To be free of the Competition Act

To be free of the Competition Act

By Roxanne Ker and Jerome Veldsman

By Roxanne Ker and Jerome Veldsman

Namibian Association of Medical Aid Funds v Namibian Competition Commission, a decision of the Supreme Court of Namibia (the apex Court) on 19 July 2017 also dealt with price fixing.

The medical aid funds had through collective negotiations with providers of medical services set benchmark tariffs for medical services.

Section 23(1) of the Namibian Competition Act, 2003 prohibits undertakings by conjoint conduct replacing their independent actions, if the effect or object of the conduct is to lessen competition in trade in any goods or services in Namibia.  And an “undertaking” is any business carried on for gain or reward by an entity in the production, supply, or distribution of goods or the provision of any service.

Some providers of medical services complained to the Competition Commission, as the benchmark tariffs suppressed selling prices of healthcare services.  The Competition Commission investigated, and challenged the medical aid funds.

The medical aid funds’ primary defence was that they were not undertakings, as they do not carry on business for gain or reward.  They are precluded by the Medical Aid Funds Act from distributing profits to fund members or anyone else, and the conduct of setting benchmark tariffs is designed to achieve a non-commercial socio-economic objective, thus excluding that activity from the Competition Act.

With reference to European case law, the Court held that the business of a medical aid fund is not an economic activity for the purposes of competition law, and that a medical aid fund therefore does not constitute an undertaking for purposes of the Competition Act.

How would the South African Competition Tribunal or Competition Appeal Court decide on similar facts?  There are many similarities between the South African and Namibian Competition Acts, but also differences.  One difference is the lack of a substantive definition of the equivalent of an undertaking in the South African statute (therein referred to as a “firm“).  Accordingly, the ‘not carrying on business for gain or reward defence’ may not succeed in South Africa.  However, the following statements in Namibian Association of Medical Aid Funds may be persuasive that medical aid benchmark tariffs contribute to pro-competitive efficiencies rather than the lessening of competition:

The funds … do not compete in respect of the prices or tariffs set by the benchmark tariff.  Whilst the fixing of purchase prices can constitute deleterious anti-competitive conduct, … it would on the contrary seem that the setting of a benchmark tariffs within socially protective and utilitarian statutory context would not be adverse to the protection of consumers … and would instead appear to serve the public interest and consumers.”

Also in this issue:

More quotes from Epicurus

Price fixing knows no borders

When an employer overpays an employee

A nasty surprise for lenders

You’re in the Air Force Now

POPI and freedom of expression

POPI developments

The Palsgraf legacy