Why are NHS Commissioners 'undertakings' and, consequently, subject to competition law?

Some months ago, I held an interesting email exchange with some readers of my paper New Rules For Health Care Procurement in the UK. A Critical Assessment from the Perspective of EU Economic Law. They basically challenged my understanding of the National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013 on the basis that NHS Commissioners could not be considered undertakings and, hence, their decisions should remain outside the scope of application of competition rules.

 

However, I thought and still think that NHS Commissioners are 'undertakings' for the purposes of (EU) competition law enforcement. These are the main reasons why I think so (apologies to non-competition law readers for the amount of 'slang' in this post, which reproduces parts of the email exchange.

 

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Regarding the treatment of NHS commissioners as undertakings, I think that the FENIN/Selex exemption is inapplicable and probably I should have made this clear in my paper (I simply assumed that this would not be controversial). As you probably know better that myself, the reason for that is basically that (most) GPs are engaged in economic activity as self-employed providers of services to the NHS (http://www.nhscareers.nhs.uk/explore-by-career/doctors/pay-for-doctors/) under the so-called General Medical Services Contract (http://www.nhsemployers.org/PayAndContracts/GeneralMedicalServicesContract/Pages/Contract.aspx). Indeed, they hold contracts for the provision of those services and, consequently, everything that they procure or commission needs to be assessed in light of such ‘downstream’ or parallel economic activity (which, in my view, immediately deactivates the FENIN/Selex exemption). Moreover, GPs located in a given area are in competition between themselves in order to attract patients and retain them, and that has an impact on their level of remuneration by the NHS. All this indicates that they do engage in economic activity ‘downstream’ or in parallel to the services and goods that they commission and purchase in their public procurement (‘upstream’?) activities. That is enough to justify the direct applicability of competition law (EU and domestic) to their activities.

In my view, this conclusion is robust even if those services are generally not directly paid for by the end users in most of the cases, since that should not affect either: 1) their inclusion within the scope of application of EU internal market law (C-372/04 Watts, dealing particularly with the NHS, although with hospital care provision), or 2) the fact that GPs are undertakings, as the requirement of provision of services in the market for remuneration does not require direct payments; under the classic formulation of the concept of an undertaking, it encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed. So, I guess that the largest point of disagreement between us is that you may consider that GPs (individually or collectively as part of a Clinical Commissioning Group, CCG) are not engaged in economic activity. However, as self-employed providers of services, I think that that assessment would not be in line with the generally functional approach to the concept of undertaking and that it is not covered by the FENIN/Selex case law. I do not think that GPs would be covered by the ‘social’ exclusion for systems based on solidarity either, given that the system in the UK promotes choice and competition and, by itself, that goes against the requirements of mandatory participation that the CJEU has included in its sickness funds-relate case law.

Finally, I also think that there would be a possibility of circumventing any possible exclusion of the (direct) applicability of the rules to the GPs and CCGs as undertakings (or groupings/associations of undertakings) via a State action doctrine approach (basically, on the basis of Cipolla) given that the UK as a State has delegated economic decisions on a type of organs (CCGs) that are in a structural (mild?) conflict of interest when they adopt commissioning (economic) decisions and, consequently, liability (of the UK) could be found on the basis of Art 4(3) + 101 TFEU. That would clearly justify the consideration and application of EU competition rules by Monitor as the ultimate watchdog in charge of ensuring compliance with (EU and UK) competition rules—as it is indeed co-competent with the new CMA in the healthcare sector. Again, you may consider this a weak legal basis, but I would disagree with that.

Coauthored paper with @pacomarcos: “Human Rights” Protection for Corporate Antitrust Defendants: Are We Not Going Overboard?

There seems to be a clear trend of increased protection of ‘corporate human rights’ and, more specifically, due process rights (or procedural fairness) in the field of enforcement of competition law. To a large extent, that trend is based on the uncritical extension of human rights protection to corporate defendants by a process of simple assimilation of corporate and individual defendants.

 

This new coauthored paper briefly explores the rationale behind the creation of due process rights when the individual is the beneficiary of such protection. It then goes on to critically assess if the same need exists for the extension of those protections to corporate defendants, particularly in the field of competition law or antitrust enforcement. It concludes with some warnings concerning the diminishing effectiveness of competition law prohibitions and of human law protection that can result from an overstretched conception of due process protection in this area of EU economic law.

From a substantive perspective, this paper submits that the extension of human rights to corporations cannot be uncritical and should not be completely symmetrical to that for human beings; but that it rather needs to be necessarily adapted to their circumstances. To put it more bluntly, it is suggested that in the field of the enforcement of economic law, administrative law procedures should be sound and there should clearly be a strong system of judicial review in place, but corporations should not have access to broader constitutional or human rights protections and any perceived shortcomings in the design and application of those procedures should remain within the sphere of regulatory reform.

 

Sánchez Graells, Albert and Marcos, Francisco, “Human Rights” Protection for Corporate Antitrust Defendants: Are We Not Going Overboard? (February 2, 2014). University of Leicester School of Law Research Paper No. 14-04. Available at SSRN: http://ssrn.com/abstract=2389715.

An interesting reminder on institutional culture and public service commitment: First speech by Clive Maxwell, new OFT's Chief Executive

The new Chief Executive of the Office of Fair Trading, Clive Maxwell, gave his first speech on 10 September 2012 at the RPI Annual Competition and Regulation Conference (http://www.oft.gov.uk/shared_oft/speeches/2012/0612.pdf). Even if he will only hold this post for about two years due to the already launched and significant reform of the UK's competition enforcement bodies (ie the establishment of the Competition and Markets Authority, which will take on the competition, markets and remaining consumer functions of the OFT plus all of those of the Competition Commission), I think that his speech is an interesting reminder of institutional culture and public service commitment that deserves praise and diffusion.

One of the keys to a strong delivery culture is to invest in people and their skills. Only then can we efficiently deliver high impact, outcomes across our portfolio. This is a critical issue not just for the OFT but for regulators more generally, and one that may get overlooked in the rush to discuss processes and procedures

I care about how we choose what we do, how we achieve change for the better in the real world most efficiently and effectively.

I led an ‘enforcement debate’ at the start of 2012 within the OFT, to identify what we at the OFT do well and less well, and the challenges we face in doing it even better. We also discussed these issues with similar bodies in the UK and abroad. I was especially struck that we need to look outside the competition and consumer community and more generally at the way in which other authorities – such as the FSA, the Serious Fraud Office and Her Majesty’s Revenue and Customs – tackle what are broadly similar challenges in addressing wrongdoing by businesses and individuals.

The conclusions to this work included three points:

• The importance of skills.

• The need for the right attitude –or culture– for successful enforcement work.

• The importance of intelligence.

What does this all show?For me, there are three important points to all of this.
The first is that while it is right that any agency needs to work hard at its processes and procedures, the skills and culture of the people in the organisation is at least as important. I believe that some of the potential for sharing such ideas between authorities remains to be exploited further. It is also the case that tackling this requires putting your money where your mouth is – skills development is an investment and it is important to recognise that this costs money. [...]
The second is that even where we are facing big organisational changes and uncertainty it is important to continue to invest time and effort doing things better. [...]
The third is that in running agencies such as the OFT it’s really important to continue to review how we do things, to experiment where needed, and to learn lessons from our own and others’ experiences. 

I hope that the observations I have made have some relevance to the challenges your organisations are facing. For me, delivery is about people and commitment, as well as processes, and we must not forget that our staff are the major driver of our organisations’ success

I think that this is a reflection of the instutional culture present in most market regulators (broadly understood) in the UK, and an important ingredient in the recipe for a smooth transition to the new institutional framework for competition law enforcement.

It seems to me too that there are many lessons to be learned by other competition authorities immersed in enforcement architecture redesign, such as the Spanish National Competition Commission–which remains in a state of shock since a reform similar to the UK's was hinted at in the last Spring.