Primary Health to offload centres following threat of ACCC action

Primary Health Care will sell more than 70 centres in a bid to put an ACCC investigation behind it.

Primary Health Care will sell more than 70 pathology collection centres and non-operational regional laboratories in Queensland and northern NSW to end an ACCC competition investigation.

Primary said the divestment represented about 3 per cent of its pathology collection centres and that the annual impact on profit would not be material.

Primary took over the centres and laboratories in February last year after peer Healthscope decided to close its Queensland pathology operations.

“As a result of Healthscope’s decision, Primary did not consider that the transaction would have the effect, or be likely to have the effect, of substantially lessening competition,” the company said in a release to the Australian Securities Exchange, adding that it continued to hold this view.

Primary said it would progressively divest the assets to Medlab Pathology over the course of 12 months to avoid “further loss of management time and the incurring of further costs associated with an on going ACCC investigation”.

The Australian Competition and Consumer Commission said the transaction “removed a significant third player in Queensland”, leaving just two major full-service pathology providers in that state.

ACCC chairman Rod Sims said Primary and Healthscope had completed the transaction without notifying the ACCC, “despite being on notice that the ACCC would have serious concerns about the likely competitive effect”.

“It is of considerable concern to the ACCC that well-advised firms such as Primary and Healthscope chose to complete the transaction in the way that they did,” he said.

“While there is no legal obligation to obtain ACCC clearance before completion of a transaction, this matter highlights the risks to companies if they complete contentious acquisitions without seeking ACCC clearance beforehand.”

Healthscope, meanwhile, said it also believed the transaction would not “have the effect, or be likely to have the effect, of substantially lessening competition”.

The agreement had seen Healthscope enter service arrangements with Primary for pathology services to be provided to Healthscope’s Queensland hospitals and medical centres.

At the 10.15am (AEST) official market open, Primary shares had risen 0.79 per cent to $3.85 against a benchmark rise of 0.6 per cent. Healthscope was up 2.9 per cent at $2.85.