Federation of Independent Practitioner Organisations v Competition and Markets Authority

On a market investigation reference, the CMA may conclude that buyer power has not prevented, restricted or distorted competition even though the conduct has the potential to do so. The absence of consumer detriment is a material indication, although not a prerequisite, in assessing whether competition has actually been affected. The CMA may consider evidence about consultant numbers, fee levels, consumer choice, quality, innovation, the conduct of other insurers and insurers’ commercial incentives. Judicial review under the Enterprise Act 2002 requires rationality, not a re-evaluation of the merits. An information remedy may address a distinct adverse effect on competition arising from inadequate information.

The CMA investigated the supply and acquisition of privately funded healthcare services following a reference under the Enterprise Act 2002. It concluded that insurer buyer power over consultant fees and patient direction did not produce an adverse effect on competition, but identified an adverse effect arising from inadequate public information about consultant performance and fees and imposed an information remedy.

FIPO challenged those conclusions and the remedy before the Competition Appeal Tribunal under section 179. The CAT majority dismissed the challenge, while the economist member dissented on four grounds. FIPO appealed to the Court of Appeal on points of law concerning consumer choice, fee caps, rationality, reasons and procedural fairness.

1. Appeal dismissed. The CAT had correctly applied the rationality standard required by section 179 of the Enterprise Act 2002.
2. For the purposes of section 134, competition may be prevented, restricted or distorted before detrimental effects become apparent. Nevertheless, the existence or absence of detrimental effects is a material indication of whether competition has in fact been affected. The CMA was therefore entitled to assess the potential effects of fee-capping against evidence concerning consultant numbers, fee levels, consumer choice, quality, innovation and long-term consumer detriment.
3. The CMA was entitled to recognise that insurers, as buyers of consultant services and proxies for policyholder patients, had a legitimate interest in constraining consultants’ charging power, while also assessing whether those constraints had exceeded proper limits and produced an adverse effect on competition.
4. The CMA’s findings that insurer practices had not reduced recognised consultant numbers, harmed private practice generally, constrained fees to detrimental levels or caused current consumer detriment were rationally open to it. Its consideration of other insurers’ practices and the insurers’ incentive to preserve competition and demand for private medical insurance was also legitimate.
5. The CAT majority was entitled to reject the challenges concerning top-up fees, standardised fee caps, competition below the caps and procedural fairness. The CMA had not overlooked relevant constraints on top-up fees, consultants were not prevented from charging below the reimbursement levels, and the Information Remedy addressed the separate adverse effect arising from inadequate public information across the private healthcare market.
6. There was no obligation on the CAT majority to explain directly why it disagreed with the dissenting economist member, just as a majority appellate court need not address every view of a dissenting minority.

• Competition Appeal Tribunal: FIPO’s application under section 179 of the Enterprise Act 2002 was dismissed on 29 April 2015 by a majority. The economist member dissented on grounds concerning top-up fees, fee caps, insurer incentives and the information remedy.
• Court of Appeal (Civil Division): The appeal was dismissed on 25 July 2016.