A brief overview of competition law news, brought to you by Laura Brealey and Robyn Sandilands. Here we cover the OFT's final decisionin itsinvestigation into the supply of healthcare products and thefinal report by the CMA on the Private Healthcare Market.
On 20 March 2014, the Office of Fair Trading issued a Decision finding that Hamsard 3149 Limited and two of its subsidiaries together with Celesio AG and its subsidiary Lloyds Pharmacy Limited entered into a market sharing agreement in relation to the supply of prescription medicines to care homes between May 2011 and November 2011. The OFT imposed a fine of £370,226 on Hamsard and its subsidiaries. The arrangement, in brief, meant that each party agreed not to supply prescription medicines to the other's existing care home customers over a limited period.
Lloyds Pharmacy Limited benefitted from the OFT's leniency policy by coming forward with information about the market sharing agreement. The leniency policy means that the first company to come forward with information regarding its participation in a cartel may be granted immunity from the fines which could otherwise be imposed as a result of their competition law breach. The grant of immunity will also be subject to additional conditions such as continued cooperation with the OFT. Immunity is very attractive as the Competition Act 1998 grants the OFT powers to issue fines to businesses of up to 10% of their worldwide turnover for competition law breaches.
Hamsard also benefitted from the leniency regime by making admissions in relation to competition law breaches and co-operating with the OFT. As a result of this, the fine payable by Hamsard was reduced from £646,426.
As part of the reforms of the UK competition regime the Competition and Markets Authority went live on 1 April 2014 and has now taken over from the OFT and the Competition Commission. The Government has previously acknowledged that the leniency regime is a vital tool and emphasised the importance of preserving the incentives for companies to seek leniency throughout the reform process.
On 2 April 2014, the Competition and Markets Authority (CMA) published its findings and conclusions following the two year investigation by the Competition Commission (CC) into the private healthcare market.
Throughout its two year investigation the CC focused in particular upon the interactions between hospital consultants, hospital operators, patients and private medical insurers and concluded that there are aspects of the supply and acquisition of privately funded healthcare services which prevent, restrict, or distort competition and which therefore result in having an adverse effect on competition.
The CMA report confirms the remedies package and measures which will be taken to increase competition in the Private Healthcare Market. The remedies include the divestiture by HCA of either the London Bridge and the Princess Grace hospitals or the Wellington hospital, restrictions on benefits and incentive schemes and a review function for the CMA (with prohibition powers) in respect of arrangements between NHS Trusts and Private Patient Unit (PPU) partners. This remedy may have a significant impact on how NHS Trusts and NHS Foundation Trusts procure PPU partners in the future. Previously there were concerns that this remedy could curtail the freedom that NHS Trusts currently have both to identify providers who are willing to invest in the PPU projects and to cultivate partnerships with those providers who have the right experience and expertise.
A full summary of the CMA report together with comments on the potential impact of the findings and remedies will be published on the Bevan Brittan website shortly.