ACCC inches closer to blocking $2b Healius-ACL merger proposal

afr.com:

The competition regulator has raised concerns that the merger of pathology companies Australian Clinical Labs and Healius will adversely affect prices, increasing the chance it will eventually knock back a proposed deal to combine the country’s second and third-largest collection centre businesses.

“ACL and Healius appear to compete closely with one another and the market is unlikely to self-correct via significant new entry or expansion,” the Australian Competition and Consumer Commission said in a statement on Thursday. “There is potential for price and non-price effects from such a significant reduction in competition.”

The ACCC is worried about the competition impact from combining Healius and Australian Clinical Labs. Gabriele Charotte

The ACCC was issuing its preliminary views about a tie-up between the operators, saying three issues of concern exist along with another one that “may raise concerns” about veterinary pathology services. The regulator is still seeking views before making any final decision.

ACL, which has almost 1300 collection centres and 74 accredited laboratories testing conditions from vitamin D deficiency to skin cancers, kicked off a possible deal by making an off-market takeover bid in March. It offered 0.74 ACL shares for every 1 Healius share.

But the board of Healius, which has almost 2080 collection centres, including brands such as QML, and 96 accredited laboratories, told shareholders to take no action and argued bid conditions were “overly restrictive”. Two large Healius shareholders, Perpetual and Tannara Capital, also described ACL’s offer as “unattractive”.

The laboratory companies describe themselves as the second and third largest in the market, and ACCC commissioner Stephen