Not on… (13.7.04)

The Commission has concluded a consent agreement with United South African Pharmacies (USAP), an association of retail pharmacies, in respect of conduct when USAP decided on a ‘group boycott’ against Anglo American Corporation Medical Scheme (AACMED) and

The consent agreement is still to be confirmed by the Competition Tribunal, and includes an administrative penalty of R250 000.

This resulted from complaints lodged by AACMED and Engen Medical Fund respectively alleging that USAP, after the two schemes individually failed to agree to the discount offered by USAP on chronic and acute medication, ordered a ‘boycott’ to the effect that its retail pharmacies would not supply chronic and acute medication to AACMED and Engen Medical Fund.

USAP further put the two schemes on its “C” list, which means ‘not recommended’, a list that USAP circulated to all its members. USAP also refused to give AACMED and Engen Medical Fund credit, thus requiring members of the two schemes to pay cash or buy on agreed credit terms.

These decisions were made mainly in an attempt to compel the said medical schemes to permit their members to purchase chronic medication from USAP members despite the fact that the two schemes individually did not agree to the discount offered by USAP.

“Our investigation revealed that as an association of competitors, USAP acted collusively, hence unlawfully, in boycotting AACMED and Engen Medical Fund in contravention of section 4(1)(b)(i) of the Competition Act.

Advocate Simelane, the Commissioner of the Competition Commission said: “It is unlawful for competitors to fix trading conditions of this nature, irrespective of what the reasons or the consequences are.

“Assuming one were to consider the consequences, in this case the boycott was dangerous as it significantly affected the supply of chronic medication to members of the schemes, who may not only be sickly but old as well.

“Thus anticompetitive practices will not be tolerated, whether direct or indirect, especially if such are at the expense of consumers.”

In the consent agreement, USAP agreed to refrain from engaging or participating in any conduct in its dealings with AACMED, Engen Medical fund and any other medical schemes or members of medical schemes, which may be in contravention of the Competition Act.

USAP has, in contemplation of the consent order, already addressed letters to AACMED and Engen Medical Fund to reassure them that they have been removed from the ‘not recommended’ list.

“We urge other players in the market, who may be engaging in or intend to engage in similar practices, to learn from this and think again. This is serious and they won’t get off lightly”.

This consent agreement encompasses all that the Commission would have asked for had it referred the matter to the Competition Tribunal for adjudication. The Commission is thus pleased with the outcome.