Notice No. 1344

7 December 2018

GG 42092

Economic Development Department

Competition Commission

The Competition Commission (“Commission”) published a Notice in the Government Gazette on 13 October 2017 (government Notice No 41178 of 2017) with regard to the exemption application filed by the National Hospital Network (“NHN”). The exemption was filed in terms of section 10(3)(b)(ii) of the Competition Act No. 89 of 1998, as amended (“the Competition Act”).

The NHN is a non-profit company, a co-operative venture that is controlled by its members, a group of independent private hospitals who run medical establishments such as day clinics, sub-acute facilities and psychiatric facilities. These members are broadly competitors in the provision of private healthcare services.

NHN requested the Commission, that the exemption granted to it until 31 December 2017 be extended and that it be permitted to continue to engage in the following activities on behalf of its members with medical aid schemes and/or medical scheme administrators:—

In addition to the above exemption, the NHN sought a further exemption to engage on behalf of its members in global fee negotiations with medical schemes, administrators, the state and healthcare providers (professional associations) and to undertake collective or centralised procurement.

The Commission evaluated the application as a possible contravention of Chapter 2 of the Competition Act. The application is based on the ground that it is necessary to obtain the objectives of section 10(3)(b) of the Competition Act, being: “(ii) promotion of the ability of small businesses, or firms controlled or owned by historically disadvantaged persons, to become competitive.”

The Commission’s investigation revealed that NHN has been operating under exemptions1 from the Competition Act, permitting it to collectively negotiate tariffs with the medical schemes and/or medical scheme administrators. The exemption has enabled NHN to get tariffs for its members that enabled them to grow in competition with the big three hospitals. Through the exemption, some of NHN members were able to grow in terms of number of beds, facilities etc. The last exemption was due to expire in December 2017 but was extended to 31 October 2018 by the Commission. The Commission’s investigation revealed that the market dynamics remained the same and as a result, the exemption is still required to enable NHN members to be able to continue growing in competition with the big three hospitals.

In addition, the Commission is of the view that the conduct in respect of centralised procurement and global fees will improve NHN’s ability to achieve the said objectives.

Notice is therefore given in terms of section 10(7) of the Competition Act that the exemption application by NHN has been granted for a period of five (5) years commencing on 1 November 2018 and ending on 31 October 2023, subject to the following conditions:

3.        Annual Submission of Information

The conditions imposed are intended to enable the NHN to achieve fully the objectives in the exemption application and for the Commission to effectively monitor implementation.

Notice is therefore given in terms of section 10(8) of the Act that any person with a substantial financial interest affected by the abovementioned decision may appeal the decision to the Competition Tribunal in the prescribed manner.

Any queries in this regard should be directed to:

Mr Derrick Bowles / Mr Tlabo Mabye

Market Conduct Division

Telephone: 012 762 6917 / 012 762 6977

Email: [email protected] / [email protected]

In correspondence, kindly refer to case no. 2017AUG0020.