Consultants’ competition law fines prompt legal warning
Independent practitioners have been warned by a top lawyer to ensure they adhere to competition law when setting their fees.
The warning came after consultant ophthalmologists and a private hospital company were heavily fined by the Competition and Markets Authority (CMA).
Michael Rourke of Hempsons Solicitors
Michael Rourke, a partner at Hempsons, London, writes: ‘The announcement by the CMA of a £1.2m fine on Spire Healthcare Limited and Spire Healthcare Group plc is a useful reminder to the sector that it is not just the usual health regulators such as the GMC and Care Quality Commission that scrutinise the sector.
It was not only the companies which were fined – six individual ophthalmologists received personal penalties.
The arrangement which fell foul of competition law involved an agreement, beginning with discussions over dinner, that the consultants would not compete on price.
After the dinner, a Spire employee at the hospital sent an email to all seven consultants to suggest that the agreed price for initial consultations for self-pay patients be set at £200 going forward.
Four of the individuals then raised their prices to the agreed level, removing price competition between them. With fines on the individual doctors involved rising to £3,859, this has proved to be an expensive meal.
This is the second time that the CMA has imposed sanctions in the ophthalmology sector, with a fine of £382,500 imposed on CESP Limited, a membership organisation of private consultant ophthalmologists, in 2015.
However, it is not just ophthalmologists who are potentially at risk of infringing the law.
Key restrictions
While competition law does not prohibit all collaboration or information sharing by private practitioners, there are a number of key restrictions. These are (broadly):
- Co-ordinating to keep prices at a certain minimum level;
- Agreeing a fixed price or a mechanism for setting prices;
- Agreeing to share or divide markets – such as particular places – or patients between you and your competitors;
- Agreeing future commercial plans.
In addition to the general competition law requirements, since 2016 the CMA’s Private Healthcare Market Investigation Order 2014 (Order) has been in force.
This order included several rules about publishing information about fees, prohibiting certain referral fees being paid and prohibitions on practitioners owning above certain thresholds of financial interests in hospitals to which clinical referrals are made.
All practitioners need to be mindful of the requirement of competition law, as well as ethical considerations, when considering any form of price setting arrangements or agreements.’
CMA warning
The CMA said private consultants set their own prices for initial consultations for self-pay patients, but by agreeing not to compete with each other on price, the Spire hospital and the consultants in this case denied potential patients the chance to choose between the consultants to get the best deal.
Michael Grenfell, executive director of enforcement at the CMA, said: ‘Initial consultations are an essential first step for people suffering from eye disorders. It is unacceptable that patients were unable to shop around and get the best deal because Spire and the consultants illegally set a minimum consultation fee.
‘It is particularly disappointing that the CMA has had to take action in the private ophthalmology sector again, following a previous finding of anti-competitive practices in the sector in 2015.’
He said the CMA’s decision, and the subsequent fines, sent a clear signal that it would not tolerate anti-competitive behaviour.
The total fines imposed took into account the behaviour of those involved. The CMA has discounted each of the fines by 20% to reflect that they all admitted to the illegal arrangement and agreed to co-operate with the CMA, thereby shortening the length of its investigation.
Illegal activity
But the CMA said one consultant was not fined, as they brought the illegal activity to the CMA’s attention and fully co-operated with its investigation.
The final total penalties payable were: £1,200,000 for Spire Healthcare Limited and Spire Healthcare Group plc; the consultants received fines of: £2,978, £1,186, £2,312, £2,193, £3,859, and £642
The arrangement was found to have taken place from at least 29 August 2017 to 3 July 2019. In the case of one consultant, the arrangement was up to 28 June 2018, when they stopped consulting at the hospital.
The CMA said: ‘In arriving at its decision in this case, the CMA reiterates the established legal position that persons entering into an agreement to fix prices may break the law, even where this does not involve them having to subsequently change their prices.
‘Equally, a business can break the law if they are facilitating illegal conduct, even if they don’t supply the product or service for which the price has been fixed.
‘A party under investigation by the CMA may enter into a settlement agreement if it is prepared to admit that it has breached competition law and is willing to agree to a streamlined administrative procedure for the remainder of the investigation. In return, the CMA imposes a reduced penalty on the business where settlement would achieve clear efficiencies, resulting in the earlier adoption of any infringement decision and other resource savings.’
Spire Healthcare response
Spire Healthcare said it accepted the investigation’s findings into the case at Spire Regency Hospital in Macclesfield:
‘Spire Healthcare apologises for its conduct and fully co-operated with the CMA in its investigation, agreeing to accept the CMA’s findings in full and settle the case with a fine of £1.2m. The CMA acknowledged the group’s strong compliance programme, which resulted in a reduction to the final fine.’
It said it had a strong compliance culture and was disappointed with the failure to meet its standards in this isolated case.
‘The group remains committed to its learning culture and has further strengthened its compliance programme in response to this incident. Spire Healthcare is also investing in a new pricing system which will provide further controls to ensure compliance.’