Summary of Judgment

1. Introduction

These proceedings concerned the urgent confirmation by the Competition Tribunal of South Africa of two consent agreements concluded between the Competition Commission and two private pathology laboratories regarding the prices charged for COVID-19 PCR tests.

The relevant parties were the Competition Commission (as the investigating and settling authority under the Competition Act), and Drs Du Buisson, Kramer, Swart, Bouwer Incorporated t/a Ampath (“Ampath”) as well as Drs Mauff AC & Partners t/a Lancet Laboratories (“Lancet”). The Council for Medical Schemes (“CMS”) featured in the matter as the complainant that initiated the Commission’s investigation, although it was not described as a party to the consent agreements in the provided text.

The procedural history reflected in the text is that CMS lodged a complaint with the Commission on 8 October 2021; the Commission investigated and formed a prima facie view of a contravention; the Commission issued letters of demand on 8 December 2021 threatening urgent Tribunal proceedings if prices were not reduced; Ampath and Lancet responded on 9 December 2021 and 10 December 2021 respectively; the parties then concluded separate consent agreements; and the Tribunal confirmed both consent agreements as orders on an urgent basis, with the stated purpose of implementing price reductions without delay in light of rising Omicron infections and increased PCR testing demand. The Tribunal’s public statement was released on 12 December 2021.

The general subject matter was the alleged excessive pricing of COVID-19 PCR tests by private laboratories, addressed through settlement terms imposing a maximum price cap and associated compliance obligations, without admissions of liability.

2. Material Facts

CMS lodged a complaint with the Commission alleging that private laboratories were charging between R850 and R900 for a COVID-19 test. CMS considered these prices to be exorbitant and unjustifiable, particularly against the backdrop of alleged cost reductions.

The Commission’s investigation found that prices charged by pathology suppliers (suppliers of test kits to laboratories) had decreased, and that a “basic average” of costs from individual COVID-19 PCR test kit suppliers showed that costs decreased between March 2020 and September 2021. The Commission also found that pathology groups had earned significant profits since March 2020, especially in the current financial year to date, and that increased profitability indicated to the Commission that excessive pricing on COVID-19 PCR tests may be present.

On the basis of its investigation, the Commission stated that it found, prima facie, that pathology groups including Ampath and Lancet had engaged in conduct amounting to a contravention of section 8(1)(a) of the Competition Act (read with Regulation 4 of the Consumer Protection Regulations).

While the investigation was underway, Ampath voluntarily reduced its PCR test price to R710 (VAT inclusive) on 29 November 2021, and Lancet reduced its price to R725 (VAT inclusive) from 2 December 2021. The Commission nevertheless assessed that Ampath and Lancet were capable of profitably selling tests at R500 (VAT inclusive).

On 8 December 2021, the Commission sent letters of demand to Ampath and Lancet requiring them to immediately reduce the price of PCR tests to no more than R500 (VAT inclusive), failing which the Commission would launch an urgent application in the Tribunal for appropriate relief aimed at securing that price level.

Ampath responded on 9 December 2021 and Lancet on 10 December 2021, agreeing to reduce the price for PCR tests to no more than R500 (VAT inclusive). The Commission and each laboratory then concluded separate consent agreements, which were confirmed by the Tribunal as orders on an urgent basis.

Under the confirmed consent terms (as described in the text), Ampath agreed to stop charging R850 (VAT inclusive) (the price that formed the subject matter of the CMS complaint), to stop charging R710 (VAT inclusive) (its post-29 November 2021 price), and to reduce the price to no more than R500 (VAT inclusive). Lancet agreed to stop charging R850 (VAT inclusive) (the CMS-complaint price), to stop charging R725 (VAT inclusive) (its post-2 December 2021 price), and to reduce the price to no more than R500 (VAT inclusive).

The R500 price was described as a maximum price cap, with both laboratories permitted to charge or negotiate a price below that maximum. The price reductions were to apply for a period of two years.

Both laboratories were also required to submit quarterly compliance reports to the Commission, including the prices charged for PCR tests and any material changes in costs, and the Commission was entitled at any time to request data relating to compliance.

The text expressly recorded that neither Ampath nor Lancet admitted that they had charged excessive or exorbitant prices in contravention of section 8(1)(a) of the Competition Act (read with Regulation 4 of the Consumer Protection Regulations), and that nothing in the consent agreements should be construed as an admission of facts, conduct, liability, or wrongdoing.

3. Legal Issues

The central legal question reflected in the background to the matter was whether the pricing conduct of pathology laboratories, including Ampath and Lancet, may constitute excessive pricing in contravention of section 8(1)(a) of the Competition Act, read with Regulation 4 of the Consumer Protection Regulations. As presented in the text, this issue was framed at a prima facie level by the Commission’s investigation, rather than being finally determined through contested adjudication.

The Tribunal’s immediate task, as described, was to confirm the consent agreements as orders on an urgent basis, thereby giving effect to the agreed price reductions without delay in light of increased infections and testing demand. This aspect primarily concerned the application of the Tribunal’s consent-order mechanism to the agreed facts and settlement terms, rather than the resolution of disputed evidence on liability.

Overall, the dispute (as resolved) concerned the application of law to agreed settlement terms and the implementation of a remedial pricing arrangement, rather than a final judicial determination of the underlying alleged contravention on the merits.

4. Court’s Reasoning

The Tribunal’s reasoning, as reflected in the provided text, was confined to the basis for confirming the consent agreements on an urgent basis. The Tribunal confirmed the consent agreements as orders in order to ensure that the agreed price reductions took effect without delay, given the then-current context of rising Omicron infections and the consequent increase in the number of PCR tests.

The consent agreements themselves implemented a structured remedy: they required each laboratory to cease charging identified prices (including those that had prompted the CMS complaint and those charged following voluntary reductions) and to charge no more than R500 (VAT inclusive) for COVID-19 PCR tests for a defined period of two years. The agreements further incorporated monitoring and enforcement-supporting features through quarterly compliance reporting and the Commission’s entitlement to request compliance-related data.

The text further indicated that the settlement structure preserved the parties’ positions on liability, recording that neither laboratory admitted contravention, excessive pricing, or wrongdoing. The Tribunal’s confirmation of the agreements as orders was therefore presented as an implementation measure for agreed relief, rather than an evaluative conclusion that the laboratories had in fact contravened the Act.

5. Outcome and Relief

The Tribunal confirmed two separate consent agreements—one with Ampath and one with Lancet—as orders of the Competition Tribunal on an urgent basis.

The relief implemented by the confirmed orders required Ampath and Lancet to reduce the prices of COVID-19 PCR tests to a maximum of R500 (VAT inclusive) for a period of two years, and to stop charging higher specified prices identified in the consent terms. The R500 figure was stipulated as a maximum price cap, permitting lower negotiated or charged prices.

The confirmed orders also required each laboratory to provide compliance reports every three months to the Commission and allowed the Commission to request compliance-related data at any time.

The provided text did not describe any costs order, and no costs outcome was stated.

Cases Cited

No cases were cited in the provided text.

Legislation Cited

The Competition Act, section 8(1)(a), read together with Regulation 4 of the Consumer Protection Regulations, was referenced in the provided text.

Rules of Court Cited

No rules of court were cited in the provided text.

Held

The Competition Tribunal confirmed, on an urgent basis, two consent agreements concluded between the Competition Commission and the laboratories Ampath and Lancet as orders of the Tribunal. The orders implemented a two-year maximum price cap of R500 (VAT inclusive) for COVID-19 PCR tests, imposed ongoing compliance reporting obligations, and recorded that neither laboratory admitted liability or wrongdoing in relation to allegations of excessive pricing.

LEGAL PRINCIPLES

The matter reflected the application of the Competition Act’s framework under which the Competition Commission may investigate alleged prohibited conduct, form a prima facie view of a contravention, and resolve the matter through consent agreements that may be confirmed as enforceable orders of the Competition Tribunal.

The text further reflected that consent-based relief may be implemented without admissions of liability, and may include both substantive pricing commitments (here, a maximum price cap for a defined period) and compliance monitoring mechanisms (including periodic reporting and data-production obligations), particularly where urgent implementation is considered necessary to give effect to the agreed remedy.