south africa antitrust regulator rejects netcare fine
10 March 2008

South Africa's Competition Tribunal rejected a fine imposed on Netcare Ltd., the first time the nation's highest antitrust authority has overruled a settlement agreement.

The Pretoria-based tribunal, which rules on antitrust matters like a court, declared the 6 million rand ($760,000) penalty too low in an e-mailed statement today. The fine was set by the Competition Commission, which makes recommendations to the tribunal after studying cases.

``We do not believe that the settlement adequately safeguards the public interest, and for that reason, we refuse to make the order sought,'' the tribunal said. ``The present agreement is inappropriately low. Administrative penalties are about deterring wrongful conduct.''

Netcare, South Africa's largest private-hospital owner, had agreed to settle allegations that it completed the takeover of Community Hospital Group Ltd. without antitrust approval, the tribunal said. Netcare and Community had also adopted the same pricing structures before the takeover was approved last August, it added. The tribunal can fine a company up to 10 percent of its revenue.

The commission should've considered the sales of Johannesburg-based Netcare when calculating the fine rather than limiting itself to the revenue of Community, the tribunal said. Netcare's South African unit had sales of 8.9 billion rand in the 12 months through September.

``If Netcare's hospital turnover in South Africa was taken into account and added to that of Community, then the present fine would constitute a tiny fraction of this figure - less than 1 percent,'' the tribunal said. ``This is miniscule indeed.''

Netcare spokeswoman Belinda Williams wasn't immediately able to comment. Chief Executive Officer Richard Friedland was also unavailable.

To contact the reporter on this story: Vernon Wessels in Johannesburg at vwessels@bloomberg.net

Vernon Wessels, www.bloomberg.co.za