The importance of the CMA in regulating the medical equipment industry

First published by Admin on April 26, 2017 in the following categories: Investigations and tagged with cma

The Competition and Markets Authority’s (CMA) recent decision to close their investigations into the medical equipment sector has raised concerns for many.

Although the competition watchdog didn’t come to a conclusive decision as to whether the medical equipment industry violated competition laws, they did however decide to close the case on ‘priority administrative grounds’.

This doesn’t mean that the industry are not guilty of anti-competitive behaviour though…

The investigation was opened on the 12^th April 2016 further to suspicions that the medical equipment industry had breached Chapter II of the Competition Act (CA) and Article 102 of the Treaty on the Functioning of the European Union (TFEU).

Prioritisation principles

When an investigation is opened, there is a period for gathering and assessing information. This is crucial for the CMA to gather enough evidence to help make its decision of whether to proceed with the case or not. The CMA considers the investigation under its Prioritisation Principles:

• Impact: what would the likely direct effect on consumer welfare in the market or sector where the intervention takes place?
• Strategic significance: does the work fit with the CMA’s strategy and/or with other CMA objectives?
• Risks: what is the likelihood of a successful outcome?
• Resources: what are the resource implications of doing the work?

It’s evident that the CMA doesn’t consider this to be a priority at the moment. However, looking at their prioritisation principle, how do they not consider medical equipment to be a priority in the brink of the NHS crumbling?

As for the impact, the CMA notes that they’ll prioritise work because of the direct effect that would specifically benefit disadvantaged consumers. Aren’t consumers relying on medical equipment/products encompassed under the CMA-termed ‘disadvantaged consumers’? I would argue they are. And with our health service already stretched, any competition breaches could seriously hurt the ability of the NHS to provide service.

And save lives…

Reason for closing the case

In reaching this decision, the CMA noted that the impact of the observed conduct on the market for the relevant medical equipment is unclear. That’s why they’ve decided to focus its ‘finite resources’ on projects that appear likely to have a greater impact on consumer welfare.

Potential impact

To give you some context, the UK medical device market is the 3^rd largest in Europe and the 6^th largest in the world. Medical equipment is used by millions in the UK and the CMA believes that it doesn’t ‘appear to have a great impact on consumer welfare’?

As defined by the World Health Organisation (WHO), a medical device is defined as:

“…an article, instrument, apparatus or machine that is used in the prevention, diagnosis or treatment of illness or disease, or for detecting, measuring, restoring, correcting or modifying the structure or function of the body for some health purpose.”

It’s evident that this encompasses millions worldwide.

What next?

Could the CMA’s decision to close the investigation end up being a foolish one?

Notably, they have recently opened an investigation into whether the supply of medical equipment has breached competition laws under Chapter I of the CA. The investigation relates to suspected anti-competitive agreement(s) or coordinated practice(s) which restrict the prices at which retailers may advertise or sell medical equipment online.

The competition watchdog hasn’t reached a view as to whether there’s sufficient evidence of a breach of competition laws.

Maybe this time they’ll see the priority in regulating the medical equipment industry and the potential impact it has on consumer welfare.