Price fixing and competition law – a warning for surgeons

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This article examines a decision which, according to the CMA, signifies the first time that formal competition law enforcement action has been taken against medical professionals in the UK.

The Competition and Markets Authority (CMA) recently published the outcomes of its investigation into the practices of the Consultant Eye Surgeons Partnership Limited (CESP) – an organisation of private consultant ophthalmologists, representing the interests of 37 LLPs and their consultant members.

This article examines the decision which, according to the CMA, signifies the first time that formal competition law enforcement action has been taken against medical professionals in the UK.

The role of CMA

The CMA was established under the Enterprise and Regulatory Reform Act 2013, and acts as the UK’s primary competition authority with an economy-wide remit. It is an independent, non-ministerial department which works to promote competition for the benefit of consumers and businesses alike.

The CMA’s authority extends to investigating practices across different markets and, where appropriate, imposing financial penalties.

The decision against CESP

In May 2013, concerns were raised over CESP’s strategy of anti-competitive information exchange and pricing agreements. CESP was found to be facilitating price fixing between its members, as opposed to encouraging competition with one another.

CESP admitted to various infringements of competition law between September 2008 to July 2015, including allegations of:

  • Recommending that members refuse to accept lower fees offered by insurers, and that they charge insured patients higher self-pay fees.
  • Circulating to members detailed price lists for ophthalmic procedures to be used with insurers. The collectively set prices did not pass on lower local costs (for example, cheaper hospital fees), and made it more difficult for insurers and patients to obtain lower prices.
  • Facilitating the sharing of consultants’ future pricing and business intentions (for example, whether to sign up to a private hospital group’s package price, which enabled members to align their responses).

As a result of the infringements, CESP was fined £382,500 (reduced from £500,000). The reduction was applied as a result of CESP’s admission to the above and their continued agreement to co-operate with the investigation, plus the adoption of a comprehensive competition law compliance programme.

The CMA welcomed CESP’s actions, designed to ensure that its members will avoid future infringements of competition law, whilst also setting a good example for other organisations in the medical profession.

Wider implications

The above decision followed a long investigation process (over two years since the original complaint was first raised). The clear message from the CMA is that infringements of competition law will be taken seriously, particularly with regard to strategies for information exchange and pricing fixing.

The decision also sends a clear warning to organisations who perform similar functions within the medical profession. Such organisations may wish to consider or review their existing anti-competition policies and training in light of the decision, to ensure these remain relevant and accurate. Should any organisation be found responsible for an infringement of competition law, full co-operation with the CMA and its investigation should be encouraged.

The decision also demonstrates that patient protection remains a primary concern (by ensuring prices are competitive for consumers), whilst demonstrating that medical professionals are within the CMA’s remit when it comes to anti-competitive behaviour.

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