9 May 2013 by

Market enquiry provision to be used to investigate healthcare sector

Economic Development Minister Ebrahim Patel announced on Tuesday that the Competition Commission would investigate the private healthcare sector on charges of high charges and market distortions.

According to Nick Altini, Director and head of the Competition practice at Cliffe Dekker Hofmeyr, “In April this year the market enquiry provisions in the Competition Amendment Act came into force, allowing the Competition Commission to investigate industries where there is a basis to believe that there are not optimal levels of competition,  but without the Commission  being constrained by the pre-requisite of having some evidence of an actual offence to validate the investigation. The private healthcare sector was identified by the Commission for this type of enquiry.

“I think that we are all going to learn a few things - the Commission, the private sector and legal practitioners in the field. I expect that the Commission will plan and execute this carefully. What we would want to see is a process that it open, fair and efficient. It must have a definite beginning, and  end, and not drag out for an inordinate period of time. At the end of the process, there must be  a clear indication of findings and what actions, if any, the Commission plans to take next and what is expected of market stakeholders as an outcome of the process. These factors will likely then act as a good beacon of guidance for other sectors that could be the subject of future market enquiries,” notes Altini.

Chris Charter, Director in the Competition practice, agrees, “The sheer scope of the enquiry into the healthcare industry will be test of the Commission's ability to manage and run complex investigations in the public eye. Hopefully it will lead to a better understanding of the dynamics of the industry which may benefit not only patients, but also other players in the value chain as well as other regulators. 

“That said, there is a danger that such a potentially wide market enquiry will become difficult to effectively marshal in a way that will lead to a clear and effective outcome.  Many similar commissions of enquiry are derailed due to a lack of clear terms of reference and result in something of a whitewash.  Even worse would be for the enquiry to devolve into a witch-hunt, which is not the intention behind the legislation.  The market enquiry provisions exist to allow for an assessment of the general state of competition in a market without prejudging and should not be used as substitute for investigation into alleged anti-competitive conduct or to trawl for contraventions without cause.   It will certainly be interesting to see how this one is managed,” he adds.

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