Competition watchdog blocks bid by Parkway to buy rival firm

Concerns that deal will lessen competition and drive prices up

The watchdog against anti-competitive business practice has effectively stopped Parkway Holdings from acquiring outpatient diagnostic chain RadLink- Asia, amid fears that the prices of radiology and imaging services like X-rays and ultrasounds would go up.

In a rare move - likely the first such decision in years - the Competition Commission of Singapore (CCS) yesterday announced its "provisional decision" to block the transaction as it would lead to a "substantial lessening of competition in the affected markets".

Two markets - the provision of radiology and imaging services as well as the supply of radiopharmaceuticals which are essential ingredients in diagnostic processes - were deemed to be likely to see decreased competition.

With less competition, the fear is that prices for radiopharmaceuticals or radiology and imaging services could be driven up.

CCS noted that Parkway and RadLink are each other's closest competitors in providing these services for private outpatients here.

More importantly, it is difficult for new players to break into the sector, while the bargaining power of customers is also weak.

CCS added that the merged entity would have very substantial market share following a merger.

Under its guidelines, the watchdog would have competition concerns if the merged entity has a market share of 40 per cent or more. The radiopharmaceuticals market would also be impacted as Parkway would be the only commercial supplier of radiopharmaceuticals here if the merger is allowed.

No potential new radiopharmaceutical supplier is expected to enter the market in the next two to three years to compete with the merged entity, noted the CCS.

Parkway announced in September that it was acquiring 100 per cent of Singapore-based RadLink for $137 million, but the deal was contingent on it being given the green light by the CCS.

While it is possible for them to appeal, the firms may have already moved on.

Parkway's parent IHH Healthcare stated last Friday that the deal had lapsed, while RadLink's parent company Fortis Healthcare, which is listed in India, announced that it would explore other opportunities.

IHH's Parkway group has 16 radiology facilities here while RadLink has six.

Doctors say that the market for radiology and imaging services is likely a growing one.

"We have an ageing population that requires more of these services. Patients are reading more online and coming into clinics and asking about sophisticated tests," said Dr Chia Shi-Lu, chairman of the Government Parliamentary Committee for Health.

"But not everyone needs the most sophisticated scan, it's up to ethical doctors to recommend the most appropriate one," he cautioned.

Most large public hospitals do their radiology and imaging services in-house.