The Court of Appeal has ruled that the Botswana Medical Aid Society (BOMAID) is subject to regulation by the Competition Act, clearing the way for the Competition and Consumer Authority (CCA) to resume its investigations against BOMAID’s alleged anti-competitive practices.
Judgement passed by Justice Isaac Lesetedi, Justice Singh Walia and Justice Tebogo Maruping states that BOMAID may not have profit making as its primary objective but it is intended to grow as a market player in the provision of medical aid funding. By investing in for-profit businesses some of which provide medical services, it engaged in business for gain.
The Court took note of the fact that the medical aid market in Botswana is not regulated, resulting in no limitation to the functions and conduct of medical aid funds as compared to other countries. Left unchecked, therefore, BOMAID’s direct or indirect investment in the health services market may lead to service providers being side-lined, thereby affecting medical aid members’ right to choice of service provider, quality and fair price in the provision of medical services. In 2020, BOMAID received communication from the Authority informing it of a number of complaints raised against it on allegations of acts of anti-competitiveness through refusal to deal with another enterprise, discrimination in price and other trading conditions and exclusive dealings.
The Authority informed BOMAID that these were conducts which if established, constituted a contravention of Section 31(1) of the Act. In response, BOMAID argued that the Act did not apply to it because it was not an enterprise within the contemplation of the Act and its activities were exempted from the reach of the Act by Section 3(3) (e) of the Act.
Following the service of a notice of intention to investigate, BOMAID approached the High Court alleging that it was exempt from the provisions of the Competition Act because its activities are designed to achieve a non-commercial socio-economic objective; that it is not an enterprise as defined under Section 2 of the Act, and does not carry out business for gain or reward. The Authority argued that BOMAID business shows that it is not performing a socio-economic and non-profit undertaking but operates on a commercial basis.
The Court of Appeal on Friday dismissed the appeal with costs and upheld the High Court’s decision that indeed BOMAID is an enterprise in terms of the Competition Act 2018, because it carries on business for gain. The Court of Appeal stated that BOMAID may not have been carrying its business for profit but it is clear that it intended to grow itself as a market player in the provision of medical aid funding and from the complaints made to the Authority to decide who among the health service providers to give business and whom to close out without consideration of quality of service to its members.
“This constitutes gain in that not only does it contribute to the growth of the resources, value and consequently wealth of the fund, if the complaints are established, such conducts runs afoul of Section 31 of the Act as it inhibits the spirit of competition.” Furthermore, the court stated that this is consistent with the objectives of the Act. “Added to that is its direct and indirect investment by way of shareholding in services provided by market players it is using its advantageous position to indirectly compete for that market segment of provision of health services with those who are already health service providers of its members and who look to it for the market.” The court also found that provision of medical aid in Botswana was not based on socio-economic objectives or social solidarity in that it is voluntary and the benefits are commensurate to the contributions. “A member’s benefits are not philanthropic or benevolent nor defined by statute to provide an across the spectrum standard medical aid cover.”
Judgement passed by Justice Isaac Lesetedi, Justice Singh Walia and Justice Tebogo Maruping states that BOMAID may not have profit making as its primary objective but it is intended to grow as a market player in the provision of medical aid funding. By investing in for-profit businesses some of which provide medical services, it engaged in business for gain.
The Court took note of the fact that the medical aid market in Botswana is not regulated, resulting in no limitation to the functions and conduct of medical aid funds as compared to other countries. Left unchecked, therefore, BOMAID’s direct or indirect investment in the health services market may lead to service providers being side-lined, thereby affecting medical aid members’ right to choice of service provider, quality and fair price in the provision of medical services. In 2020, BOMAID received communication from the Authority informing it of a number of complaints raised against it on allegations of acts of anti-competitiveness through refusal to deal with another enterprise, discrimination in price and other trading conditions and exclusive dealings.
The Authority informed BOMAID that these were conducts which if established, constituted a contravention of Section 31(1) of the Act. In response, BOMAID argued that the Act did not apply to it because it was not an enterprise within the contemplation of the Act and its activities were exempted from the reach of the Act by Section 3(3) (e) of the Act.
Following the service of a notice of intention to investigate, BOMAID approached the High Court alleging that it was exempt from the provisions of the Competition Act because its activities are designed to achieve a non-commercial socio-economic objective; that it is not an enterprise as defined under Section 2 of the Act, and does not carry out business for gain or reward. The Authority argued that BOMAID business shows that it is not performing a socio-economic and non-profit undertaking but operates on a commercial basis.
The Court of Appeal on Friday dismissed the appeal with costs and upheld the High Court’s decision that indeed BOMAID is an enterprise in terms of the Competition Act 2018, because it carries on business for gain. The Court of Appeal stated that BOMAID may not have been carrying its business for profit but it is clear that it intended to grow itself as a market player in the provision of medical aid funding and from the complaints made to the Authority to decide who among the health service providers to give business and whom to close out without consideration of quality of service to its members.
“This constitutes gain in that not only does it contribute to the growth of the resources, value and consequently wealth of the fund, if the complaints are established, such conducts runs afoul of Section 31 of the Act as it inhibits the spirit of competition.” Furthermore, the court stated that this is consistent with the objectives of the Act. “Added to that is its direct and indirect investment by way of shareholding in services provided by market players it is using its advantageous position to indirectly compete for that market segment of provision of health services with those who are already health service providers of its members and who look to it for the market.” The court also found that provision of medical aid in Botswana was not based on socio-economic objectives or social solidarity in that it is voluntary and the benefits are commensurate to the contributions. “A member’s benefits are not philanthropic or benevolent nor defined by statute to provide an across the spectrum standard medical aid cover.”
