Commerce Commission reaches preliminary view to approve Palmerston North private hospital merger

The Commerce Commission has reached a preliminary view that it should allow Southern Cross
Hospitals Limited and Aorangi Hospital Limited to merge their Palmerston North private hospitals.

The Commission has today published its draft determination on the application made under the
Commerce Act for authorisation of the proposed merger.

The Commission’s preliminary view is that the proposed acquisition would substantially lessen
competition in the markets for the provision of private elective surgery in Palmerston North. The
Commission also considers there would be the potential for Southern Cross and Aorangi to raise
prices after the merger because of the loss of competition between the hospitals.

“However, at this preliminary stage, the Commission considers that the majority of patients would
be protected from price increases as their procedures would be funded by ACC and through fixedprice arrangements between insurance companies and the hospital. Also, there would be benefits
such as cost savings that would outweigh the loss of competition,” said Commerce Commission
Deputy Chair Sue Begg.

The Commission is seeking submissions on its draft determination by 15 July 2011. Submissions
will be posted on the Commission’s website. The Commission will release the final determination
on the proposed merger by 29 July 2011.

You can view the draft determination on the Commission’s websiite at: