The Philippine Competition Commission (PCC) has approved the proposed acquisition by AIA Philippines Life and General Insurance Company Inc. of 100 percent of shares in Medicard Philippines Inc.
“In a Commission Decision released today, the PCC found that the proposed takeover will not likely result in substantial lessening of competition in the markets for individual and group health or medical coverage,” PCC said in a news statement released on Friday.
“There will be no significant shift in the share of the parties in the market and the number of players will remain unchanged post-transaction,” the decision stated, as cleared by PCC Officer-in-Charge Chairperson Johannes R. Bernabe, Commissioners Emerson B. Aquende, Marah Victoria S. Querol and Michael B. Peloton.
According to the antitrust agency, while Medicard is among the top health maintenance organizations (HMOs) in the Philippines at the time of the merger holding 16.93 percent of the market share, it competes with Maxicare HealthCare Corporation that holds 36.29 percent; Asalus Inc. (Intellicare) with 26.12 percent; PhilHealth Care Inc. with 4.89 percent; Value Care Health Systems Inc. with 4.20 percent, and other HMOs composing 11.57 percent of the remaining share in the market.
The PCC noted, however, it expects that the current concentration of Medicard’s market shares will “spread thinner” when reviewed to compete not only with other HMOs but also insurance companies offering similar services and health plans.
Currently, it said, 29 health maintenance organizations and 30 life insurance companies compete in providing individual and group health or medical coverage.
In its market analysis, the PCC Mergers and Acquisitions Office also found that “customers are able to switch easily to other health or medical coverage firms, since majority of health maintenance organization [HMO] plans run only for a year and policyholders are not barred from switching providers.”
The PCC Mergers and Acquisition Office also noted that with information on their product offerings “readily available to the public and agents constantly jockeying” to secure a sale, customers can easily switch to another provider.
This low barrier to switch to different competing firms, PCC noted, is a sign of a competitive market.
The antitrust agency said it also observed that customers looking for group health or medical coverage have “high bargaining power” and can negotiate with service providers for better terms.
“The high bargaining power of these customers pose sufficient competitive constraints as well for the merged firm,” PCC noted.
AIA is considered the largest independent publicly listed pan-Asian life insurance group, which is present in 18 markets—wholly-owned branches and subsidiaries in Mainland China, Hong Kong Special Administrative Region (SAR), Thailand, Singapore, Malaysia, Australia, Cambodia, Indonesia, Myanmar, New Zealand, the Philippines, South Korea, Sri Lanka, Taiwan, Vietnam, Brunei and Macau SAR and a 49 percent joint venture in India.
In the Philippines, AIA Philippines was formerly known as Philippine American Life and General Insurance Company or AIA Philam Life, a life insurance company.
On the other hand, Medicard is among the largest HMO in the Philippines with over 920,000 members and nationwide coverage in 523 hospitals and 641 clinics engaged with the services of 23,000 doctors and 817 dentists.