COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 07/CR/Feb05
In the matter between:
The Competition Commission Applicant
and
The Board of Healthcare Funders of Southern Africa First Respondent
Order
Further to the application of the Competition Commission in terms of Section
49D, in the above matter -
The Tribunal hereby confirms the order as agreed to and proposed by the
Competition Commission and the respondent.
D Lewis
Concurring: N Manoim, Y Carrim
03 March 2005
Date
IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
HELD AT PRETORIA
CASE NO:
In the matter between
COMPETITION COMMISSION Applicant
and
THE BOARD OF HEALTHCARE FUNDERS
OF SOUTHERN AFRICA Respondent
SETTLEMENT AGREEMENT BETWEEN THE COMPETITION COMMISSION
AND THE BOARD OF HEALTHCARE FUNDERS OF SOUTHERN AFRICA IN
REGARD TO AN ALLEGED CONTRAVENTION OF SECTION 4(1)b)(i) OF THE
COMPETITION ACT, 1998 (ACT NO. 89 OF 1998)
WHEREAS THE COMPETITION COMMISSIONER OF SOUTH AFRICA, THE
APPLICANT HEREIN, INITIATED A COMPLAINT AGAINST THE RESPONDENT
AND,
HAVING REGARD to the Competition Act, 1938 (Act No. 89 of 1998), as
amended by the Competition Second Amendment Act, 2000 (Act No. 39 of
2000), and in particular Chapter 2 and Chapter 5 thereof,
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HAVING REGARD to the Form CC1 Complaint lodged by the Complainant
and issued pursuant to Section 49B of the Competition Act, 1998 (Act No. 83
of 1998) as amended,
HAVING REGARD to the Rules for the Conduct of Proceedings in the
Competition Commission pursuant to Government Notice 20384 in
Government Gazette No. 22025 (Vol. 410 of 1999), and
HAVING REGARD to the parties hereto having agreed to be bound by the
provisions of this Settlement Agreement to resolve all possible disputes
arising out of the aforementioned complaint initiated by the Complainant
herein;
NOW, THEREFORE, before the taking of any testimony, and without trial or
adjudication of any Issue of fact or law, and upon agreement between the
Competition Commission and the Respondent, it is hereby agreed as
follows:
For the purposes of this settlement agreement the following definitions shall apply:
1. The "Act" means the Competition Act, 1998 (Act No. 89, of 1998), as
amended.
2. "Section 4(1)(b)(1)" means section 4(1)(b)(i) of the Act which states, inter
1.
DEFINITIONS
Alia, that:
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"(1) An agreement between, or concerted practice by, firms, or a
decision by an association of firms, is prohibited if it is between
parties in a horizontal relationship and if-
(b) it involves any of the following restrictive horizontal
practices:
(i) directly or indirectly fixing a purchase or selling
price or any other trading condition."
3. "Benchmark tariffs" means the recommended scale of benefits published by
the Respondent.
4. "Person" includes any natural person, corporation, association, firm,
partnership, or other business or legal entity.
5. The "Commission" means the Competition Commission of South Africa, a
statutory body, established in terms of section 19 of the Act, with its
principal place of business at Mulayo Building, The DTI Campus,
77 Meintjies Street, Sunnyside, Pretoria, Gauteng.
6. The "Tribunal" means the Competition Tribunal of South Africa, a statutory
body, established in terms of section 26 of the Act, with its principal place of
business at Mulayo Building, The DTI Campus, 77 Meintjies Street,
Sunnyside, Gauteng,
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7. The "Complaint" means the complaint initiated fay the Complainant in terms
of Section 49B(1) of the Act and filed with the Commission under case
number 2002AUG164.
8. The "Complainant means the Competition Commissioner of the
Commission.
9. The "Respondent" means the Board of Healthcare Funders of Southern
Africa, a company duly registered and incorporated in terms of section 21 of
the Companies Act, No. 01 of 1973 (Registration No. 2001/03387/08) with
its principal place of business at 37 Bath Avenue, Rosebank, Johannesburg;
10. "Service Provider" means, collectively, the providers of relevant health
services as defined in the Medical Schemes Act.
11. The "Parties" means collectively the Commission and the Respondent, and
includes an individual reference to any one or more of them, as the context
may require.
12. The "Settlement Agreement" means this agreement in its duly signed form
by the Commission and the Respondent
13. "Medical Schemes Act" means the Medical Schemes Act, No. 131 of 1998.
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APPLICABILITY
This Settlement Agreement applies to the Respondent,
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3.
ALL EGATION OF CONTRAVENTION OF THE ACT
In its complaint initiation submission, the Complainant made the allegation that the
Respondent is an association of medical aid schemes, which determines,
recommends and publishes benchmark tariffs for healthcare services on an annual
basis. These recommended tariffs are embodied in various annual publications
entitled Board of Healthcare Funders of Southern Africa. Benchmark Tariffs.
4.1 Following the initiation of the Complaint, the Commission undertook an
investigation into the alleged prohibited practices of the Respondent
4.2 Pursuant to the investigation, the Commission was of the view that:
4.2.1 The Respondent is an association incorporated not for gain in terms of the
company laws of South Africa, representing approximately eighty five per
cent (85%) of medical aid schemes in South Africa. The Respondent's
activities deal with both the professional and business aspects of its
members' businesses.
COMMISSION'S INVESTIGATION
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4.2.2 The purpose of the Respondent is to promote the interests of member
schemes with a view to promoting the effective and efficient access, of their
subscribing members, to healthcare benefits. Its objectives are furthermore
to promote the viability of the healthcare industry through, inter alia,
facilitation of communication between members and various stakeholders in
the healthcare funding industry.
4.2.3 As part of its activities, the Respondent, inter alia, determines, recommends
and publishes benchmark tariffs. The Respondent provides these services
to some one hundred and fifty one (151) medical aid schemes in South
Africa, These recommended tariffs are embodied in various annual
publications entitled Board of Healthcare Funders of Southern Africa,
Benchmark Tariffs.
4.2.4 in the Commission's view, the conduct described in clause 4.2.3 hereof
constitutes a contravention of section 4(1)(b)(i) in that;
4.2.4.1 the Respondent is an association of firms;
4.2.4.2 that determines, recommends and publishes tariffs to and/or for its
members;
4.2.4 3 which recommendation has the effect of fixing a purchase price.
5,1 The Parties have reached agreement on the resolution of the Complaint on
specified terms and agree that all issues pertaining to the investigation shad
be resolved on the basis of this settlement agreement.
5.
SETTLEMENT
5.2 The settlement agreement is entered into in full and final settlement of any
and all disputes, concerns, issues and matters of whatsoever nature and
howsoever arising between the Parties in respect of or pursuant to the
Complaint
6.
AGREEMENT CONCERNING CONDUCT
6.1 The Respondent hereby undertakes to cease publishing a tariff,
recommended scale of benefits or other form of price guideline for services
rendered in the private healthcare industry,
6.2 Without limiting or derogating from the aforegoing, the Respondent wilt be
entitled to convert information that exists in the public domain into an
alternative format for use by medical schemes.
6.3 It is recorded that the Respondent has sent a letter to each of its members
informing them that the Respondent shall no longer determine, recommend
or publish tariffs for the provision of medical services (a copy of which is
annexed hereto as Annexure A).
6 4 It is further recorded that the Respondent has advised its members of the
competition concerns that arise from deciding to jointly utilise the Reference
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Price List as published by the Council for Medical Schemes (CMS) In this
regard, the Respondent has impressed upon its members not to engage in
collusive activity with another medical scheme
6.6 All undertakings contemplated in this clause 6 shall be without any admission
of guilt or wrongdoing by the Respondent
6.7 Without limiting or derogating from the provisions of clause 6.6 above, the
Respondent, on 15 September 2004, paid to the Competition Commission
(for on-payment into the National Revenue Fund), as set out in clause 7
hereof, a settlement payment in the amount of R500 000,00 (five hundred
thousand rand) in consideration for the finalisation of this matter
6.8 It is recorded that the Respondent is unable to undertake to significantly
influence its members to adopt the policies and stand points outlined herein.
7.1 It is recorded that the Respondent, on 15 September 2004, paid the settlement
payment of R500 000,00 (five hundred thousand rand) contemplated in
clause 6.7 hereof to the Competition Commission for on-payment into the
National Revenue Fund,
7.2 This settlement agreement is entered into in full and final settlement of any and
all disputes, concerns, issues and matters of whatsoever nature between the
Commission and the Respondent in respect of conduct referred to in clause 4
hereof.
7.
SETTLEMENT FEE
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8.
The Commission shall refer the complaint to the Tribunal but advise the Tribunal
that it shall not continue with the prosecution.
VARIATION OF THE SETTLEMENT AGREEMENT
Any variation of this settlement agreement shall have no legal effect and shall not
be binding on the Parties unless reduced to writing and signed by or on behalf of
the Parties
10.
COSTS
Each party agrees to pay its own legal costs in respect of this settlement
agreement and in respect of the Complaint.
11.
EFFECTIVE DATE OF THE SETTLEMENT AGREEMENT
This settlement agreement shall come into force on the data on which it is
confirmed by the Competition Tribunal
12.
BREACH
The parties agree that where either party is in breach of this agreement, the
Competition Tribunal and Competition Appeal Court shall have exclusive
jurisdiction to deal therewith
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13.
DOMICILIUM CITANDI ET EXECUTANDI
13.1 The Parties choose as their domicilia Citandi et executandi for all purposes
under this agreement, whether in respect of court process, notices or other
documents or communications of whatsoever nature (including the exercise of
any option), the following addresses:
13.1.1 THE RESPONDENT:
Physical: 37 Bath Avenue
Rosebank
2196
Postal: PO Box 2324
Parklands
2121
Telefax: (011)680-8798
E-mail: bhf@bhfgiobal.com
13.1.2 THE COMMISSION :
Physical: Mulayo Building
The DTI Campus
77 Meintjies Street
Sunnyside
Pretoria
Postal: Private Bag X 23
Lynnwood Ridge
0040
Telefax: 012 394 4200
E-mail: ccsa@compcom.co.za
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13.2 Any notice or communication required or permitted to be given In terms of
this agreement shall be valid and effective only if in writing but it shall be
competent to give notice by telefax or e-mail.
13.3 Either party may by notice to the other party change the physical address
chosen as its domicilium citandi el executandi to another physical address
where postal delivery occurs or its postal address or its telefax number or e-
mail address, provided that the change shall become effective on the 10th
(tenth) business day from the deemed receipt of the notice by the other party.
13.4 Any notice to a party —
13.4.1 sent by prepaid registered post (by airmail if appropriate) in a correctly
addressed envelope to it at an address chosen as its domicilium citandi et
executandi to which post is delivered shall be deemed to have been
received on the 10th (tenth) business day after posting (unless the contrary
is proved);
13.4.2 delivered by hand to a responsible person during ordinary business hours at
the physical address chosen as its domicilium citandi et executandi shall be
deemed to have been received on the day of delivery; or
13.4.3 sent by telefax to its chosen telefax number, shall be deemed to have been
received on the date of despatch (unless the contrary is proved); or
13.4.4 sent by e-mail to its chosen e-mail address, shall be deemed to have been
received on the date of despatch (unless the contrary is proved).
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14.
WHOLE AGREEMENT, NO AMENDMENT
14.1 This settlement agreement constitutes the whole agreement between the
Parties relating to the subject matter hereof.
14.2 No amendment or consensual cancellation of this settlement agreement or
any provision or term thereof or of any agreement, or other document issued
or executed pursuant to or in terms of this settlement agreement and no
settlement of any disputes arising under this settlement agreement and no
extension of time, waiver or relaxation or suspension of any of the provisions
or terms of this settlement agreement or of any agreement, or other document
issued pursuant to or in terms of this settlement agreement shall be binding
unless recorded in a written document signed by the Parties. Any such
extension, waiver or relaxation or suspension which is so given or made shall
be strictly construed as relating strictly to the matter in respect whereof it was
made or given.
14 3 No extension of time or waiver or relaxation of any of the provisions or terms
of this settlement agreement or any agreement, or other document issued or
executed pursuant to or in terms of this settlement agreement, shall operate
as an estoppel against any party in respect of its rights under this settlement
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agreement, nor shall it operate so as to preclude such party thereafter from
exercising its rights strictly in accordance with this settlement agreement.
14.4 No party shall be bound by any express or implied term, representation,
warranty, promise or the like not recorded herein, whether it induced the
contract and/or whether it was negligent or not.
Thus done and signed by the Parties here below.
PARTIES
DATE
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ON BEHALF OF APPLICANT
DATE