The Philippine Competition Commission approved the acquisition by AIA Philippines Life and General Insurance Company Inc. of 100 percent of shares in MediCard Philippines Inc.
It said in a decision the proposed takeover would not likely result in substantial lessening of competition in the markets for individual and group health or medical coverage.
The anti-trust body said that after the transaction, other health plan companies offering the same services would continue to pose substantial competitive constraints on the merged firms.
“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,” according to the decision cleared by PCC officer-in-charge Johannes Bernabe and commissioners Emerson Aquende, Marah Victoria Querol and Michael Peloton.
Medicard is among the top health maintenance organizations in the Philippines holding 16.93 percent of market share and competes with Maxicare HealthCare Corp. with 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 with 11.57 percent.
The PCC said the current concentration of Medicard’s market shares would spread thinner when reviewed to compete with not only other HMOs, but also insurance companies offering similar services and health plans.
About 29 health maintenance organizations and 30 life insurance companies compete in providing individual and group medical coverage in the Philippines.
The PCC said the market analysis of the Mergers and Acquisitions Office found that customers are able to switch easily to other health or medical coverage firms, as HMO plans run only for a year and policyholders are not barred from switching providers.
It said with information on product offerings readily available to the public and agents constantly jockeying to secure a sale, customers could easily switch to another provider. This low barrier to switch to different competing firms is indicative of a competitive market.
The PCC 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 groups present in 18 markets, including the Philippines.
AIA Philippines was formerly known as Philippine American Life and General Insurance Company or AIA Philam Life.
Meanwhile, Medicard has more than 920,000 members with a nationwide coverage across 523 hospitals and 641 clinics with the services of 23,000 doctors and 817 dentists.