Corona: Block Exemption Healthcare South Africa | FTI Consulting

Fighting Corona: Block Exemption for the Healthcare Sector in South Africa

COVID-19 Update from South Africa

Economic Consulting | Healthcare & Life Sciences

March 24, 2020

Doctor and Patient

The Department of Trade and Industry (DTI) moved rapidly last week to join the fight against COVID-19, by publishing Block Exemption Regulations for the Healthcare sector, in the Government Gazette on 19 March 2020. This comes only days after the National State of Disaster was declared on 15 March 2020.

More detail about the ambit of the Block Exemption becomes clear when one notes that it is an exemption from only certain sections of the Competition Act (sections 4 and 5). In plain terms this means that several players in the healthcare sector – including hospitals, pharmacies, medical aid funds, laboratories, pathologists, etc. – will not be in contravention of the Competition Act if they have to coordinate an emergency response to the imminent threat of COVID-19.

Sections 4 and 5 of the Competition Act prohibit general agreements that could be concluded between competitors (firms in horizontal relationships), or e.g. between suppliers and their customers (broad category of vertical relationships). Under normal circumstances competitors are not allowed to coordinate their behaviour, such as collectively determining which patients are treated at which hospitals, as this is deemed anti-competitive.

This swift move from the DTI should be welcomed by all and is indeed exemplary. It means that the DTI, in consultation with the Competition Commission, realised almost immediately that the National State of Disaster would require healthcare stakeholders, such as hospitals and pathology firms, to coordinate their behaviour in order to collectively fight the Coronavirus.

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Nicola Theron

Senior Managing Director, Head of South Africa Economic and Financial Consulting