HPCSA vs Buchanan

Whether corporate ownership of healthcare providers can improve efficiency and lower prices is a hotly contested topic in the healthcare sector. In this case an individual who operated a large franchise of optometrists put this topic on trial. The person lodged a competition law complaint that the Health Professions Council of South Africa (HPCSA) was involved in a restrictive horizontal practice by not permitting corporate ownership. Genesis was retained by the HPCSA to provide an expert economic view of whether this was the case.

While there were legal questions as to whether the practice could fall within the ambit of a restrictive trade practice, Genesis focused on the core economic question of whether the complainant was able to demonstrate that competition was indeed lessened by the exclusion of corporate ownership. Genesis first sought to determine, from the international applied economic literature and regulatory reviews, what the specific benefits were alleged to follow corporate ownership. On that basis, Genesis was able to determine that most of these alleged benefits could already be realised through permitting franchise arrangements in optometry, and that the only potential incremental benefit was raising capital. However, the evidence collected by Genesis demonstrated that this was not a barrier to entry in optometry.

The Competition Tribunal concurred with the Genesis opinion and cited the Genesis findings as its primary reasons for dismissing the complaint. This included findings that there was no evidence the optometry market was uncompetitive.