Sanctions imposed on medical related associations in Argentina

1.    Introduction

The Argentine Antitrust Commission (the “Commission”) has analyzed a new case regarding market associations, in this case, regarding the provision of medical services.[1]  The focus of this case was based on the identity of the members of the market associations and their possibility of restricting competition in the market where they operate. The Commission decided to sanction it, as an abuse of dominant position was apparently evidenced.

2.    The claim

On April 6, 1999, Policlínico El Dorado (the “Claimant”) filed an accusation against several market associations and companies related to the medical services’ market in the province of Entre Ríos.

The accused parties were: (i) Federación de Clínicas y Sanatorios de la Provincia de Buenos Aires (the “Federation”), which was an association whose members were rated depending on the degree of complexity of the cases that they could deal with, (ii) Asociación de Clínicas y Sanatorios Alto Paraná (the “Association”), which was an association of clinics that also rated its members; (iii) Medicina del Nordeste Argentino S.A. (“Medinea”), which was an intermediary between social medicine associations and the clinics that perform such services and (iv) two competing clinics of the Claimant, Sanatorio Buddenberg S.A. (“Sanatorio Buddenberg”) and Instituto Materno Infantil S.A. (“IMI”).

The Federation had downgraded the Claimant’s rating which made it impossible for Claimant to perform any type of surgery, internment or birthing activities in its facilities. While the Claimant stated that it had filed requests for the upgrade of the rating and provided evidence of the necessary investments, the Federation did not change its assessment.

Claimant stated that the Federation was composed of Clinic Associations from three zones: South, Center and Paraná. The Paraná representatives (which were the zone in which Claimant operated) were the directors of Sanatorio Buddenberg and IMI, competitors of Claimant.

On the conducts performed by the Association, which encompassed all clinics within the area, Claimant stated that different classes of voting rights had been granted to the clinics, and that Sanatorio Buddenberg and IMI were the only ones that had been granted 5 votes each, while the remaining clinics only had one vote each. These voting classes were based on the rating granted to the clinics by the Federation.

Additionally, Medinea, an association that intermediates between healthcare organizations and clinics, also limited the type of services that Claimant could perform for healthcare organizations, by eliminating the access of Claimant to radiology, internment and lab-related services required by healthcare organizations. Claimant stated that 80% of the patients were channeled to doctors that worked for Sanatorio Buddenberg and IMI, while the remaining 20% were channeled to the remaining clinics in the area.

3.    The analysis

The Commission determined that the relevant market was the provision of medical services with internment and lab facilities performed in the city of El Dorado as well as its nearby locations. The Commission focused its analysis on the intermediate companies between the offering companies of medical services (such as clinics) and the final users of such services (the patients).

Based on the fact that the Federation, the Association and Medinea were controlled either by directors or shareholders of Sanatorio Buddenberg and IMI, the Commission determined that such clinics had tried to exclude the Claimant from the provision of certain medical services. This was concluded by the Commission after analyzing the meeting minutes from these organizations as well as the corporate structure of Sanatorio Buddenberg and IMI.

The Commission also determined that the services that the Claimant was not able to perform due to the downgrade of its ratings were supplied in turn by Sanatorio Buddenberg and IMI.

While the Commission did not analyze in detail the evidence that would show that the Claimant had complied with the accused associations rating standards, the Commission took into account a resolution issued by the Council of the City of El Dorado in which the Claimant’s facilities were considered to be an “heirloom of the town”.

It was also demonstrated by witness hearings that after the downgrade in the rating, the Claimant’s facilities were severely affected by the lack of funds and that competing clinics attracted its staff.

As a result of this analysis, the Commission decided that the accused parties had intended the exclusion of the Claimant by means of an abuse of dominant position and decided to sanction each of the five accused parties with a fine of AR$300,000 (approximately US$78,000 at the current exchange rate).

4.    Conclusion

Once again, the Commission has analyzed the performance of abuse of dominant practices by market associations.

The Commission based its analysis solely on the fact that some of the members of the associations were competing parties of the Claimant in the same relevant market, since the case does not make any reference to any type of evidence that would show that the downgrade of the rating to Claimant was not justified.

The general economic interest was harmed, according to the Commission, by the downgrade of the rating of Claimant by associations controlled by its competing companies, but did not further elaborate on this concept.

While this case provides further information on the guidelines that members of market associations will have to comply with, the Commission still lacks a clear rule regarding this type of cases as well as the evidence that is necessary in order to impose sanctions.