Botswana Medical Aid Society (BOMAID) has failed to prove to the authorities that it falls within the limited economic activities exempt from the oversight and regulation of the 2018 Competition Act.
This conclusion was reached by the Court of Appeal when it dismissed the medical aid’s appeal, thereby paving the way for the Competition and Consumer Authority to investigate allegations of anti-competitive conduct.
In a matter that has been ongoing for several years, BOMAID approached the Court of Appeal in hopes that it would overrule a High Court decision made on November 4, 2022, which determined that BOMAID is an enterprise under the Competition Act 2018, and therefore subject to the Act.
The medical aid argued that it is not an enterprise as contemplated under the Act. The CCA initiated investigations against BOMAID in 2020 following several complaints, including allegations of acts of anti-competitiveness such as refusal to deal with another enterprise, discrimination in price and other trading conditions, and exclusive deals.
According to the CCA, these were conducts that, if established, constituted a contravention of section 31 of its Act. The authority proceeded to communicate to BOMAID its intention to investigate the said allegations. In response, the medical aid asserted that the Act did not apply to it as it was not an enterprise within the contemplation of the Act and therefore its activities were exempt from the reach of the Act. BOMAID then refused to subject itself to the enquiry and investigation processes.
Following this, BOMAID demanded that the CCA halt its investigation process pending the outcome of High Court proceedings, which it went on to institute on January 21, 2021, to assert its exemption from the application of the Act. While the CCA opposed this application, it agreed to halt any action aimed toward investigating BOMAID pending the outcome of the High Court case.
However, the High Court did not agree with BOMAID, citing that there was no satisfactory evidence to support these claims, and the medical aid appealed the decision to the Court of Appeal.
Dismissing the appeal, the Court of Appeal found that while BOMAID may not have profit-making as its primary objective, it intended to grow as a market player in the provision of medical aid funding. By investing in for-profit businesses, some of which provide medical services, it engaged in business for gain.
Additionally, the Court of Appeal noted that BOMAID’s direct and indirect investments, by way of shareholding in services provided by market players, allowed the company to use its advantageous position to indirectly compete in the health services market with those who are already health services providers of its members and who look to it for the market.
“Unchecked this conduct may lead to service providers being sidelined to a monopolistic empire where the members are not even able to access their chosen service providers while quality and price of service play a peripheral role,” it pointed out.
The judgment said BOMAID is not involved in conduct that can be characterised as designed to achieve a non-commercial objective as its business is not born out of non-commercial socio-economic considerations.
“Profit making may not be its primary objective but its activities are market-related and fall nowhere within the criteria upon, which the cases relied upon by the appellant are based. BOMAID has therefore also failed to show that it falls within the exemption contained under section (3) (a) of the Act. In the premises, the appeal cannot succeed” the CoA ruled.
CCA revealed in its 2020/21 annual report, that Ekuseleni Clinical Laboratory had hauled BOMAID before the Authority with allegations of abuse of its market dominance in the form of discriminatory pricing through the introduction of a tariff system as and discriminatory price increments that BOMAID applies to Ekuseleni.
Another allegation pointed to an exclusive arrangement between BOMAID and Diagnofirm concerning the BOMAID Managed Care Benefit Scheme. In yet another case, BOMAID – which is one of Botswana’s top medical aid providers – was fingered in a Botswana Dental Association (BODEA) complaint to CCA with allegations of possible abuse of dominance in the form of refusal of access to an essential facility.
This was in addition to an allegation of a possible horizontal agreement through price fixing between BOMAID, Pula Medical Aid (PULA) and Botswana Public Officers Medical Aid Scheme (BPOMAS).
