Competition Bureau statement regarding LifeLabs BC's acquisition of BC Biomedical

Position statement

OTTAWA, March 15, 2013 — This statement summarizes the approach taken by the Competition Bureau in its review of the proposed acquisition by LifeLabs BC LP of BC Biomedical Laboratories Ltd. as announced on January 15, 2013.

On February 26, 2013, the Bureau issued a No Action Letter (NAL) to LifeLabs and BC Biomedical indicating that the Commissioner of Competition does not, at this time, intend to make an application under section 92 of the Competition Act in respect of the proposed transaction.Footnote 1 The Bureau concluded that the regulatory framework governing the provision of diagnostic testing services was sufficient to mitigate the potential for anti‑competitive effects arising from the merger under any plausible market definition.Footnote 2 As a result of this and other factors, the Bureau concluded that the merger would not likely result in a substantial lessening or prevention of competition.

Background:

On January 15, 2013, LifeLabs and BC Biomedical announced that they had entered into an agreement whereby LifeLabs would acquire BC Biomedical. Both companies provide diagnostic testing services for patients in the BC Lower Mainland, whereas LifeLabs also provides these services throughout the rest of British Columbia. These services, which include specimen collection, laboratory testing, and reporting of results to health practitioners, are offered to patients outside of hospitals in community-based facilities. They are used to help physicians and other healthcare providers in the prevention, diagnosis, treatment and monitoring of diseases.

Rather than paying for the services directly out-of-pocket, the vast majority of patient testing is funded through BC's public health care plan. As such, the BC government, through the Medical Services Plan, is the primary customer of both LifeLabs and BC Biomedical, representing a significant proportion of revenues for the companies. Importantly, the fees for, and provision of, diagnostic testing services is highly regulated in BC. The Medical Services Commission, established under BC's Medicare Protection Act, is responsible for managing the provision and payment for these services through the Medical Services Plan on behalf of the BC government. Within this regulatory framework, there was little evidence of direct competition between the parties pre-transaction, or of future competition likely arising. Furthermore, the Bureau found that BC Regional Health Authorities will continue to represent an effective alternative to the merged entity. As a result, the Bureau concluded that the merger would not likely result in a substantial lessening or prevention of competition.

With respect to the relatively small proportion of private customers of diagnostic testing services in the BC Lower Mainland, while there was some evidence of competition between the parties, that competition was found to be minimal, and no significant concerns were expressed by market contacts.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.

However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case‑by‑case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.


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