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Bloody nose for Competition Commission in dispute over jurisdiction over medical aid funds

Bloody nose for Competition Commission in dispute over jurisdiction over medical aid funds

The protracted entanglement between medical aid funds and the Competition Commission came to a head on Wednesday when Justice Dave Smuts of the Supreme Court ruled that medical aid funds can not be defined as enterprises in the conventional sense, and that the Commission does not have jurisdiction over them.

This ruling is also extended to the Namibian Association of Medical Aid Funds (Namaf).

This week’s Supreme Court judgement reverses an earlier High Court ruling which found that medical aid funds fall within the definition of an undertaking as described in the Competition Act. The High Court found that medial aid funds are indeed businesses in the conventional sense, even if their profits are not distributed.

A notice issued in March 2014 by the Competition Commission informed Namaf and its members that their conduct contravened section 23 of the Competition Act which prohibits the fixing of prices. According to the Commission, the fact that medical aid funds agree on tariffs and publish same as benchmark rates through its association, Namaf, is a form of price collusion and that Namaf is not granted this power under the Medical Aid Fund Act.

The medical aid funds maintained that they are precluded by the Medical Aid Fund Act from distributing profits to fund members or anyone else. They also argued that the conduct of setting benchmark tariffs is designed to achieve a non-commercial socio-economic objective, thus excluding that activity from the Competition Act. They also argued that the issue of benchmark tariffs is authorised by the Medical Aid Fund Act and as a result excluded from the jurisdiction of the Competition Commission.

But the Competition Commission persisted in its charges against Namaf and the medical aid funds, and in May 2014 notified them of its intentions to stop the practice of setting benchmark tariffs and seek remedies from the funds in the form of penalties.

A dialogue between the Competition Commission and the funds took place in Augst 2014 after which the Commission indicated it will make a final decision by the end of September in that year. However, when no clear decision was communicated by the Commission by December 2014, the funds and Namaf approached the High Court for an order declaring that they do not fall within the ambit of the Competition Act and that the setting of benchmark tariffs is authorised under the Medical Aid Fund Act. The medical aid funds lost this case while the Commission published its intention to lodge proceedings in court against the funds and Namaf.

The funds and Namaf appealed against the High Court ruling. Justice Smuts considered arguments for both the appellants and the respondents, citing legal authority in similar cases, before dismissing the respondents’ arguments in law.

“Funds are thus highly regulated in the public interest to protect their members and ensure that the business of a fund is conducted within the confines of the Act. The legislature has provided this protective framework in the interest of members. This is no doubt because of the statutorily endorsed social function funds perform where members subsidise each others’ medical costs on a principle of social solidarity thus rendering access to expensive medical services as widely as possible. It is plainly in the public interest that as many people as possible enjoy the benefits of fund members (to receive assistance in defraying medical expenses) to relieve the public purse from providing those medical services to those members. The purpose of the Medical Aid Fund Act is not only for control to be exercised over funds but also, according to its long title, to promote funds because of the useful societal function they perform” the judge stated when upholding the funds’ contention that the Competition Comission does not exercise jurisdiction over any medical aid fund or their association.

Justice Peter Shivute and Justice Petrus Damaseb concurred.


 

 

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