MEDHEALTH wins a case against Mwaiwathu CFTC fines Mwaiwathu K19Million
By Malawi Exclusive
Competition and Fair Trading Commission (CFTC) has ordered Mwaiwathu to pay K19Milllion for breaching Competition and Fair Trading Laws.
CFCT Judgement which we have seen indicate that Mwaiwathu has been ordered to pay such huge some of money after the Commission had received a complaint from MedHealth Limited.
In the complaint it is alleged that conduct by Mwaiwathu Private Hospital is
suspected to have negative effect on competition in the health insurance.
Specifically, the complainant Medhealth alleged that the rates that Mwaiwathu charge Medhealth are 50 – 300% higher than the rates they charge Medical Aid
Malawi (MASM) members for the same senvices.
The complainant cited the example of pediatrician consultation fee which is set at MK 15,000 for MASM members and
K47,230 for clients of other health insurance companies.
MedHealth further alleged that Mwaiwathu is behaving like that because Masm holds 34% shares in Mwaiwathu and this is the reason they charge MASM lower rates to give them a competitive edge over competing health insurance.
For this reason, the complainant alleged that the conduct is anti-competitive and immediately the Commission launched investigations against Mwaiwathu Private Hospital where it appeared to have engaged in a conduct that contravened the provisions of Competition and Fair Trading Act CAP 48:09 of the Laws of Malawi.
The report reads in part.
“In view of the findings made during the investigations on this matter, the Board of Commissioners issued the folowing orders:
(1) That Mwaiwathu Private Hospital Limited should cease and desist from offering discriminatory discount rates to health insurance providers.
(2) That Mwaiwathu Private Hospital Limited should review its discount system and ensure that the qualification criteria is transparent and does not unduly discriminate against any health insurance company and because of this , Mwaiwathu Private Hospital Limited should pay a fine of Nineteen Million Kwacha Seven Hundred and Forty-Three Thousand Six Hundred and Sixty Kwacha
(MK19,743,660.00) being financial gain generated from engaging in the discriminatory biling of services across medical insurance schemes.” Reads the judgement in part.
According to the judgement, the fine was calculated basing on the number of Medhealth members (5,773)
that visited Mwaiwathu Private Hospital from 2012 to 2017, and those members
were assumed to have accessed the cheapest service of full blood count at the
rate of MK6,900 per member versus a MASM member, who accessed the same
service at MK3,480 per member which gave a discrepancy of MK3,420 per
Thus, the total generated gain is calculated as 5,773 x MK3,480 = MK19,743,660.00.
Mwaiwathu is a private medical service while MedHealth is a health insurance provider.
It is also believed that access to Mwaiwathu being a specialized hospital is
considered by health insurance company as a factor that detemines their
competitiveness and that the favourable treatment that Mwaiwathu gives to MASM
has the effect of influencing subscribers to move away from other insurance companies and join MASM.
“In this regard, the discounts that the Respondent gives to MASM has the
effect of unduly restraining competition between MASM and other health insurance
companies and MedHealth in particular.
5.3In light of the above analysis, it is concluded that the discounts given to MASM by Mwaiwathu constitute a contravention of Section 32(2)(6) of the CFTA.” Reads the report.
But when contacted MedHealth sales and Marketing Manager Maya Kafwamba referred the matter to Medhealth Chief executive officer who refused to comment saying it is a legal matter.