No breach of law by health trust

PN 171/03 18 December 2003

The North & West Belfast Health & Social Services Trust (N&W) has not breached the Competition Act 1998, the OFT has found.

The BetterCare Group Limited (BetterCare) - who run private care homes across the UK - complained to the OFT that N&W, BetterCare's main customer in the North and West Belfast area, was abusing a dominant position in the purchasing of social care for the elderly. BetterCare said that N&W, when purchasing residential and nursing home care from BetterCare, offered uneconomically low and discriminatory prices (when compared with what it paid its own residential homes).

The OFT has found that N&W does not set the prices for residential and nursing home care for the elderly that BetterCare is paid, nor does it determine the funding for its own residential homes. Therefore, N&W cannot have committed an abuse with respect to the alleged low or discriminatory prices. It has not, therefore, infringed the Competition Act. The relevant rates are set by the Eastern Health and Social Services Board and the Department of Health, Social Services and Public Safety. The OFT has found that these two bodies do not carry out economic activities and so are not undertakings for the purposes of the prohibitions in the Competition Act.

Further, the OFT considers that paying low purchase prices is only likely to amount to an abuse of a dominant position in exceptional circumstances, which the OFT has no reason to believe are present in this case.

The full decision will be published shortly. Early in the New Year the OFT will publish guidance explaining how it intends to handle cases which raise similar questions on the status of a public body as an undertaking for the purposes of the Competition Act.

NOTES

1. The OFT originally (2 November 2001) rejected BetterCare's complaint on the grounds that N&W, when purchasing residential and nursing care for the disadvantaged in society using monies raised by taxation, was not acting as an undertaking. The prohibitions contained in the Competition Act 1998 only apply to undertakings.

2. The OFT's decision to reject the complaint was appealed by BetterCare to the Competition Commission Appeal Tribunal (CCAT) (now the Competition Appeal Tribunal). The CCAT took a wide view of the Competition Act in relation to the purchasing activities of a public body in its judgment. It decided that N&W is engaging in economic activities (and is therefore an undertaking) in running its statutory residential homes and in contracting out the supply of nursing and residential care to independent providers. BetterCare's complaint was remitted to the OFT.

3. The OFT looked at the case under Chapter II of the Competition Act. This prohibits conduct by one or more undertakings which amounts to the abuse of a dominant position in a market which may affect trade within the UK (or any part of it).

4. The OFT received a super-complaint from the Consumers' Association on 5 December 2003 requesting an investigation under the Enterprise Act 2002 of various alleged practices operating in the care homes market. This complaint is separate from the OFT's decision in the BetterCare case under the Competition Act 1998, though in part it concerns similar issues.

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