Competition Act, 1998 (Act No. 89 of 1998)

Notices

Notice in terms of Section 10(7) of the Competition Act No. 89 of 1998 (As Amended) - The National Hospital Network Conditional Exemption Granted

Notice No. 5022 of 2024

Purchase

Notice No. 5022

5 July 2024

GG 50903

Department of Trade, Industry and Competition

The Competiton Commission of South Africa

National Hospital Network - 2023SEP0040

On 27 September 2023, the National Hospital Association (“the NHN”) and its members, hereinafter referred to as (“the Applicants”) filed an application for an exemption (“the Application”) in terms of Section 10(3)(b)(ii) of the Competition Act No 89 of 1998, as amended (“the Competition Act”). The NHN’s application related to the category of agreements and/or practices concluded by its members who are in a horizontal relationship.

The NHN is a non-profit organization registered in terms of the Companies Act 71 of 2008. Its members are independent private hospitals. In the NHN’s context, independent relates to membership in the NHN that is limited to private hospitals which are not ‘owned’ or controlled by Mediclinic South Africa, the Netcare Hospital Group and Life Healthcare.

In their Application, the Applicants relied on the objectives set out in Section 10(3)(b)(ii) of the Competition Act which allows an exemption of agreements and/or practices that promote the effective entry into, participation in or expansion within a market by small medium businesses, or firms controlled or owned by historically disadvantaged persons.

4.	The Applicants submitted that the practices sought to be implemented contravene Section 4(1)(b) of the Competition Act since they operate as competitors in the provision of hospital services.

5.	The NHN has requested the Competition Commission (“the Commission”) to grant an exemption for the period of five years to allow for the implementation of the following practices:

5.1.	The members of the NHN shall agree to collectively implement the prices negotiated and agreed on their behalf by the NHN, with medical schemes and medical scheme administrators;

5.2.	The NHN shall engage on behalf of its members in global fee negotiations with medical schemes, administrators, the State and healthcare providers (professional associations);

5.3.	The NHN shall undertake collective or centralised procurement on behalf of its members; and

5.4.	The NHN shall promote the interests of its members and to market their services and also to provide a base for benchmarking which would help NHN members to increase efficiencies.

On 1 December 2023, the Commission published a Government Gazette Notice pertaining to the NHN’s exemption application in accordance with Section 10(6) of the Competition Act, read with Rule 19(4) of the Rules of Conduct of Proceedings in the Competition Commission (“the Rules”). The Notice stated that the conduct sought may amount to prohibited practices in contravention of Section 4 of the Competition Act. The Notice also called upon interested parties to make written representations to the Commission within twenty (20) business days of publication as to why the exemption should or should not be granted.

7.	The submissions received from interested parties were considered in the assessment of the NHN’s exemption application.

8.	The Commission’s investigation revealed that:

8.1.	the conduct of the NHN’s members would result in a contravention of Section 4 of the Competition Act;

8.2.	the exemption if granted, may achieve the objectives of Section 10(3)(b)(ii) of the Competition Act.

After consideration of the exemption application, the Commission has decided to grant the NHN a conditional exemption for a period of five (5) years, commencing from 1 June 2024 and ending on 31 May 2029. The exemption will be subject to monitoring mechanisms which the Commission has put in place to ensure that the objectives set out in the application are met by the exemption. The Conditions and Monitoring Mechanisms are attached below as Annexure A.

10.

Notice is hereby given in terms of Section 10(7) of the Competition Act regarding the Commission’s decision to grant this exemption. The Applicants and any other person with a substantial material interest affected by this decision may lodge an appeal to the Competition Tribunal in the prescribed manner in terms of Section 10(8) of the Competition Act.

11.	Further queries concerning this Notice should be directed to:

Dr Thabang Ndlovu

Competition Commission South Africa

Market Conduct Division

Email: [email protected]

Mr Tlabo Mabye