Health inquiry terms of reference published

The first market inquiry under the Amendment Act, into the private healthcare sector in South Africa,  has been formally announced by the Competition Commission.

According to Lerisha Naidu, Senior Associate in the Competition Practice at Cliffe Dekker Hofmeyr, “As is required under the Amendment Act, the Commission has published its terms of reference for the intended market inquiry.  The Commission intends to commence the inquiry on 06 January 2014 with the scheduled completion date being 30 November 2015.  A panel will be constituted to conduct hearings during this period.  Details regarding the administrative phases of the inquiry and guidelines for participation will be published by the Commission in due course.

Naidu explains that the inquiry comprises the portion of healthcare services that are funded by private patients themselves (either through medical aid schemes, insurance or "out-of-pocket" payments). In embarking upon this inquiry, the Commission has indicated that it seeks to investigate the factors that have a distortive impact on competition in the market.  In investigating the competitive dynamics that characterise the private healthcare market, the Commission will also consider a range of inter-related markets, including healthcare financing and healthcare goods (medical devices and pharmaceutical products).

“The rationale for the initiation of the private healthcare market inquiry appears to be alleged prohibitive pricing and above-inflation increases in prices and expenditure.  The inquiry seeks to investigate the factors that drive price formulation, seeking to not only identify competition concerns that impact on price, but also regulatory failures.  The end goal is to furnish recommendations as to: (i) ways in which pro-competitive outcomes in the market can be achieved; and (ii) policy and regulatory mechanisms that can be implemented to bolster the accessibility, affordability and quality of private healthcare services,” she explains.

Naidu notes that Section 6 of the Competition Amendment Act, 2009 (Amendment), which came into effect on 01 April 2013, formalised the powers of the Commission) to conduct market inquiries.  The Amendment Act empowers the Commission to conduct market inquiries in respect of "the general state of competition in a market for particular goods or services, without necessarily referring to the conduct or activities of any particular named firm". 

“As its name suggests, a market inquiry is a broad investigation into the state of competition in a market, as opposed to a narrow investigation into the conduct of specific market participants,” she adds.