also be offered at any time during a Phase 2 review.

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