Ex-officio investigation by the Fair Trade Commission into Kaohsiung City Medical Association's restriction that members of primary care clinic must not see patients every other Sunday, in violation of the Fair Trade Law

Taiwan

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1. In early 2002, Kaohsiung City Medical Association (the respondent), in an official letter drafted by Disciplinary Committee Director Chen Si-Chuan and sent to members in the name of association Chairman Hsiao Chi-wen, notified members that beginning in February 2002 on a trial basis, primary care clinics in the association's northern and southern jurisdiction would begin a rotating holiday system on Sundays, with those clinics in the southern jurisdiction (the city's Hsinhsing, Lingya, Hsiaokang, Chienchin and Chienchen districts) closing on those Sundays falling on even-numbered dates and those clinics in the northern jurisdiction (the city's Sanmin, Tsoying, Nantze, Chichin, Kushan and Yencheng districts) closing on those Sunday falling on odd-numbered dates. Where a month contained a fifth Sunday, clinics would be free to decide whether to open or close. The association also requested that clinics post a sign reading “closed for public holiday” on their doors on those Sundays they were closed. The association's schedule for implementing the plan was as follows: (1) it will begin in February with consultations with members as well as patients to assist them understand the purpose of the new policy. The respondent's role will be limited to consultation only. (2) In March and April, random checks would be executed with the respondent dispatching officials to inspect clinics for compliance. Those found in violation of the new policy would be identified by public announcement at the end of the month. (3) In May, disciplinary actions against violators would begin. The details of disciplinary actions would be proposed by the respondent's Disciplinary Committee subject to be approved by a joint meeting of the respondent's boards of directors and supervisors and by a meeting of association delegates. Association members would then be informed of the disciplinary actions to be implemented.

2. After investigation, it is the findings of the Fair Trade Commission that the market of medical care service provision in Kaohsiung City consisted of two medical colleges (with 928 doctors), seven regional hospitals (with 483 doctors), 59 district hospitals (with 383 doctors), and 775 primary care clinics (with 948 doctors) and each of said institutions was a member of Kaohsiung City Medical Association. The respondent, by resolutions of the first and second plenary of the eighth association delegate's assembly and the first and second joint sessions of the eighth boards of directors and supervisors, divided all primary care clinics into northern and southern jurisdictions in accordance with their location and, in February 2002, implemented on a trial basis a rotating holiday system whereby clinics in the northern and southern districts would close on alternating Sundays. The new system took full effect in March and April of the same year, and clinics were banned from opening on Sundays that were designated holidays in their districts. Punitive sanctions were meanwhile drafted to ensure compliance with the new rotating holiday system. In addition to publishing the abovementioned resolutions in the association's newsletter, members were also notified with an official letter calling for compliance. 

3. Grounds for disposition: Under the current market structure of medical care service provision in Kaohsiung City, of the two medical colleges and seven regional hospitals, six were normally closed for services on Sundays, making the district hospitals and primary care clinics the chief service providers on Sundays in that relevant market. The respondent's use of association resolutions to impose the system of rotating Sunday closures for primary care clinics, restricting clinics from seeing patients on alternating Sundays, would lead to a reduction in the supply of medical services providers in that relevant market and reduce the competitiveness of primary care clinics. Statistics compiled from a questionnaire the association circulated among members in March and April 2002 regarding clinics that continued to see patients on the Sundays on which they should be closed in violation of the rotating holiday system found that prior to the prescription and enforcement of relevant punitive sanctions, there were still a considerable percentage of clinics continuing to see patients on those given Sundays (in the event the Association had not instituted its policy, the proportion seeing patients on Sundays would likely have been even higher), regardless of whether or not they might be included in the respondent's public announcement or publication in the Association newsletter of its list of violating clinics. Additionally, in minutes from debates on the rotating holiday system policy from numerous past Association delegates meetings and joint meetings of the boards of directors and supervisors, the respondent mainly cited as a reason for the rotating holiday system the deleterious effects on the medical establishment of malicious competition by some clinics, such as those not collecting registration fees or patient cost-sharing fees. Thus the Respondent, with total disregard for the business freedom of primary care clinics to see patients on holidays, required such clinics to close [on alternating Sundays] for the purpose of reducing competition among association members. As the respondent's actions were not within the reasonable scope authorized under relevant health and social policy regulations, and since they resulted in restrictions on the freedom of competition among primary care clinics, they were thus inappropriate restrictions on the business activities of members and inappropriate acts affecting supply and demand in the relevant market, thereby constituting “concerted action” as defined in the Fair Trade Law. These acts were determined to be in violation of the provisions of Article 14(1) of the Fair Trade Law. Accordingly, the respondent was ordered under the fore part of Article 41 of the Fair Trade Law, to immediately cease all of the abovementioned actions.

Summarized by Hsu, Cho-Yuan; Supervised by Cheng, Chia-Lin