Competition Law and the NHS

I struggled some time ago with the NHS white paper, Equity and Excellence: Liberating the NHS, which proposes a new role for Monitor, as an economic regulator and competition authority for health services. To summarise, crudely, the government is proposing that all purchasing of NHS services will be done either by GP consortia or a new NHS Commissioning Board. Service providers will be either foundation trusts or the private sector. Monitor will be turned into the economic regulator for health and social care, with the responsibility to promote competition, with powers to enforce competition law, price regulation and supporting continuity of services. Monitor will license the providers of publicly funded NHS services in England.

In terms of competition law, Monitor will be like the other economic regulators and have a concurrent power with the OFT to apply competition law in this sector. The immediate thought that strikes me is that competition law only applies to undertakings and an undertaking is an entity engaged in economic activity which means offering goods and services on a market. The White Paper starts by committing the government to an NHS available to all, free at the point of use and based on need, not ability to pay. Whatever this might be characterised as, it does not look like economic activity, rather a service based on solidarity (and the FENIN case would seem to back this up). FENIN also makes the point that purchasing cannot be viewed independently of the ultimate use of the goods or services. So it looks as if, outside private sector providers, competition law cannot apply and, because this is EU law, it cannot be amended.

A similar issue arises in relation to mergers as it is envisaged that the OFT and the Competition Commission will have the responsibility for investigating mergers in the health and social care services. Here the problem is that a merger situation occurs when two or more enterprises cease to be distinct and an enterprise is defined as the activities of a business. This can no doubt be sorted out by amendment of the legislation and a similar procedure put in place as exists for media and water mergers to allow the regulator to comment on the merger, and this is recognised in the consultation documents. Although I do wonder what merger analysis will look like, as applied to institutions which are not carrying on economic activity in any straightforward sense.