SINGAPORE — The Republic’s competition watchdog has blocked a proposed takeover of outpatient diagnostic and molecular imaging chain RadLink-Asia by a company linked to Malaysian hospital operator IHH Healthcare, saying the deal could reduce competition in the market

Parkway Holdings, which is owned by IHH Healthcare, had sought to buy RadLink from Fortis Healthcare Singa­pore last year through its subsidiary, Medi-Rad Associates, and the Competition Commission of Singa­pore (CCS) was notified of the deal on Oct 15 last year.

But after two rounds of reviews, the CCS found that Parkway and Rad­Link were each other’s closest competitor in providing radiology and imaging services for private outpatients. If a merger were to go through, the merged entity would have very substantial market share. “Evidence also suggests that entry barriers are moderate to high and that the bargaining power of customers is weak,” the CCS said.

The proposed merger would also make Parkway the only commercial supplier of radiopharmaceuticals in Singapore, as it already owns 33 per cent of another supplier, Positron Tracers. “The CCS’s market inquiries indicated that no potential new radiopharmaceutical supplier would enter the market in the next two to three years to compete with the merged entity,” the authority said.

Further, if the operations of the merged entity were to be vertically integrated with its businesses supplying radiopharmaceuticals, it would be able to restrict competition in the radiology and imaging services market. This is because it would be able to control supply as well as the prices and range of radiopharmaceuticals available to its downstream competitors.

The review took into consideration views sought from the industry and the public as well as information submitted by Parkway Holdings and Fortis Healthcare Singapore. The CCS informed the two parties of its decision against the deal on last Wednesday.

Two days later, Fortis Healthcare, which owns an 85 per cent stake in Rad­Link-Asia through Fortis Healthcare Singapore, announced on the National Stock Exchange of India that the proposed deal, worth S$137 million, had fallen through. On the same day, IHH Healthcare made the same announcement on Bursa Malaysia and Singapore Exchange.

The CCS said this was not the first time the authority had provisionally blocked a proposed merger, but did not provide examples.

Should the parties involved wish to press on with the deal, they can submit their arguments to the CCS and provide any other information for consideration within 20 working days, before the authority comes to a final decision. “The parties may also apply in writing to the Minister of Trade and Industry for the proposed acquisition to be exempted on public-interest grounds,” a spokesperson said.