Spire Healthcare, a private healthcare provider, and six consultant ophthalmologists have been fined for their roles in facilitating and arranging to fix the price of initial consultations between different consultants at a Spire hospital in the north of England. Whilst individual consultants were fined in the range of GBP 642 to GBP 3,859 for agreeing to fix initial consultation fees, the private healthcare group was fined GBP 1.2 million for its role as the instigator and facilitator of the arrangement as a result of the UK Competition and Markets Authority ("CMA") applying a significant uplift for specific deterrence and proportionality.
| what you need to know - key takeaways |
- The CMA has found the price-fixing agreement between consultant ophthalmologists to infringe competition law, with the arrangement having been informally agreed during a consultants' dinner and confirmed via email the next day.
- Spire, the private healthcare provider, was fined GBP1.2 million, after CMA applied a six-fold uplift to the level of the fine for deterrence and proportionality in its penalty calculation, although Spire also benefited from the maximum available 10% reduction for its compliance programme.
The individual consultants themselves were fined a fraction of this amount, up to GBP 3,859 each after agreeing settlements. Three of the consultants fined operated as sole traders, providing a reminder that individuals may be subject to civil penalties for competition law infringements where they are engaged in economic activity.
- This case continues a long-running focus by the CMA in this sector, following its private healthcare market investigation, as well as its 2015 decision to fine an association of ophthalmologists for exchanging price information.
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A costly diner: the agreement
The CMA has fined Spire Healthcare Limited and its parent company Spire Healthcare Group plc, together with six consultant ophthalmologists, for an infringement of Chapter I of the Competition Act 1998 by facilitating and agreeing to fix the price of initial consultations at GBP 200 per session for self-pay patients. A seventh consultant was granted immunity after applying for leniency.
According to the CMA's infringement decision issued on 1 July 2020, seven consultant ophthalmologists operating out of Spire's Regency Hospital in Macclesfield had agreed to fix their initial consultation fees for self-pay patients (which are normally set by the individual consultant) following a dinner organised by Spire's management on 24 August 2017. The CMA found that the topic of fees had been raised by a Spire employee during the dinner, with a view to simplifying fee options for self-pay customers. Following a discussion at the dinner, the CMA found that an agreement was reached via an email exchange the next day to fix the level of the fee at GBP 200. The CMA concluded that the resulting agreement, instigated by a Spire employee and facilitated by the hospital's customer service team, lasted until early July 2019.
Fine reduction: settlement and the importance of compliance programmes
In calculating the fines, the CMA applied a starting point of 25% (out of a maximum of 30%) of relevant turnover (the revenue from privately-funded ophthalmology services at the Regency Hospital), reflecting its assessment of the infringement as the "most serious type of cartel behaviour". The six consultants each saw a reduction in their penalties in view of, in particular, their lessor role in the conduct (as compared to Spire), and a further 20% reduction for settlement. While three of the consultants operated through limited companies (with the fine imposed on the company accordingly), fines were imposed on the remaining consultants as sole traders.
A number of adjustments were made to Spire's penalty during the calculation, including a specific 10% increase to reflect Spire's role as the "instigator", although this was offset by an equivalent reduction for Spire's existing competition compliance activities. This represented the maximum available discount for compliance programmes. Spire also agreed to submit a report to the CMA on its compliance activities every year, for the next three years. A further 5% discount was granted on the basis of cooperation as Spire had made an employee (who was a key individual in the investigation) available for interview.
Fine uplift: instigator and facilitator
Spire's penalty following the above adjustments came to GBP 225,824. This was then increased to GBP 1.5 million, a six-fold increase, on the basis of deterrence and proportionality. This uplift in part reflected Spire's overall size and financial position, within the relevant turnover used in calculating the fine representing only a very small part of Spire's overall turnover. However, a key driver was the CMA's findings that Spire had acted as both the instigator and facilitator of a price fixing agreement.
This case follows-on from extensive focus by the UK competition authorities on the private healthcare market. The CMA previously considered the issue of consultant groups (specifically, anaesthetist groups) and the setting of common prices in its private healthcare market investigation carried out over a number of years from 2011 onwards. It is also not the first time that the CMA has investigated the ophthalmology sector in particular; in August 2015, the CMA imposed a fine of GBP 382,500 on an association of ophthalmologists for exchanging price and other commercially sensitive information between members.
With thanks to Harriet Martin of Ashurst for her contribution.
