Judgment

Neutral citation:

[2015] CAT 8

Published:

29 Apr 2015

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Summary:

Judgment of the Tribunal by a majority (Sales LJ and Clare Potter), dismissing an application for review under section 179 of the Enterprise Act 2002 (the “Act”) brought by the Federation of Independent Practitioner Organisations (“FIPO”).

FIPO 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:

(i) the market power of private medical insurers (“PMIs”) did not give rise to an adverse effect on competition (“AEC”) (the “PMI Decision”); and

(ii) there was an AEC arising from the lack of independent publicly available performance and fee information on consultants, which should be remedied by requiring healthcare facility operators and consultants to publish information about consultants’ fees and other aspects of their practice (the “Information Remedy”).

By its application, FIPO challenged the CMA’s PMI Decision on six grounds, and the Information Remedy on one ground. FIPO’s grounds of review, together with the Tribunal’s conclusions in relation to each ground, are summarised below:

(1) FIPO claimed that the PMI Decision was based on the factually erroneous and/or irrational finding that consumer choice was not restricted by the PMI’s practice of directing policyholders to consultants whose fees were within their caps. The Tribunal, by majority, dismissed this challenge on the basis that the CMA had well in mind that the practical availability for policyholders (who did not hold open referral policies) of payment of top-up fees could be substantially constrained by reason of the restrictions on the freedom of action of consultants.

(2) FIPO argued that the PMI Decision was based on the finding that consultants could compete below the fee caps, such finding being unsupported by probative evidence. Therefore, FIPO argued that this finding was irrational and/or amounted to a fundamental error of fact. FIPO also contended that the PMI Decision was procedurally unfair as that finding had not been put to it. For the reasons set out in the judgment, the Tribunal, by majority, dismissed both the rationality and procedural challenge under this ground. The CMA had made a detailed study of the relevant market and was well placed to assess what scope there could be for competition between consultants on price and quality. Based on this evidence, it was entitled to conclude that there was a real prospect of consultants being able to compete on price even below the cap. As to the procedural challenge, the CMA had set out the relevant Theories of Harm in its Statement of Issues and thus it was obvious that if FIPO wished to present a case that, for example, reimbursement rates were so low as to preclude any competition between consultants below those rates it should do so. Moreover, the CMA’s position was made clear in subsequent documents provided to FIPO, and FIPO made representations on several occasions. Therefore, the Tribunal concluded that the CMA satisfied its obligation to consult fairly pursuant to section 169 of the Act and the general requirements of fairness in public law.

(3) – (4) FIPO submitted that the PMI Decision was reached on the basis of a factually erroneous finding that the buyer power of the PMIs had not resulted in a reduction in the overall number of consultants in private practice when, in fact, the numbers had reduced. FIPO also argued that the CMA irrationally failed to conduct any investigation into whether the number of consultants was likely to fall significantly in the future. The Tribunal unanimously dismissed both of these grounds and concluded that the CMA’s assessment was both rational and lawful. The CMA had conducted a careful analysis of what had been happening in relation to consultant numbers generally and in private practice; and it also addressed what was likely to happen in the future.

(5) FIPO contended that the PMI Decision was based on the unevidenced finding that the fee constraints imposed by PMIs would benefit customers insofar as premiums would be reduced for policyholders. For the reasons set out in the judgment, the Tribunal unanimously concluded that the CMA’s reasoning, albeit thin, was clearly rational.

(6) FIPO claimed that the PMI Decision was based on the unevidenced assumption that it was in the interests of the PMIs to ensure that there were high-quality consultants in private practice. As explained in the judgment, the Tribunal, by majority, rejected this ground of challenge. The CMA’s assessment was based on straightforward reasoning which could not be said to be irrational, and was also supported by evidence.

(7) FIPO contended that the Information Remedy was not an effective remedy. However, it conceded at the hearing that this challenge could not succeed unless the Tribunal was persuaded that the PMI Decision was unlawful. As the Tribunal dismissed, by majority, FIPO’s application for review in connection with the CMA’s PMI Decision, this ground of challenge was dismissed, by majority, as well.

For the reasons set out in the dissenting judgment, Dermot Glynn would have allowed FIPO’s Grounds 1, 2, 6 and 7, quashed both the PMI Decision and Information Remedy and referred the matter back to the CMA.

Accordingly, by a majority, the Tribunal dismissed FIPO’s application for review.

This is an unofficial summary prepared by the Registry of the Competition Appeal Tribunal.