The Competition and Consumer Authority (CCA) has confirmed it is looking into the conduct of Bomaid medical aid fund, and is likely to prosecute some individuals for contravening the Competition Act.
The confirmation comes after the Court of Appeal (CoA) ended a marathon legal battle between the two, concerning Bomaid’s refusal to be investigated for anti-competitive conduct.
Although High Court approved the investigation, Bomaid approached the CoA seeking a reprieve.
According to the record, in early 2020, the CCA informed Bomaid it had received several complaints against the medical aid.
These included allegations of anti-competitiveness through refusal to deal with another enterprise, discrimination in price and other trading conditions as well as exclusive dealings.
“In response, Bomaid argued that the Act did not apply to it because it was (a) not an enterprise within the contemplation of the NBFIRA, and (b) its activities were exempted from the reach of the Act by Section (3)3 of the Act. On those grounds, it refused to subject itself to the enquiry process,” reads the unanimous judgment by Justice Isaac Lesetedi, Dr Singh Walia, and Tebogo Maruping.
In October 2020, the CCA followed up the matter, informing Bomaid of its intention to investigate bad practices at the entity.
Bomaid was instructed to submit its written representations in 30 days and appear at CCA premises on 1st December.
“Bomaid response thereto was short. It reiterated its contention that the Act did not apply to it as it was not an enterprise and was exempt from application of the Act. It declined to be involved in the investigation process and demanded that the Authority undertake not to progress with the investigation further pending the outcome of the High Court proceedings, which it intended to institute asserting its exemption from the application of the Act,” the judgment reads.
Bomaid insisted it was a non-profit making society because the subscriptions it received from its members for medical aid cover were used to pay the medical costs incurred by the membership.
CoA observed that the ‘Book of Rules’ Bomaid used to support its court case stated that the entity is run under the control and supervision of a Board of Trustees: four of whom are nominated by member companies, two are nominated during the AGM, three others, and an ex-officio member.
In the ‘Book of Rules’, Bomaid does not declare any profits, but the surplus is distributed to the members.
On the other hand, CCA stated that prior to the 2018 amendment of the Act, Medical Aid Funds, most whom were registered as Trusts, refused to be regulated under the Act on grounds they were not covered under definition of an enterprise and not recognized as business entities.
“It was in the light of that argument, so argues CCA, that the Act was amended to include partnerships and trusts so as to bring medical aid funds under the control of the Act,” said the Court of Appeal.
Many medical aid funds have since regularized and accepted the regulatory jurisdiction of the Authority.
CoA ruled that Bomaid and other medical aid funds operate commercial entities, and invest in commercial activities which are also key role players in the competitive health service industry.
CoA decided CCA was justified to investigate the allegations that Bomaid was closing out other players by refusing to permit some service providers access to providing healthcare for its members even though they were qualified and produced competitive healthcare services.
Ultimately, Bomaid’s appeal was dismissed with costs.
