ACCC Institutes Proceedings Against Calvary Hospitals
Tuesday 16 December 2014 @ 9.09 a.m. | Trade & Commerce
In a yet to be released judgment, the Australian Competition and Consumer Commission (the ACCC) has instituted proceedings in the Federal Court against Little Company of Mary Health Care Limited (LCMHC) and its subsidiary Calvary Health Care Riverina Limited (CHCR ) (together, Calvary) for imposing by-laws regulating the use of Calvary medical facilities by medical practitioners, which the ACCC alleges had the purpose of substantially lessening competition.
Background
To use Calvary medical facilities, a medical practitioner enters into a contract with Calvary granting them rights to use Calvary medical facilities. In March 2011, Calvary introduced a new set of by-laws that governed the conduct of medical practitioners who wish to use Calvary’s medical facilities. The by-laws included provisions that allowed Calvary to refuse to grant, or to revoke, the right of a medical practitioner to use its facilities if the medical practitioner had become involved in the operation of a business in competition with Calvary.
The ACCC alleges that, by granting medical practitioners the right to use its medical facilities subject to these by-laws, Calvary entered into contracts with the medical practitioners which had the purpose of substantially lessening competition in day surgery markets, particularly in Wagga Wagga, in contravention of the Competition and Consumer Act 2010 (Cth) (the Act).
ACCC Chairman Rod Sims said:
“In recent years there has been an increase in the establishment of independent day surgeries. It is not uncommon for these day surgeries to be run by medical practitioners who also treat patients at other medical facilities … The ACCC is concerned that by-laws or contractual conditions of this kind applied by a significant national health care organisation could prevent the establishment of new day surgeries. The consequence of this would be to limit the availability of day surgery procedures to consumers.”
Mr Sims said the investigation had been triggered by complaints.
Comment by Calvary
A spokeswoman said Little Company of Mary Health Care and Calvary Health Care Riverina were "surprised and disappointed" the ACCC had commenced proceedings:
"LCMHC gave consideration to the legal implications of the arrangements in question, both at the time of entry into those arrangements and again in the context of the ACCC's investigation of those arrangements and understands the arrangements are consistent with those utilised by other major health care providers
While LCMHC and CHCR fully co-operated with the ACCC's investigation, we remain of the view that these arrangements and our conduct is in accordance with the Competition and Consumer Act 2010.
LCMHC and CHCR are carefully considering the application and our response."
Medical practitioners that are surgeons will generally have rights to use multiple medical facilities including hospitals and day surgeries. This allows increased access for consumers to surgical procedures. Where medical practitioners are involved in the operation of a medical facility they may also still treat consumers at other medical facilities.
About the Calvary Organisation
Calvary is a national healthcare organisation. It operates 10 private hospitals and a range of other medical facilities across Australia. In addition to its medical facilities, it operates a number of retirement and social welfare facilities and services.
The matter is listed for a directions hearing in Sydney at on 4 February 2015. The ACCC is seeking pecuniary penalties, declarations and costs.
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Sources:
ACCC alleges Calvary tried to lessen day surgery competition in Wagga Wagga – Canberra Times
ACCC institutes proceedings against Calvary Hospitals - ACCC Release MR 304/14
