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From: Managed Care and Competition Law Conference
Medico-Legal Society of Queensland & ADF: Brisbane, March 1998
Ms Suzanne Sheridan
In late 1997, the Australian Competition and Consumer Commission (ACCC) which had replaced the Trade Practices Commission, instituted proceedings against five anaesthetists and the Australian Society of Anaesthetists (ASA) on the grounds of price-fixing for after-hours services at three Sydney hospitals and a threatened boycott of services at one of the hospitals.
The ACCC alleged that the anaesthetists agreed to charge $25 for on-call services and that the ASA was knowingly concerned in, or party to, one or more of the arrangements. The ACCC alleged that the price-fixing agreements were made for services to be supplied at St George and Kareena Private Hospitals and Greenoaks (now Bankstown) Private Hospital.
The Trade Practices Act 1974 (Cth) commenced operation on 1 October 1974 and has continued to regulate consumer, business and commercial activities for some 20 years. Part IV of the Trade Practices Act, containing the restrictive trade practices provisions, is the legislative basis of Australia's competition policy. The progress of reform in competition policy in the last few years will have a major impact on all professions including the medical profession.
Traditionally as a result of constitutional limitations, Part IV of the Trade Practices Act primarily applied to trading, financial and foreign corporations, with only limited application to unincorporated associations and individuals 2.
In 1992, the Council of Australian Governments (COAG) recognised the need for a national competition policy to:
At the request of COAG, Professor Frederick Hilmer undertook an independent review of Australia's competition policy. In August 1993 his recommendations were presented to COAG and by February 1994 the Hilmer Report was accepted in principle. 4 His primary recommendation was that Australia should have a national competition policy applying universally across all sectors of the economy.
To achieve universal application of the competition rules, it was recognised that the application of the Trade Practices Act had to extend to apply to the professions, unincorporated associations and government business enterprises. For this to occur, the Trade Practices Act would need to apply to "individuals" as well as to "corporations". The Commonwealth Constitution precludes the Commonwealth government from enacting legislation unless the government can rely on a "head of power" contained in the Commonwealth Constitution 5. Since no head of power exists for the Commonwealth to pass legislation for "Individuals", the Commonwealth had to rely on the co-operation of the States and Territories to widen the ambit of the Trade Practices Act.
A national agreement was reached on 11 April 1995 when the Commonwealth, State and Territory governments of Australia entered into the Conduct Code Agreement. Under this Agreement, the State and Territory governments agreed to enact legislation which would implement the majority of the recommendations of the Hilmer report.
A national legislative scheme was implemented as a result of the Agreement, with each State and Territory and the Commonwealth enacting a Competition Policy Reform Act. The Competition Policy Reform Acts of the States and Territories effectively applies Part IV to individuals and other organisations not previously subject to Federal competition laws and policy. The substantive provisions of the Competition Policy Reform (Queensland) Act 1996 applying Part IV commenced operation on 21 July 1996. Apart from some necessary definitional changes, the Competition Code under this Act is identical to Part IV of the Trade Practices Act. 6
The national legislative scheme also effected amendments to the competition conduct rules contained in Part IV of the Trade Practices Act, which embody the majority of the recommendations made in the Hilmer Report. 7
The effect of the Conduct Code Agreement and the enactment of the Competition Policy Reform Acts is that Part IV of the Trade Practices Act now applies to all professionals including architects, engineers, lawyers, doctors, nurses, pharmacists and teachers alike, whether they provide their services through an incorporated body or not.
As a result of recommendations contained in the Hilmer Report, the national legislative scheme includes various new features. A new administrative regime has been adopted 8. The Trade Practices Commission ('TPC') and Prices Surveillance Authority have been merged into one and replaced by the Australian Competition and Consumer Commission ('ACCC'). In addition to its other functions in relation to the dissemination of information, law reform and research, the ACCC determines applications for authorisations and notifications in respect of restrictive trade practices. The ACCC's determinations can be challenged in the Australian Competition Tribunal ('ACT'). The ACT consists of a President and Deputy President who are both judges of the Federal Court of Australia, and other members with experience or knowledge in industry, economics, commerce, public administration or law. 9 As a fully-participating jurisdiction 10, Queensland can participate in the appointment of members and associate members to the ACCC.
A new body, the National Competition Council has been established 11, having advisory and research functions and being responsible for making recommendations to the Federal Treasurer and responsible State and Territory Ministers on access and pricing under the Trade Practices Act.
Another feature of the national scheme is the intergovernmental Competition Principles Agreement. This places the States and Territories under an obligation to review and reform by the Year 2000 all legislation, which restricts competition unless it can be shown that the benefits of the restriction to the community as a whole outweighs the costs.
Professor Hilmer expressed the view that:
"Competition policy covers a broad set of laws, policies and government actions that should be seen as an integrated whole. This set establishes the guidelines that determine the nature and extent of competition and the ways in which possible conflicts between the results of competition, economic efficiency and other social goals are to be handled." 12
In a report based on the legal profession, the TPC commented that it was aware that other issues apart from competition, such as due process, judicial independence, access to justice and recognition of personal and social rights, should also be considered when assessing the public benefits of regulation of legal services. However, the TPC further stated that it was not its intention to look at the law in this broader context but to examine the narrow issue of competition and restrictions on competition. 13
This raises the issue of whether the ACCC will only assess concepts such as public interest and benefits to the community in the context of considering economic policy and economic theory. The broader context of professional ethics, quality of health services, doctors' duty to patients and other professionalism concepts fundamental to the medical profession may not be given adequate weight.
The effect of the Conduct Code Agreement, and the resulting Competition Policy Reform Acts, is that Part IV of the Trade Practices Act now applies to all professionals, including doctors. The substance of the provisions which are most likely to cause doctor groups concern are set out below.14
This section will apply where:
An exclusionary provision is a primary boycott which constitutes a per se breach of the Trade Practices Act: that is, whether an exclusionary provision affects competition is not relevant.
The second limb of section 45 prohibits a corporation from making a contract, arrangement or understanding if a provision of the proposed contract, arrangement or understanding has the purpose or effect of substantially lessening competition in the market. 15
Section 45A deems certain conduct to have the purpose or effect of substantially lessening competition for the purposes of section 45. 16
Section 45A, in combination with section 45(2)(A)(ii), will apply where:
This section will be contravened where a corporation that has a substantial degree of power in a market takes advantage of that power for the purpose of -
These sections will apply where:
or where:
It has been suggested by some commentators that the referral system, whereby general practitioners refer patients to specialists, might be caught in some way by the provisions of Part IV of Trade Practices Act. 20 As a matter of principle it could be said to be anti-competitive per se that consumers (patients) cannot go directly to a specialist, just as it is said in the legal profession to be anti-competitive that consumers (clients) cannot approach barristers directly.
In the medical field, there are powerful arguments against the suggestion that the referral system is against the public interest. They are as follows:
The legitimacy of the referral system is therefore not just an issue for the profession but is critical for Government.
On its face, the system does not appear to contravene the general operation of Part IV of the Trade Practices Act, as there can be no objection to a person consulting a general practitioner, and the general practitioner referring the patient to a particular specialist.
It is possible, however, to imagine the existence of certain referral patterns which might amount to the 'primary boycotting' 22 or 'third line forcing' 23 practices prohibited under the Trade Practices Act.
A few examples may assist. Suppose all general practitioners in a group or in an area collectively agree to refer patients requiring a cardiologist to a particular cardiologist. There may be a basis for contending that this could contravene section 45, if it could be said to have the 'purpose ... of preventing, restricting or limiting ... the supply of services ... from a particular person or class of persons'. 24 The agreement need not have, or be likely to have, the effect of substantially lessening competition. 25
Alternatively, suppose a general practitioner made it a condition of giving a referral that the patient agree to see a particular specialist nominated by the practitioner, or the practitioner refuses to give a referral to a particular specialist requested by the patient rather than the specialist nominated by the general practitioner. These practices may be caught by the 'third line forcing' provisions of the Trade Practices Act. 26
These practices may be caught by the Trade Practices Act even though there may be legitimate medical reasons for the practitioner's insistence on his or her choice of specialist.
There is clearly potential under the Trade Practices Act for constraints to be placed on the way in which the referral system is operated. We are not of the view that the requirement for a referral to be obtained in order to see a specialist is in danger of removal, however, it is possible that some patterns of referral may be unlawful as being in contravention of the Act.
The combined effect of sections 45 and 45A is to prohibit the making of any, 'contracts, arrangements or understandings' between persons 'in competition with each other' to 'fix, control or maintain price'. A provision of a contract, arrangement or understanding which has the purpose or effect of 'price fixing' is deemed to have the effect of substantially lessening competition. 27
The potential impact of these provisions upon the medical profession was realised as a result of proceedings instituted in October 1997 by the ACCC against a group of Sydney anaesthetists. It is alleged that the anaesthetists were engaged in price fixing for after hours anaesthetic services at three Sydney metropolitan private hospitals and that they threatened a 'boycott' of after hours services at another private hospital 28.
The ACCC alleges that three anaesthetists (through their medical practice companies) arrived at agreements with other anaesthetists to charge a $25 an hour on-call service fee. It is alleged that the Australian Society of Anaesthetists (ASA) and two other doctors were knowingly concerned in, or party to, one or more of the agreements.
The agreements arose out of a report by a sub-committee of the ASA to ASA members which recommended that 'an appropriate on-call fee' should be paid by private hospitals to anaesthetists and that fee should be $25 an hour. The public hospital rate was $7 an hour.
It alleged that various anaesthetists, following receipt of the sub-committee report, then collectively agreed to charge private hospitals $25 an hour for being on call to provide anaesthetic services.
In the proceedings, the ACCC has sought, amongst other things, injunctive relief 29
The price fixing provisions are essentially untested in. the professional sphere. The extent to which the Trade Practices Act would prohibit certain practices is unclear. For example, the ACCC has said that discussing fee scales with colleagues 'raises the possibility' that an 'agreement or understanding' will be reached. 30
The argument is presumably based on the concern that, following a mere discussion, the parties may arrive at the same price for services. Where those discussions lead to doctors charging exactly the same price, it would be difficult to contend that there had not been, at least implicitly, some arrangement to fix price. If the ultimate price fixed by each was different the question may not arise: the conduct may not become the subject of investigation by the ACCC.
Where the discussions result in an agreement not to 'bulk bill' then such agreements potentially contravene the price fixing provisions.
The Trade Practices Act is limited to impugning price fixing between persons 'in competition with each other' 31. For the purposes of section 45 and section 45A, the term 'competition' means competition in any market in which a corporation or person which is a party to the particular contract, arrangement or understanding (or any related corporation) supplies, acquires, would be likely to supply or acquire, or would, but for a provision in the contract arrangement or understanding supply or acquire goods or services. 32 It is unclear whether professionals competing in the market place for work, but who are members of a partnership or directors and shareholders of a company, could be described as being 'in competition'.
Professor Allan Fels, the Chairman of the ACCC, is quoted as having said:
'medical professionals could form a partnership with colleagues or incorporate the group practice if they wanted to set common fees'. 33
However, while the professional chooses to work as an independent or sole practitioner, business decisions such as setting fees or negotiating contracts must be done on an independent and individual basis. 34
There has been a deal of debate about the public benefit or otherwise of fee scales and recommended charges for professionals. One view is that fee scales and recommended charges are anti-competitive and against the public interest. The ACCC in one of its publications has said
'Price competition is one of the most important elements of a properly functioning market and any attempts to reduce or minimise that competition will be at risk under the Act'. 35
In the same publication, the ACCC
'strongly discourages the involvement of associations in the establishment of professional fee structures' 36
However, the ACCC does appear to recognise that recommended fee scales, which are generally not adhered to by members, may not breach the Trade Practices Act.
For example, the ACCC has indicated 37 that the Australian Medical Association's list of medical services and fees is a permissible scale, since evidence suggests the scale is not generally adhered to. 38
In Re Association of Consulting Engineers, Australia 39 the former Trade Practices Tribunal 40 said that there was value in a fee scale, provided that it was made clear to the client that it was a reference or guideline scale only. The Tribunal suggested that any recommended fee scale should contain a clause that states:
'The fees provided for in this scale, which is a reference scale only, are fees which provide, for the average firm of... [professionals], a reasonable level of profitability. However, ... [professionals] and prospective clients are free to negotiate fees on any basis whatsoever, including bases which are not at all related to the scale.'
Likewise, in TPC v Service Station Association, 41 a recommended scale was held not to breach the Trade Practices Act since the Association had repeatedly told dealers that they had to make their own decisions, with the consequence that differing prices would often be charged. There was no evidence of attempts to sanction any dealer who made his or her own decision on price and a distinct lack of uniformity existed amongst members.
In 1996, physiotherapists abandoned their traditional fee structure after discussions with the ACCC over the possible price fixing nature of the fee structure. The Australian Physiotherapy Association now provides to members a formula which they can use for their individual practice to base fees on their cost structure and income. Such a system obviously does not, however, inform the public significantly about fees.
An arrangement between collective acquirers of services in relation to the price of those services is permitted under the Trade Practices Act, provided the arrangement does not substantially lessen competition. 42
Earlier this year, the Western Australian Chamber of Commerce and Industry asserted that a pay deal for doctors working part-time in small government non-teaching hospitals in the Perth area was anti-competitive and in contravention of the Trade Practices Act. 43
Mr Lyndon Rowe, an Executive Director of the Western Australian Chamber of Commerce and Industry said that:
'This is not an issue about quality.' 44
The debate is about money. The Chamber suggested that the pay deal has had the effect of increasing the annual cost of health services.
The ACCC believes the Trade Practices Act may not catch hospitals which negotiate collectively with doctors for the provision of their individual services to the hospitals and then subsequently acquire the services of individual doctors at the negotiated rate. 45 It is a curious distinction to allow collective negotiation by acquirers of health services (eg hospitals and health funds) but to disallow such collective bargaining by providers.
Whether all collective arrangements by acquirers remain unaffected, however, remains to be seen.
The extension of the competition provisions to professionals immediately raised questions as to the legality of restrictions imposed on advertising by professionals. In most jurisdictions, those restrictions were imposed both by State legislation and industry Codes of Conduct.
The view expressed by the ACCC is that advertising can be 'an important part of the competition process (particularly in providing information to the public)' 46
The ACCC has stated:
'restrictions on the means, manner or frequency of advertising are inherently anti-competitive and [the ACCC] would be particularly concerned about restrictions on advertising fees or discounts' 47
Those opposed to changes in advertising argue, amongst other things, that advertising is non- professional, likely to mislead, likely to encourage consumers into making service choices based on price and not quality and not likely to truly better inform the public.
Some of the previous restrictions on advertising are somewhat difficult to defend, such as restrictions on the size of advertisements, size of lettering and reference to price. It is also difficult to assert, however, that any restrictions on advertising by professionals are likely to have the effect of substantially lessening competition in the market, and therefore contravene the Act. 48
Nevertheless, provisions in Codes of Conduct or State legislation restricting advertising (apart from restrictions which prevent false, misleading or deceptive representations or conduct) 49 do run the risk of being impugned.
Most of the State Medical Acts, in fact, have already been amended to remove restrictions on advertising, subject of course to the rules preventing false, misleading or deceptive representations and conduct 50.
Any remaining advertising restrictions in State or Territory legislation may survive untiI the year 2000. By that time, by virtue of the Competition Principles Agreement between the States, Territories and the Commonwealth any legislation that restricts competition must be reformed. 51
Section 47(6) and (7) of the Trade Practices Act prohibit a corporation from supplying services on the condition that the person acquiring those services will obtain services of a particular kind from a nominated third party. This type of arrangement, known as 'third line forcing', was previously commonly used in the finance and insurance industries, where financial services may be provided on the condition that insurance or other services are obtained from another party.
A recent example in the health industry which was found to contravene the third line forcing provisions involved benefits withdrawn by a health insurer from a pharmacy.
In ACCC v Health Partners Incorporated 52, Health Partners, a private health insurer, supplied certain benefits to Chem mart Pharmacies, including rebates on prices charged by pharmacists for dispensing prescriptions and discounts on insurance contribution rates. When the applicants removed the name 'Chem mart' from the name of their pharmacy, Health Partners refused to supply them with the benefits.
The Court found that Health Partners refused to supply services to the applicant pharmacy for the substantial reason that the pharmacy had not acquired certain services from Chem mart. The reason for Health Partners' refusal had been stated in a letter from the CEO of Health Partners to the applicant pharmacy. The Court preferred that evidence to the contrary oral evidence given by the CEO.
As there was no proof of loss by Chem mart, the Court refused to grant an injunction. However, as a contravention had been made out, costs were awarded to the applicant pharmacy.
This principle could potentially apply to the provision of health services. For example, a surgeon who said the surgeon would only supply a service, that is perform an operation, if assisted by a nominated doctor or nominated anaesthetist, may be acting in breach of the 'third line forcing provisions'.
Since the implementation of the Hilmer Reforms, there has been much debate about Codes of Conduct prescribed for professionals. We have already commented on the validity of such Codes in the context of restrictions on advertising and prescribed fee scales.
In addition, the ACCC has commented on 'blanket restrictions' upon associations between medical professionals and other parties and restrictions on professionals undertaking business activities in addition to their core professional services. 53
It is argued that the imposition of restrictions by professional associations through Codes of Conduct is a 'misuse of market power', it being recognised that professional associations have a substantial degre of market power.
In the medical arena, Codes of Conduct are not only prescribed by professional associations, but also by the specialist colleges.
The practices of those colleges has been the subject of much debate. In regard to membership, the ACCC has said it will:
'give close attention to any attempts to restrict membership of an association where the purpose or effect of those restrictions is to substantially lessen competition.' 54 (emphasis added)
It appears to be accepted that the following college activities will be susceptible to scrutiny:
The preservation of such restrictions will need to be Justified by reference to resource levels, in terms of money and availability of trained supervisors, and the legitimate maintenance of standards.
A separate review process by the Australian Medical Workforce Advisory Committee (AMWAC) recognised that the practices of some colleges had resulted in a shortage of manpower in some specialist areas. Action is being taken by AMWAC to remedy this shortage.
There are provisions in the Trade Practices Act whereby conduct which would otherwise be treated as illegal may be immune.
Where conduct would otherwise contravene Part IV of the Trade Practices Act, an application can be made to the ACCC, by a party to the conduct, for authorisation. 56 If authorisation is granted, the applicant becomes immune from legal proceedings under Part IV for the particular conduct. Some authorisations are granted subject to certain conditions being fulfilled or for a specific period only. 57
The applicant must provide the ACCC with an application including detailed submissions specifying the conduct to be authorised and addressing the 'statutory tests'. The ACCC will then approach interested parties (Including competitors), provide them with a copy of the application, and invite them to make submissions of their own. 58 The applicant is given the opportunity to respond to these submissions. After considering the applicant's submissions and those of any interested parties, a draft determination is prepared. 59 The draft determination is sent to the applicant and/or other interested persons, with an invitation to notify the Commission whether the applicant or other interested party wishes the Commission to hold a pre-determination conference in relation to the draft determination. After the predetermination conference, there may be an opportunity for further submissions to be made to the ACCC, following which the ACCC delivers its final determination.
The applicant can seek review of the ACCC's determination by the ACT. Any other person with a sufficient interest in the application can also challenge the decision. This effectively allows third parties including the applicant's competitors, to prolong the process.
An applicant for authorisation may apply for interim authorisation. 60 Interim authorisation allows the applicant to engage in conduct the subject of the application while the ACCC reviews the application on its merits. Submissions for interim authorisation must be made with the formal request. However these authorisations are discretionary and the ACCC only grants interim authorisations in exceptional circumstances.
The ACCC has power to revoke an authorisation. This power can only be exercised by the ACCC after a review of the authorisation and subject to completion of the formal processes under the Trade Practices Act. 61 These reviews may be prompted as a result of complaints by consumers or other parties adversely affected by the authorised conduct. Where an authorisation is revoked, the ACCC may grant substitute authorisation. 62 A determination by the ACCC to revoke an authorisation can also be reviewed by the ACT.
The statutory test for authorisation to enter into or give effect to a provision of the contract arrangement or understanding which has or may have the effect of substantially lessening competition within the meaning of section 45 (including, in our view, any price fixing provision 63) or to engage in conduct that may constitute the practice of exclusive dealing under section 47 (other than third line forcing) is whether the provision or the conduct 'would result, or be likely to result, in a benefit to the public and that that benefit would outweigh the detriment to the public constituted by any lessening of competition' likely to result if the provision or proposed conduct comes into operation. 64
The statutory test for authorisation of an exclusionary provision, or conduct which may amount to third line forcing is whether the Commission is satisfied, in all the circumstances, that the proposed provision, or the proposed conduct, would result or be likely to result in such a benefit to the public that the proposed contract or arrangement should be allowed to be made, the proposed understanding should be allowed to be arrived at, or the proposed conduct should be allowed to take place. 65 The practical application of the two tests is said to be substantially the same: Re Media Council of Australia (No. 2). 66
The onus is on the applicant to satisfy the ACCC that the relevant test has been satisfied.
"Public benefit" is not defined under Part IV. The ACCC's guidelines provide that to prove public benefits arise from the conduct in question, the applicant must demonstrate how community objectives can be efficiently met in ways other than the normal competition of the market. 67 In ACI Operations Pty Ltd 68, a case decided under the merger authorisation section, it was held that to show sufficient "public benefit" applicants had to demonstrate there were benefits flowing to consumers or the community at large.
In Re 7-Eleven Stores Pty Limited, Australian Association of Convenience Stores Incorporated and Queensland Newsagents Federation 69 the Tribunal held:
"Public benefit has been, and is, given a wide ambit by the Tribunal as, in the language of QCMA 70 'anything of value to the community generally, any contribution to the aims pursued by the society including as one of its principal elements ... the achievement of the economic goals of efficiency and progress.' Plainly the assessment of efficiency and progress must be from the perspective of society as a whole: the best use of society's resources." 71
In its guidelines, the ACCC has listed a range of public benefits. 72 They include:
The ACCC admits the emphasis on public benefit assessment is primarily on efficiency considerations. 73 However non-economic public benefits ill also be considered. There are a number of cases where conduct resulting in non-economic public benefits has been authorised.
In Abbott Australia Pty Ltd and Nestle Australia Limited 74, a marketing arrangement between manufacturers of infant formula was authorised because it increased the information available to the market on infant nutrition.
In The Proprietary Medicines Association of Australia Inc 75 the Association's code concerning restrictions on advertising and promotion of proprietary medicines was authorised because it benefited the public by preventing oversupply and overuse of these medicines. 76
In Capital Territory Health Commission ("CTHC") and the Australian Capital Territory Medical Association ("ACTMA" ) 77, a standard form contract concerning the appointment of medical practitioners to hospitals and the provision of their remuneration was authorised because it substantially benefited the public by providing a comprehensive medical service to hospital patients.
'Detriment' is a term also not defined in the Act. It has been defined widely to mean any impairment to the community generally, or any harm or damage to the aims pursued by the society. 78 Detriments to the public would include a reduction in the number of effective competitors, an increase in entry restrictions and constraints on competition by market participants affecting their ability to innovate and conduct their affairs efficiently and effectively.
It can be argued that the ACCC's power over doctor groups is most evident in the authorisation process. The authorisation process is costly. The filing fee alone is $7,500 79 and the applicant must pay all his or her own costs no matter what the outcome.
In addition, the applicant bears the onus of proof. The process is rather legalistic and the completion of the application is likely to require the assistance of lawyers.
If the authorisation is not granted and the conduct the subject of the application continues, the ACCC can subsequently use the information the applicant provided in good faith to prosecute the applicant. As authorisation is a public process, the applicant's competitors can also obtain information which can subsequently be used against the applicant.80
The process can become very delayed, once all appeal rights are exercised.81
Another procedure for attracting immunity from proceedings under Part IV is notification. The notification provisions are limited to 'exclusive dealing' arrangements (including 'third line forcing'), thereby reducing the extent of the usefulness of these provisions. This is a rather curious limitation.
Once notification has been given in essence the conduct is deemed not to have the effect of substantially lessening competition in the market.
The onus is then on the ACCC to review the conduct and determine whether the public benefit obtained from the conduct outweighs the anti-competitive detriment constituted by a lessening of competition.
The immunity granted remains in force until the ACCC gives a formal notice to the applicant stating that the conduct no longer satisfies the 'public benefit' test.
Prior to reaching a formal decision, the ACCC must issue a draft notice. An applicant can then request a conference similar to a predetermination conference under the authorisation provisions. The applicant can then furnish further written submissions after which the ACCC reaches its final decision. Similarly to authorisation, this decision can be reviewed by the ACT.
It is possible to apply for both authorisation and notification for the same conduct. However where the ACCC makes a determination of an authorisation with respect to conduct over which a notification is lodged, the notification is deemed to be withdrawn. 82
The intention of the legislation would appear to be for notifications to be a temporary measure, whilst the applicant has the opportunity to make an application for authorisation.
Dr Wooldridge, in commenting on the anaesthetist's case, has told doctor groups:
'You know, this is the world as it is. You have to work within that. You have to realise that the ACCC is looking after the public benefit, and it is a different world from what it was five years ago.' 83
It certainly is a different world for professionals. But to say that the differences created by the Trade Practices Act, in relation to the provision of medical services, is for the public benefit assumes that the outcome of more open competition results in the provision of better health services. As one commentator concluded: 'Competition policy is seen as a means of promoting efficiency and economic growth. Unrestricted competition does not always promote these ends.' 84
Whilst there should be a removal of the unnecessary barriers to competition, there should not be an abandonment of those barriers which, whilst perhaps appearing to be anti-competitive, are in fact in the public interest.
The imbalance is created by the presumptions in the Code that certain activities or barriers are anti-competitive irrelevant of whether in fact there has been a lessening of competition and by the placing of the onus on individual doctors or doctor groups to prove the 'public benefit' for conduct presumed to be anti-competitive.
2 By section 6 of the Trade Practices Act the application of the Act is extended to conduct of individuals or unincorporated associations, provided that conduct is in trade or commerce:
3 Edwell S, 'National Competition Policy Reforms' CLE Queensland Law Society, 14 June 1995 at 14
4 Rahph J, 'Letter regarding the February meeting of the Council of Australian Governments' Business Council Bulletin (106) March 1994, 12
5 Section 51 of the Commonwealth Constitution
6 For convenience, actions arising out of contraventions under both the Competition Policy Reform Act and Part IV of the Trade Practices Act will subsequently be referred to as actions under the Trade Practices Act.
Unless otherwise provided, all references to sections of an Act in this paper are references to sections of the Trade Practices Act.
7 Amendments made to Part IV that were recommended by the Hilmer Report:
8 This is effected by Part III Division 1 of the Competition Policy Reform Act 1995 (Cth).
9 Section 30 of the Trade Practices Act.
10 A fully-participating jurisdiction is a State or Territory that is a party to the Conduct Code Agreement and has applied the Competition Code as a law of the State or Territory with minimal modification as determined by the Federal Minister (section 7(3), 8A, 4, 150A and 150K of the Trade Practices Act).
11 Part IIA of the Trade Practices Act.
12 Hilmer F, 'The Bases of Competition Policy', University of NSW Law Journal, 1994 17(1), at x
13 Trade Practices Commission, Study of the Professions - Legal, Final report, March 1994 at 42 - 43
14 Section 45(2)(a)(i) prohibits a corporation from making a contract or arrangement, or arrive at an understanding if the proposed contract, arrangement or understanding contains an exclusionary provision.
'Exclusionary Provision is defused in section 4D of the Act. Effectively, a provision of a contract, arrangement or understanding (or a proposed contract, arrangement or understanding) shall be taken to be an exclusionary provision where the contract arrangement or understanding has been made between two or more person who are competitors with each other and the provision has the purpose of preventing, restricting or limiting the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons.
15 Section 45(2)(a)(i).
16 Section 45A(1) provides that a provision of a contract, arrangement or understanding shall be deemed for the purposes of section 45 to have the purpose or effect of substantially lessening competition if the provision has the purpose or effect of fixing, controlling or maintaining the price for, or a discount, allowance, rebate or credit in relation to, goods or services supplied or acquired by the parties to the contract, arrangement or understanding or by any bodies corporate that are related to any of them, in competition with each other.
17 Section 46(1)
18 Section 47(6). A corporation engages in the practice of exclusive dealing if the corporation supplies goods or services; supplies goods or services at a particular price; or gives a discount, allowance, rebate or credit in relation to the supply of goods or services by the corporation, on the condition that the person whom the corporation supplies the goods or services or, if that person is a body corporate, a body corporate related to that body corporate will acquire goods or services of a particular kind or description directly or indirectly from another person.
19 Section 47(7): A corporation engages in the practice of exclusive dealing if the corporation refuses to supply goods or services to a person; to supply goods or services at a particular price to a person; or to give a discount, allowance, rebate or credit in relation to the supply of goods or services to a, person, for the reason that the person or, if the person is a body corporate, a body corporate related to that body corporate has not acquired, goods or services of a particular kind or description directly or indirectly from another person.
20 Roberts D 'State AMA's View' and Davis N 'Specialists' View', Can the Professions Survive under a National Competition Policy?, AGPS, Perth, 11/4/97 at 56 & 61 respectively
21 Section 19A of the Health Insurance Act 1973 (Cth) and section 2 of the Health Insurance (1995-96 General Medical Services Table) Regulation No. 298 of 1995: Attendance upon a specialist without a referral disentitles a patient from claiming Medicare benefits in respect of the service.
22 Section 45 (2)(a)(i) and section 4D. If a provision of a contract, arrangement or understanding is taken to be an exclusionary provision, it is prohibited per se.
23 Section 47(6) and 47(7).
24 Section 4D.
25 Section 45.
26 Section 47(6) or 47(7).
27 Section 45A(I)
28 ACCC Australian Society of Anaesthetists Incorporated and Others, NG 884 of 1997
29 Injunctive relief is available under section 80 of the Trade Practices Act. Pecuniary penalties are also available for a breach of Part IV of the Trade Practices Act (sections 76 and 79), as well as damages (section 82) or compensation for loss (section 87).
30 ACCC Guide to the Trade Practices Act for the Health Sector, AGPS, Canberra, 1995 at page 13.
31 Section 45A(I)
32 Section 45(3) of the Trade Practices Act
33 "Ethics Board to investigate 'Giveaways' from Doctors" The Australian
19/4/97.
34 id.
35 supra n.29 at 22
36 id.
37 supra n.29 at 22.
38 id.
39 (1984)4 ATPR 40-202. In this case, the Association of Consulting Engineers Australia had made an application to the Commission to obtain authorisation in relation to the setting of minimum fee scales. The application was rejected by the Commission, and the Tribunal on appeal.
40 The Australian Competition Tribunal now carries out the functions previously performed by the Trade Practices Tribunal.
41 (1992) 109 ALR 465
42 Section 45A(4). Compare all other price fixing arrangements, which are prohibited per se, without any consideration of the effect on competition (section 45A(1)).
43 'Doctor Deal Costs $50m' West Australian 10/1/98
44 id.
45 supra n.29 at 15 - 16
46 Fels, A. 'ACCC's View', Can the Professions Survive under a National Competition Policy?, AGPS, Perth, 11/4/97 at 50.
47 supra n.29 at 23
48 Section 45.
49 The Trade Practices Act itself has the effect of imposing these restrictions (section 52). Section 52 of the Trade Practices Act does not have the expanded application of Part IV of the Act. However the Fair Trading Act 1989 (Qld) makes similar provision and extends to individuals.
50 This has been carried out in Queensland through section 13 of the Medical Act By-Law No. 341 of 1997 and in New South Wales through section 114 of the Medical Practice Act 1992 (NSW) and section 8(3) of the Medical Practice Regulation 1993.
51 Clause 5(1) The Guiding Principle of the Competition Principles Agreement. (page 938 of Miller)
5.1(1) The guiding principle is that legislation (including acts, enactments, ordinances or regulations) should not restrict competition unless it can be demonstrated that:
(a) the benefits of the restriction to the community as a whole outweigh the costs; and
(b) the objectives of the legislation can only be achieved by restricting competition.
52 (1998) ATPR 41-604.
53 supra n.29 at 23
54 supra n.29 at 24
55 Davis N 'Specialists' View', Can the Proffesions Survive under a National Competition Policy?, AGPS, Perth, 11/4/97 at 62.
56 Section 88 of the Trade Practices Act.
57 Section 91(1) and 91(3).
58 An applicant can request the provision of certain information be excluded on the grounds of confidentiality: Section 89(5).
59 Section 90A(1).
60 Section 91(2)
61 Section 91(4) of the Trade Practices Act provides that if at any time after the ACCC has granted an authorisation, it appears to the ACCC that the authorisation was granted on the basis of evidence or information that was false or misleading in a material particular, then a condition to which the authorisation was expressed to be subject has not been complied with, or that there has been a material change of circumstances since the authorisation was granted, the Commission may consider revoking the authorisation. Before making a determination to revoke an authorisation, the Commission is required to give notice to the corporation or person to whom the authorisation was given and any other interested person, and afford them the opportunity of making submissions to the Commission in the matter.
62 Section 91(4)(b)
63 The amendment to s88 in 1995 allows the inference that authorisations can be obtained for price fixing arrangements.
64 Section 90(6) of the Act. Section 90(7) deals with the test for authorisation for an existing contract arrangement or understanding. The test is very similar, namely, whether the provision has in the past resulted, or is likely in the future to result, in a benefit to the public which outweighs any detriment caused by any lessening of competition resulting from the provision or likely to result from the provision.
65 Section 90(8)
66 (1987) ATPR 40-774 This was upheld on appeal: (1996) ATPR 41-497 at 42,239
67 ACCC, Guide to Authorisations and Notifications, AGPS, Canberra 1995 at 19
68 (1991) ATPR (Com) 50-108 at 56,077
69 (1994) ATPR 41-357 (commonly known as Victorian Newsagency)
70 Re Oueensland Co-operative Milling Association Ltd, Defiance Holdings Ltd (1976) ATPR 40-012 at 17,245 (commonly known as -OCMA)
71 supra n. 67 at 42,677
72 supra n. 65 at 20
73 supra n. 65 at 21
74 (1992) ATPR (Com) 50-123
75 (1994) ATPR (Com) 50-141
76 It should be noted that this authorisation was subject to the Association altering parts of its Code.
77 [A213241] (1976) ATPR (Com) 16, 552
78 Victorian Newsagency, at 42,683
79 Any additional related application cost an extra $1,500.
80 Application can be made to protect 'confidential information'
81 There are no time limits imposed by the Act. The ACCC's guidelines state that the ACCC aims to issue the applicant with a draft determination within four months (supra n.65 at 10). The ACCC can hold the process at any point to seek further information.
82 supra n.65 at 31
83 'Doctors Use BLF Tactics in Pay Dispute', Daily Telegraph (Australia), 11/10/97, 15
84 Pascoe J 'Professional Regulation after the Hilmer Report' Australian Accountant 64 (2), March 1994, 35 at 36
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