Australia: The ACCC turns its attention to the medical and health sector

The Australian Competition and Consumer Commission (the ACCC) has announced that the medical and health sector will be a priority compliance and enforcement area for 2015.

Businesses in this space should take note and review their current practices for compliance.

ACCC compliance and enforcement priorities

Each year the ACCC announces its compliance and enforcement priorities for that year. Some priorities never seem to change, such as the investigation of cartels, anti-competitive agreements and practices and the misuse of market power. However, the ACCC also looks to new areas of focus, based upon information such as complaint data and international trends. This year it is the turn of the medical and health sector to be placed under the spotlight.

Why the medical and health sector?

To those that follow the ACCC's enforcement activity, this should come as no real surprise, as 2014 saw the ACCC take action on both the competition and consumer side in this sector.

In the ACCC Chairman Rod Sims' speech announcing the 2015 priorities, he noted that the ACCC has received allegations about attempts to limit access to products, patients, procedures and facilities in this sector. He referenced the significant effect anti-competitive conduct by medical professionals in regional areas can have, using the example of the proceedings commenced by the ACCC late last year against Little Company of Mary Health Care Limited (Calvary) for imposing by-laws regulating the use of Calvary medical facilities by medical practitioners. Those by-laws have been alleged by the ACCC to restrict those practitioners from providing services to competing facilities, with the purpose of substantially lessening competition.

However, this was not the only action taken by the ACCC in the medical and health sector.

Last year, the ACCC commenced proceedings against Pfizer, alleging misuse of market power and exclusive dealing in relation to its supply of atorvastatin to pharmacies. Whilst the Court has recently judged in Pfizer's favour, this case demonstrates the ACCC's focus on this sector.

The ACCC also looked at a number of medical and health related merger applications, and successfully opposed both Sonic Healthcare's proposed acquisition of the Delta Imaging Group and Healthscope's proposed acquisition of Brunswick Private Hospital.

From the consumer side, two breast-imaging businesses, Safe Breast Imaging and Breast Check were fined $200,000 and $75,000 respectively for making false representations about their breast-imaging services. Fines were also imposed on their directors.

What particularly irked the ACCC were the health related claims being made by these businesses without proper scientific basis, and the view that consumers would expect a medical-related business to promote itself in a way consistent with credible scientific knowledge. Consumers are particularly vulnerable when they must rely heavily on technical and scientific information that they cannot be reasonably expected to check or certify.

Key considerations

Being made a priority by the ACCC does not necessarily mean that everyone in that sector should expect a knock on the door. However, what it does mean is that the ACCC is going to take a close interest and dedicate resources to investigating and prosecuting breaches of the Competition and Consumer Act in this sector.

Combined with other ACCC priorities such as a continued clampdown on anti-competitive conduct and practices, product safety issues and misleading advertising claims, it is reasonable to expect an increased number of investigations and subsequent prosecutions across the sector.

Now on notice, businesses that are active in the sector should review their current practices for compliance. Behaviour that should be carefully reviewed includes any agreements or understandings with competitors, exclusivity arrangements, as well as advertising and representations made promoting the business and its goods or services. Businesses should ensure that their management understand their obligations under the Act, and have appropriate training and education in place to raise and reinforce awareness across the business. The penalties for non-compliance can be significant. Prevention is definitely the best medicine when it comes to breaches of the competition law.

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