AXA PPP loses appeal against competition shake-up

By Robin Stride

The Competition Appeals Tribunal has rejected an appeal by private medical insurer AXA PPP in relation to one of the findings from the Competition and Markets Authority’s (CMA’s) private healthcare investigation.

AXA PPP had challenged the CMA’s decision, made in its final report last April, that the formation of local anaesthetist groups did not have an adverse effect on competition.

But in a judgment published today, the Competition Appeal Tribunal (CAT) dismissed the appeal on all three grounds.

The CAT held its hearing on the AXA PPP appeal in January 2015, when a separate challenge by the Federation of Independent Practitioner Organisations (FIPO) was also heard.

Doctors are expecting a judgment on the FIPO appeal soon. The CAT said this would be ‘shortly.’

AXA PPP said: ‘We are surprised and disappointed the CAT has not upheld our appeal.

‘The evidence we presented – namely that, in some local markets, the combination of anaesthetist groups with high market shares and the practice of collective fee setting within those groups leads to a loss of rivalry and consequently has an adverse effect on competition – was sound and in keeping with our own experience and that of others who purchase private anaesthetists’ services.

‘We remain concerned that this is a significant issue for patients and we will continue to challenge unfair practices in the interests of our members.’


Summary of the Competition Appeal Tribunal’s findings

An unofficial summary prepared by the CAT’s Registry today said:

‘AXA PPP challenged parts of the CMA’s final report on its investigation of the private healthcare market dated 2 April 2014 (the ‘Report’). In that Report, the CMA concluded that the formation and operation of consultant groups did not give rise to an adverse effect on competition (‘AEC’) for the purposes of section 134 of the Act. AXA PPP contended that this conclusion was flawed.

‘By its application, AXA PPP challenged the CMA’s finding in relation to consultant groups on three grounds. AXA PPP’s grounds of review, together with the Tribunal’s conclusions in relation to each ground, are summarised briefly below:

1. AXA PPP claimed that the CMA failed properly to recognise that there was a prima facie AEC in relation to at least some local markets by reason of the formation and operation of anaesthetist groups in those markets, where a group has very high market share and there is evidence that it collectively sets prices, and the CMA had failed to identify any adequate reasons or evidence to displace the presumption that there was an AEC. For the reasons set out in the judgment, the Tribunal concluded that the CMA was entitled to reach the conclusion it did.

2. AXA PPP claimed that the evidence the CMA relied on as the basis for its conclusion that there was no AEC did not support such a determination and was irrational. AXA PPP submitted that, in fact, the evidence assembled by the CMA demonstrated that the formation and operation of anaesthetist groups had led to an increase in prices in at least some local markets.

‘Therefore, either this evidence did not displace the presumption of an AEC which AXA PPP argued existed or it positively tended to show that there was indeed an AEC in at least some local markets, and the CMA had not done any further analysis which would be capable of displacing such a conclusion.

‘The Tribunal found that this was a case in which there was evidence pointing in different directions, in relation to which an overall evaluative judgment had to be made and where more than one alternative conclusion was rationally possible. The CMA had tested the hypothesis set out in its theory of harm and rationally concluded that price analysis showed “mixed results”.

‘The CMA’s decision not to pursue its investigations at that point engaged its discretion and could not be impugned as irrational or in any way unlawful based on the application of judicial review principles.

3. AXA PPP submitted that the CMA breached its statutory obligation under section 134(1) of the Act to find whether there was an AEC. For the reasons set out in the judgment, the Tribunal considered that the CMA’s conclusion on the existence of an AEC was a proper and lawful response to the question it was obliged to determine under section 134(1).

‘The Tribunal also concluded that the CMA was lawfully entitled to decide that it had taken its investigations far enough, and that it would be disproportionate and potentially prejudicial to the fulfilment of its overall statutory obligations to take it further.

‘Accordingly, and for the reasons set out in the judgment, the Tribunal unanimously dismissed AXA PPP’s application for review.’

Still to be decided

The CAT’s Registry added that AXA PPP had also challenged another part of the Report, regarding the provision of private hospital services. It said this part of the application had been stayed pursuant to the Tribunal’s Order of 12 January 2015 and was therefore not addressed in this judgment.

In December, the CAT agreed to the CMA’s request to quash part of its final report relating to the healthcare market in central London – and remit it back to the CMA to reconsider and reach a new decision.

The CMA published an order last October which put into force some of the changes required by the investigation.