Southern Cross has drawn the wrath of one of its competitors and has attracted scrutiny from the Commerce Commission over its handling of a tender for Bank of New Zealand's staff health insurance business.
At issue is whether Southern Cross breached a set of conditions the commission put on it relating to its acquisition of Aetna Health.
Southern Cross, New Zealand's largest health insurer, originally applied to the commission last year for permission to buy its closest rival Aetna.
The commission turned it down twice, but finally granted clearance earlier this year subject to a number of conditions.
One of those was that it would sell all of Aetna's 40,000 policies due to concerns over market dominance.
Another was that the two businesses would be kept separate until the divestment were complete.
However, Southern Cross has picked up the BNZ that is one of Aetna's prime customers.
Tower Health managing director Jim Minto says his company was not invited to participate in the BNZ tender and he is questioning how it was run.
Commission spokesman Vince Cholewa has confirmed the matter has been brought to the commission's attention and it is looking into it.
He says the commission has sought information from Southern Cross on the deal as part of its investigation.
"The commission cleared Southern Cross to acquire Aetna subject to a series of undertakings," he says.
"If the undertakings are not adhered to the clearance is longer valid."
Meanwhile, Southern Cross has applied to the High Court in Auckland to overturn the commission's earlier two decisions which stopped it buying Aetna. It now wants to keep hold of the business including the 40,000 policies the commission has told it to sell.
The case was heard in January and a decision is due soon.
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