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Pretoria - A proposed R6m fine imposed on Netcare and the Community Health Care group (CHG) for anti-competitive practices has been rejected by the Competition Tribunal as being too low.
The tribunal ruled on Monday: "Whilst we do not take a view on what an appropriate penalty should be, we believe that the present agreement is inappropriately low and that we cannot approve it."
It rejected a settlement between the Competition Commission, Netcare and the Community Hospital Group to settle contraventions of the Competition Act.
Netcare had agreed to pay a penalty of R6m to settle the matter after the Competition Commission found that it had bought a controlling stake in the Community Health Group without notifying it.
The Competition Tribunal, however, said the proposed settlement amount was not enough.
"We do not believe that the settlement adequately safeguards the public interest, and for that reason, we refuse to make the order sought.
"If administrative penalties are about deterring wrongful conduct then the present penalties exhibit insufficient disincentive on firms not to notify - and indeed firms may well construe low penalties as an acceptable cost of doing business if prior implementation impedes proper adjudication," the tribunal said.
Netcare, which can appeal the tribunal's decision, said in a statement released late on Monday that it was "disappointed" with the tribunal's decision.
"It is Netcare's view that the proposed consent order is a fair resolution of the historical events which ultimately led to the Competition Tribunal approving unconditionally Netcare's acquisition of the entire issued share capital of CHG late last year."
It also said the company's main motivation for the deal was "a desire to assist black economic empowerment and facilitate the transformation of the private health care sector".
CHG was formed following the liquidation of the MacMed Group in 1999.