The Philippine Competition Commission (PCC) has given the AIA Philippines Life and General Insurance Company Inc (AIA) the green light to acquire MediCard Philippines Inc (MediCard).
In a decision, the PCC said that other health plan companies offering the same services remain to pose substantial competitive constraints on the merged firms after the transaction.
“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 PCC said in its decision.
Medicard is one of the top health maintenance organisations (HMOs) in the Philippines and held 16.9% of the market share at the time of the merger. Other players include Maxicare HealthCare Corp that holds a 36.3% market share, Asalus (Intellicare) with 26.1%, PhilHealth Care with 4.9%, Value Care Health Systems with 4.2%, and other HMOs composing 11.6% of the remaining share in the market.
The PCC expects that the current concentration of Medicard’s market share would spread thinner when reviewed to compete with not only other HMOs but also insurers offering similar services and health plans.
Currently, there are 29 health maintenance organisations and 30 life insurers competing 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 the majority of HMO plans run only for a year and policyholders are not barred from switching providers.
“Moreover, 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 is indicative of a competitive market,” the PCC said.
The competition watchdog 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.
AIA Group Limited and its subsidiaries comprise one of the largest independent publicly listed pan-Asian life insurance group present in 18 markets, including the Philippines, China, Hong Kong, Thailand, Singapore, Malaysia, Australia, Cambodia, Indonesia, Myanmar, New Zealand, South Korea, Sri Lanka, Taiwan (China), Vietnam, Brunei and Macau SAR, and a joint venture in India.
In the Philippines, AIA Philippines was formerly known as Philippine American Life and General Insurance Company or AIA Philam Life, is a life insurance company.
Medicard, on the other hand, is among the largest HMOs 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.
In September, global insurance company AIA Group Ltd said the acquisition of Medicard accelerates AIA’s integrated health strategy in the Philippines.
“MediCard is a leading health maintenance organisation in the Philippines with an established track record of high-quality services and strong brand recognition among customers and providers. With a focus on comprehensive, affordable and quality healthcare, MediCard brings new customer segments, healthcare assets and capabilities that will help accelerate AIA’s Integrated Health Strategy in the Philippines,” AIA Group’s regional CEO and chief strategy officer Leo Grepin said earlier.
“This is the right time for AIA to play a leading role in making health insurance and healthcare more accessible, more affordable and more effective in the Philippines, helping many more people live healthier, longer, better lives and delivering long term sustainable value creation for our shareholders,” he said.
The PCC is mandated under the Philippine Competition Act to review mergers, acquisitions, and joint ventures of firms across all sectors that meet the threshold to ensure that these deals do not result in a monopoly or harm the interest of consumers, reported Philstar Global.