ACCC’s case against Ramsay a delicate operation
In what might be one of the last cases prosecuted under the current version of the ‘misuse of market power’ prohibition in the Competition and Consumer Act 2010 (CCA), the ACCC has commenced proceedings against Ramsay Health Care Australia Pty Limited (Ramsay).
The ACCC’s claims relate to Ramsay’s alleged conduct in the Coffs Harbour region of New South Wales. Ramsay operates Baringa Private Hospital and the Coffs Harbour Day Surgery, which are the sole private hospital and private day surgery in the region. Surgeons in the region use operating theatres at these facilities for procedures on private patients.
According to the ACCC, a group of surgeons planned to establish a private day surgery facility in the region in competition with Ramsay. In response, it is alleged that Ramsay executives threatened to have the surgeons’ access to operating theatre time at Baringa Private Hospital withdrawn or reduced. The ACCC contends that this was done in order to preserve Ramsay’s position in day surgery services in the region, and that in response the plans to establish a new surgery were suspended.
The ACCC alleges that this conduct constituted a misuse of market power within the meaning of section 46 of the CCA, as well as exclusive dealing within the meaning of section 47 of the CCA. Pecuniary penalties, declarations, compliance program orders and legal costs are being sought against Ramsay.
In order to prove the misuse of market power case against Ramsay, the ACCC must show, on the balance of probabilities, that:
- Ramsay had a substantial degree of power in the market for day surgery services in Coffs Harbour; and
- Ramsay took advantage of that market power; and
- this was for the purpose of either:
(i) eliminating or substantially damaging a competitor; or
(ii) preventing the entry of a person into that or any other market; or
(iii) deterring or preventing a person from engaging in competitive conduct in that or any other market.
Reforms to the law
The ACCC has previously opined that the narrow manner in which the ‘take advantage’ limb has been interpreted by courts makes it difficult to successfully prosecute section 46 cases. As the law currently stands, a corporation would not have taken advantage of its market power if its unilateral conduct was a form of rational business conduct that would be engaged in by companies without market power.
The Federal Government has since adopted the recommendation of the Harper Review to modify section 46 so that a firm will have breached the section if its conduct had the purpose, effect or likely effect of substantially lessening competition. However, the reform is contained in the Competition and Consumer Amendment (Misuse of Market Power) Bill 2017, which has not yet passed through Parliament.
It will be interesting to see whether the ACCC is able to establish that Ramsay did take advantage of its alleged market power, in what may be one of the last cases run under the ‘old’ section 46 (if the reforms are ultimately passed).