Oct. 11, 2012, 10:43 a.m.

Sonic Healthcare's bid to buy Healthscope's pathology businesses across Australia has largely been knocked back, with the competition regulator this morning ruling against Sonic's bid forHealthscope's Queensland pathology business.

The Australian Competition and Consumer Commission this morning said Sonic's bid for the Queensland business was rejected becauseit was "likely to have the effect of substantially lessening competition in the market for the supply for community pathology services in Queensland."

This is due to a range of factors, including the reputation, professional relationships, network of collection centres and testing capability it has established in Queensland, supported by its strong position in other pathology markets in Australia.

If Healthscope were removed as a competitive constraint, it is not likely to be replaced in a timely and sufficient way by the new entry or expansion of other pathology providers in Queensland.

The ACCC has approved Sonic's takeover of Healthscope's Western Australian pathology business.

In Western Australia, the ACCC recognised that a number of significant pathology providers will remain following the proposed acquisition, such that the removal of Healthscope is not likely to result in a substantial lessening of competition in that market, ACCC chairman Rod Sims said ina statement.

Last month,Sonic and Healthscope said they were dropping plans for Sonic to buy Healthscope's pathology businesses in New South Wales and the Australian Capital Territory, blaming delays in the ACCC decision-making process. This left just the WA and Queensland businesses for ACCC consideration.

Healthscope chief executive Robert Cook told BusinessDay recently thatit was conducting a strategic review of its pathology business in NSW and ACT, and it hadformed the view it is a long term holder of that business."

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Regulator denies Sonic's full bid for Healthscope Save