The market inquiry into the private healthcare sector was initiated because of concerns raised by civil society and members of the healthcare sector. These concerns centre on suspicions of anti-competitive behaviour, such as the sector’s high costs, and no doubt high profits, which may contravene stipulations in South Africa’s Competition Act. The Competition Commission has convened a panel of experts to investigate the private healthcare sector in terms of its costs and the fairness of competition.
Members of the Inquiry
- Inquiry director - Tamara Paremoer
- Panel Chair - Retired Chief Justice Sandile Ngcobo
- Panel Member - Mr Cornelius van Gent
- Panel Member - Professor Sharron Fonn
- Panel Member - Dr Ntuthuko Bhengu
- Panel Mmber - Dr Lungiswa Nkonki
Litigation
The Competition Commission announced its intention to inquire into the private healthcare sector in November 2013. The commencement of the inquiry was delayed due to the inquiry’s technical advisors, KPMG, being held up in litigation with Netcare. Netcare claimed a conflict of interests between KPMG and the inquiry because KPMG had done work for them in the past. Netcare is concerned about the protection of confidential information to which KPMG has had access. The Competition Commission, to avoid further delays, are liaising with other technical advisors in order to move forward with the inquiry while KPMG are unavailable for use.
Conference 16 April 2014
The inquiry Panel called a meeting with stakeholders and civil society on 16 April 2014 to update interested parties on the principles of engagement and procedure which will inform the inquiry. The Panel could not, at the stage of the meeting, respond to matters of substance that have yet to be investigated and resolved. In Judge Ngcobo’s address to the audience, he acknowledged the expectations that rest on the Competition Commission to produce useful and informative findings that will develop the public’s understanding of the health sector. He clarified that while the Competition Commission may conduct a formal inquiry, their purpose is to be investigative rather than accusational. He assured stakeholders that they will be presented with opportunity to respond to the findings should they be affected by their implications.
The function of this market inquiry, as stated by Judge Ngcobo, is to discover whether there are features in the market that “prevent, distort or have an adverse effect on competition”. The Panel seeks to discover if there is a lack of information available on how stakeholders in the healthcare sector run their businesses. If any acts of an anti-competitive nature are found, the commission is empowered (by Chapter 5 part C of the amended Competition Act) to take action as it sees fit. This action excludes anything of a prosecutory nature. The information obtained may rather be used to initiate complaints and make recommendations and decisions about the structures and functions of firms. The Commission has discretion on how to use the information obtained and could not say for certain if their findings will be used to force action.
The Panel’s intention is to promote public understanding of how the private healthcare sector works. It will require transparency from all participants.
Judge Ngcobo conceded that the internal functioning of the private healthcare sector is confusing for an outsider, due to many of its features being inaccessible as public knowledge. Thus it is difficult to tell at this stage, how wide the investigation will spread. That being said, the Panel does not, at the moment, foresee the investigation extending to the pharmacy market, however, as information arises it may become pertinent to do so.
Plea for Confidentiality of Information
Stakeholders participating in the Commission have expressed concern that information of a confidential nature will be widely disseminated. They have asked for formal assurance that confidentiality be protected. The Commission responded to these concerns by stating that participants may claim confidentiality but must be able to show acceptable support as to why that particular information needs to be confidential. It is then for the inquiry Panel to decide whether the claim is valid or if participants want confidentiality to protect anticompetitive or unethical behaviour. These requests for confidentiality can also be challenged by the public. If it is determined that claims of confidentiality are valid, confidentiality will be binding. The Commission will protect this confidentiality in their findings as well.
How the Inquiry will be Conducted
According to the inquiry Panel, the administrative guidelines to be used in the investigation will be guided by methods used by international inquiries of this kind and will involve a comparative study of foreign experiences in order to determine good practice. The Panel recognizes that they cannot ignore history and experiences unique to South Africa and will conduct their study according to the values embodied in our constitutional democracy.
Time Line
The Commission has drafted a stipulated timetable under which it hopes to conclude its inquiry. In order for this to occur, resources must be used effectively. However, this is not a task to be rushed and promises to be thorough, disciplined and fair.
The audience was told to expect draft administrative guidelines to be published by the end of May 2014. Comments will be open to stakeholders and civil society until the end of June 2014. The Commission promises to consider all comments carefully, but the ultimate responsibility to make administrative guidelines is theirs in terms of section 43 of the amended Competition Act.
After such time, a statement of issues is due for publishing. This is not intended to reflect findings and is not final. It will include the ‘theories of harm’ that concern features in the private healthcare sector that have adverse effects on competition. Within this framework, specific issues to be considered include market power, barriers to expansion and regulatory frameworks. The latter will likely overlap with issues of transparency, accountability and proper regulation in not only the private sector but the public sector too. This means that the findings of the inquiry will have overlapping effects on the public sector as well. The statement of issues will be opened to the public who may then add any further issues that should be considered in this investigation.
Once public comment has been evaluated, 1 August 2014 is the date set for the call to all relevant parties for submissions of information.
From 1 March 2015 until the 30 April 2015, public hearings will be held and after such all information will be analysed. The findings of the report are expected to be published in October 2015. This is a tentative schedule and will heavily depend on information that is made available and how much information there is to analyse.
What the Commission Expects from the Public
Judge Ngcobo explained what the Commission expects from the public. He stated that without public input and volunteering information, the report will be lacking. He urged the public to inform the Panel on how petitioners view how the market operates. In order to know which practices do or do not comply with law, stakeholders with relevant information must provide accurate information on how the market operates in order for the Commission to sift out where the problems, if there are any, lie. Accurate information is undoubtedly necessary to the effectiveness of this inquiry. Once their findings have been published in October next year (hopefully), the Commission hopes for feedback from the general public pertaining to suggested improvements for the functioning of the market and for those within the market to respond to any parts of the report on which they can shed light or where they were affected.
Audience Participation
The conference was then opened to the floor for questions, many of which expressed concern for the ‘disregard’ of the public health care sector in this inquiry. In short, the Competition Commission feels that as part of a market inquiry, one must be dealing with a market and not a service which it sees the public health care sector to be. It also understands that when dealing with issues of regulation, where there are problems in the private sector, there are likely problems in the public sector too. Thus, changing regulation or ensuring that practices are properly regulated will also affect the public sector. If improvements are made to the private sector in terms of regulation, we can foresee improvements in the public sector too.
There was further concern expressed for confidentiality, location of future meetings and languages in which the meetings would be held so as to include all members of society. The panel seemed open to new locations in all provinces and will make allowances for people to be involved in the language of their choice. They remained firm that confidentiality would be treated with respect but, unreasonable requests for confidentiality should not be expected to be protected.
The HSF supports this inquiry. Our organisation’s mandate is to promote and protect our Constitution and thus according to Section 27, we support the advancement of a well regulated health system, where people are accountable and, that ensures access to all South Africans. Whether provided by a market or a government service, access to affordable health care is our right.
Amy Meyer
HSF Intern
amy@hsf.org.za
