ENFORCEMENT AND EXEMPTIONS AN OVERVIEW OF COMPETITION LAW IN SOUTH AFRICA, AS IT RELATES TO HEALTH CARE 23 JULY 2007 NANDI MOKOENA ENFORCEMENT AND EXEMPTIONS

PRESENTATION OUTLINE COMPETITION LAW AND ITS PURPOSE COMPETITION COMMISSION’S (“CCSA”) INVOLVEMENT IN HEALTH CARE COMPETITION LAW AS IT APPLIES TO HEALTH CARE PROVIDERS RESEARCH STUDY INTO PRIVATE HOSPITAL COSTS COMPETITION LAW AS IT APPLIES TO THE FUNDING SECTOR

COMPETITION LAW AND ITS PURPOSE CCSA and the new competition regime established in terms of the Competition Act 89 of 1998, as amended (“the Act”). Purpose of the Act is to promote and maintain competition in order to: promote efficiency, adaptability and development of economy; provide consumers with competitive prices and product choices; ensure that SME’s have opportunity to participate in economy; Section 2(a) – (f) provides further.

COMPETITION LAW AND ITS PURPOSE CCSA fulfills this purpose through: evaluation of complaints evaluation of mergers conducting research engaging in advocacy Provisions of the Act are carried out by: CCSA (investigative) Competition Tribunal (adjudicative) Competition Appeal Court (appeals)

CCSA’S INVOLVEMENT IN HEALTH CARE Enforcement & Exemptions matters: managed healthcare arrangements collusion amongst competitors access to HIV medicines advocacy NHN exemption application Mergers and Acquisitions matters: Afrox Healthcare Ltd & Wilgers Hospitals Ltd Medi Clinic & Curamed Business Ventures Investments & Afrox Healthcare Medi Clinic & Wits Univ DGMC (Pty) Ltd Medi Clinic & Protector Netcare & Community Hospital Group (pending)

COMPETITION LAW AS IT APPLIES TO HEALTH CARE PROVIDERS Competition Act applies to all economic activity within or having an effect within the Republic, except: – collective bargaining collective agreement concerted conduct designed to achieve a non-commercial socio-economic objective or similar purpose To the extent that health care providers are engaged in economic activity which falls outside the above exclusions, the Act applies to them Consumers of health care are also vulnerable to potential anti-competitive conduct and should be protected by the Competition Act

COMPETITION LAW AS IT APPLIES TO HEALTH CARE PROVIDERS Current matters involving service providers: Community Hospital Group v Netcare (pending) Independent pathologists v Netcare, Medi-Clinic and others (pending) BHF v SAMA (pending) Research study concerning private hospital costs

RESEARCH STUDY INTO PRIVATE HOSPITAL COSTS Research study brought about by: national effort to reduce private hospital costs general concerns raised regarding hospital costs Phodi-Clinics merger finding Purpose of the study is to determine: possible contraventions of the Competition Act; possible competition solutions Research study involves: consultation with regulators consultation with hospitals consultation with other industry participants consultation with public

COMPETITION LAW AS IT APPLIES TO FUNDING SECTOR Competition law prohibits price fixing (fee schedules in professions) Information asymmetry in health care (and professions generally) requires that consumers be protected From a competition perspective, function is better fulfilled by the State (after consultation) rather than competitors in an industry, hence the decision in CC v BHF National Health Reference Price by the Department of Health Medical Schemes require countervailing power

COMPETITION LAW AS IT APPLIES TO FUNDING SECTOR Medical Schemes lack countervailing power Competition Act provides for exemption applications if conduct contributes to: Maintenance and promotion of exports Promotion of ability of SME’s or firms controlled by HDP’s to become competitive; Change in productive capacity necessary to stop decline in an industry; Economic stability of any industry designated by the Minister, after consultation with Minister of that industry