Irish Competition Authority Decisions

1. The Memorandum, Articles of Association and Code of Ethics of the Association of Optometrists, Ireland, were notified to the Competition Authority on 6 March, 1992. A certificate in respect of the notification was sought. In the event of a refusal by the Authority to grant a certificate, a licence was sought. Following discussions with the Authority, certain aspects of the notified arrangements were amended.

2. Notice of the intention of the Authority to take a favourable decision in relation to the arrangements was published in the Irish Times on 12 February, 1993. No substantive submissions were received from third parties in response.

(a) Subject of the Notification

3. This notification concerns the Memorandum, Articles of Association (the Articles) and Code of Ethics (the Code) of the Association of Optometrists, Ireland. These documents provide a framework for the operation of the Association and the behaviour of its members. Members of the Association are required to give an undertaking to observe and be bound by the Association's Articles, Rules and Regulations and Code of Ethics and practice.

4. The Association of Optometrists (the Association), formerly called the Association of Ophthalmic Opticians, has been in existence for 85 years. The primary stated objective of the Association is to promote high standards of training, education and practice for optometrists (ophthalmic opticians) for the public good.

5. There are three categories of members in the Association: ordinary, fellows and dispensing. Membership figures are as follows:

1987 1992

Ordinary 17 10

Fellows 270 315

Dispensing 6 5

Totals 293 330

A fellow of the Association is a member who has passed the Association's clinical examinations in optometry, has applied and has been admitted to the fellowship of the Association. A dispensing member means a member of the Association who holds, by examination, the Association's dispensing certificate or is otherwise entitled to be in the Register of the Opticians Board. This certificate is no longer being issued. The ordinary category of membership dates from a time when many optometrists practising in Ireland received their training and education in the United Kingdom. Essentially optometrists who have not passed the Association's clinical examinations but who are eligible for inclusion in the Opticians Board Register of ophthalmic opticians may apply for ordinary membership.

6. The services provided by optometrists are eye examination, advice and, where necessary, the prescribing of spectacles and contact lenses. Visual assessment and certification for occupational and other purposes is also provided. Goods provided by optometrists are spectacles and contact lenses. Accessories for these products are also sold.

7. The prescribing of spectacles and contact lenses and the dispensing of such goods is regulated by the Opticians Act, 1956. Under the Opticians Act, only a registered medical practitioner or a registered ophthalmic optician can prescribe spectacles. Similarly, only a registered medical practitioner or a registered optician can dispense prescriptions for spectacles. The relevant provisions in the Act are as follows:

"47(1) A person shall not, on or after the appointed day, prescribe spectacles unless he is a registered medical practitioner or a registered ophthalmic optician.

(2) A person shall not, on or after the appointed day, dispense prescriptions of registered medical practitioners or registered ophthalmic opticians for spectacles unless he is a registered medical practitioner or a registered optician...."

8. Section 49 of the Act prohibits the sale of spectacles unless it is done by or on behalf of a registered medical practitioner or a registered optician:

"49(1) A person shall not, on or after the appointed day, sell spectacles unless -

(a) in case the person is not a body corporate, the person is a registered medical practitioner or a registered optician or, if the sale is conducted on behalf of the person by another person, that person is a registered medical practitioner or a registered optician, or

(b) in case the person is a body corporate, the sale is conducted by a registered medical practitioner or a registered optician...."

9. Section 5 of the Act provides for the establishment of the Opticians Board. Sections 23 and 32 of the Opticians Act provide for the setting up and maintenance of the Register of Ophthalmic Opticians and the Register of Dispensing Opticians by the Board.

10. Practitioners may get their names placed on the Register if they have undergone and passed specified training courses.

The relevant provisions in the Act are as follows:

"24. The Board shall, in accordance with rules, register in the Register of Ophthalmic Opticians a person who applies for such registration and who has undergone such courses of training and passed such examination (being courses of training and examinations under Part V of this Act) as are specified for the purposes of this section in the rules.

33. The Board shall, in accordance with rules, register in the Register of Dispensing Opticians a person who applies for such registration and who had undergone such courses of training and passed such examinations (being courses of training and examination under Part V of this Act) as are specified for the purposes of this section in the rules."

11. The Opticians Act provides for the establishment of the Opticians Board, which has responsibility, inter alia, for the registration of Ophthalmic Opticians and Dispensing Opticians and for making rules regulating their activities.

12. The Opticians Board (the Board) was established under Section 5 of the Opticians Act. It was empowered under Section 18 of the Act to make rules relating to any matter referred to in the Act and generally for carrying the Act into effect. Sections 51 and 52 of the Act give the Board power to make penal rules for the regulation and control of prescribing, dispensing and selling spectacles and for the control of advertising by registered opticians. Rules 28, 29, 30 and 31 of the Board, which relate to premises and advertising, are stated to be penal rules under the above mentioned sections of the Act, the contravention of which would leave the registered optician liable on summary conviction to be fined. Under Sections 23 and 32 of the Act, the Board is required to set up Registers of Ophthalmic Opticians and Dispensing Opticians. Ophthalmic opticians can prescribe and dispense prescriptions for spectacles. Dispensing opticians dispense prescriptions of registered medical practitioners or registered ophthalmic opticians.

13. Rule 30 of the Opticians Board deals with the regulation and control of sales of spectacles by registered opticians. It states that:

"(b) Save as provided for in the next sub-paragraph no registered optician shall sell or offer for sale any spectacles save on a prescription issued following an examination by a registered medical practitioner or by a registered ophthalmic optician or by way of replacement of broken spectacles or lenses;

(c) Notwithstanding the preceding sub-paragraph a registered optician may sell spectacles without prescription for an adult person where the spectacles have two single vision lenses of the same positive spherical power not exceeding four dioptres and where the spectacles are intended to correct, remedy or relieve the condition known as presbyopia."

14. The functions of the Board include providing for the training of opticians and control of the practice of optics, in accordance with rules made by the Board with the approval of the Minister for Health.

15. The Board consists of eleven members. Four of these are registered medical practitioners appointed by the Minister for Health; five are registered Ophthalmic Opticians and one is a registered Dispensing Optician - these members are elected by registered Opticians; one other person is appointed to the Board by the Minister.

16. The examinations provided for under rule 21 of the Board in the case of candidates for registration on the Register of Ophthalmic Opticians are as follows:

"(a) Such examinations as are prescribed by the City of Dublin Vocational Education Committee with the approval of the Board.

(b) Such examination in clinical practice as is approved by the Board.

Where a person satisfies the Board that he has passed a qualifying examination of a standard not lower than that which the Board requires candidates to pass, the Board may exempt such person seeking registration from any examination or from any part of an examination."

In the case of candidates for registration in the Register of Dispensing Opticians, the following examinations are prescribed under rule 22:

"(a) Such examinations as are prescribed by the City of Dublin Vocational Education Committee with the approval of the Board.

(b) Such examination in clinical practice as is approved by the Board.

Where a person satisfies the Board that he has passed a qualifying examination of a standard not lower than that which the Board requires candidates to pass, the Board may exempt such person seeking registration from any examination or from any part of an examination."

17. The course for optometrists is of four years' full-time duration, leading to a diploma with honours classification of the Dublin Institute of Technology (DIT) which is under the control of the City of Dublin Vocational Education Committee (CDVEC). The course, which is considered to be of degree standard, is run at DIT Kevin Street, a constituent college of DIT, also known as the College of Technology, Kevin Street. This is the only course approved by the Opticians Board for the purposes of registration on the Register of Ophthalmic Opticians. Completion of this course, and of subsequent clinical examinations set by the Association of Optometrists Ireland, provides entitlement to register with the Opticians Board. However, other qualifications deemed by the Board to be equivalent to the above are acceptable for registration. [1] The clinical examination of the Association is the only one approved by the Opticians Board as fulfilling its requirements under Rule 21(b).

18. The course for Dispensing Opticians is the Certificate in Optical Dispensing. This is a three-year part-time course run at DIT Kevin Street, and requires attendance for the equivalent of two days per week. Students are required to be working as trainee dispensing opticians, under the supervision of a registered optician, for the remainder of the week. The course has been accepted by the Opticians Board as fulfilling its requirements for the training of dispensing opticians. Those who complete the course and pass professional examinations are entitled to register with the Opticians Board. As graduates from the first course for the Certificate in Optical Dispensing to be held in Ireland are not due to sit their final examinations until 1993, the application of rule 22(b) has not yet arisen.

19. The minimum standards required for entry to the courses at DIT Kevin Street are set out below. Admission is on a competitive basis, on the CAO/CAS system.

(a) Irish Leaving Certificate in 6 subjects with grade C or higher in at least 2 Higher Level papers; subjects (at either level) must include English and Mathematics, or

(b) Such qualification as the College may deem equivalent.

(a) Irish Leaving Certificate in 5 subjects (at either level) which must include Mathematics and English, or

(b) Such qualification as the College may deem equivalent.

20. There have been approximately 1000 applicants per year for the Diploma in Optometry. 14 applicants were accepted in 1987 and 1988, 20 have been accepted each year since then. It was stated by the Director of the DIT Course, who is a member of the Association, that the number of places was limited to 20 per year due to shortages in the number of staff available to teach the relevant courses. It was also indicated that the College Authorities felt that 20 per year represented the number of optometrists required. In relation to the Certificate in Optical Dispensing, the course was started, in its present form, in January 1991. Recruitment is on a tri-annual basis. The number of applicants in the first year was 32 and 20 of these were admitted onto the course.

21. The market in this instance is that for the provision of eye examinations, visual assessments, the prescription of spectacles and contact lenses, the sale of such goods and other services provided by optometrists. Detailed statistics on the market are not readily available. Almost everybody needs lenses at some stage of their lives - spectacles have a bigger share of the market than contact lenses. 40% of people in Western Europe have corrective lenses. Half of these are sold to over-40s. Only optometrists or medical practitioners may conduct eye examinations and prescribe spectacles or contact lenses. Both these groups together with dispensing opticians may dispense prescriptions and sell spectacles. A number of medical practitioners such as ophthalmologists and ophthalmic surgeons conduct eye examinations and prescribe spectacles. They generally do not sell spectacles but refer patients to ophthalmic opticians or dispensing opticians to have their prescriptions filled.

22. The numbers of practitioners included on each of the registers of the Optician's Board are as follows:

Registered Registered

Ophthalmic Dispensing

Opticians Opticians Totals

1992 327 147 474

1990 324 149 473

1989 315 149 464

1988 300 166 466

1987 298 169 467

Having regard to Para. 5 above, which sets out membership details for the Association, it is evident that (a) virtually all practitioners on the Board's Register of Ophthalmic Opticians are members of the Association and (b) very few of those in the Register of Dispensing Opticians belong to the Association.

23. The form of business practice for optometrists varies. The majority of members practice as sole traders, other members are in partnerships, some are engaged as employees of members and some are employees of companies having more than one outlet. One of the features of the Irish market in recent years has been the entrance of large foreign owned companies. These companies have relied heavily on large advertising budgets and price discounting as competitive tools.

24. The Association notified its Memorandum, Articles of Association and Code of Ethics. Observance of the Code, which derives mainly from the Rules of the Opticians Board, is binding on members of the Association. The main objectives of the Association as set out in its Memorandum of Association are as follows:

(1) The encouragement of (a) the Science of Optics, and (b) the art of the application of the Science of Optics to the improvement of Human Vision.

(2) The protection of the Members of the Association from influences inimical to the prosperity of the profession of an Optician.

The notification states that the arrangements contain no restrictions on members' freedom to take individual commercial decisions 'other than a requirement that members abide by the provisions of the Opticians Act, 1956 and the Rules of the Opticians Board'.

25. The Articles of Association provide for the conduct of Annual General Meetings, Special General Meetings and procedures relating to election and operation of the Council of Management.

The Articles also contain provisions relating to entry to and expulsion from the Association. The relevant Articles relating to entry to the Association are as follows:

"5. The Association shall consist of all persons whose names are registered in the Register of Members of the Association of Ophthalmic Opticians Ireland prior to the registration of the Association and of all persons who shall thereafter be admitted members.

6. (a) Subject to Article 5 hereof no person shall be admitted as a Member of the Association unless he is duly elected in accordance with the provisions of this Article.

(b) Every Applicant seeking admission to membership of the Association shall be over twenty-one years of age.

(c) A Candidate may apply to be elected to Membership of the Association and the application for election shall be proposed and seconded in writing by two Members and the name, address and place of practice together with the names of his Proposer and Seconder shall be placed on the Notice convening the Meeting of the Council at which his application for admission is to be considered.

(d) The election shall be carried out by ballot of the members of the Council present at the Meeting. If three-fourths of the members present ballot in favour of the Applicant he shall be declared duly elected and thereupon entitled to apply for admission to membership.

7. (a) The members of the Association including those members who were admitted to the Association prior to the date of the registration of the Association shall consist of three classes, namely, (1) Fellows (2) Dispensing Members (3) Ordinary Members.

(b) Subject to the provisions of these articles an ordinary member may be granted and may hold for so long as he continues to be a member of the Association a Certificate of Membership. An ordinary member shall not use the initials of the Association in connection with his practice or in any other way whatsoever but may indicate his membership by printing in reasonable small type on his letter headings or other business forms the words "Member of the Association of Optometrists, Ireland" without contraction or abridgement.

(c) A Member who has passed the Association's examinations in Optometry may apply to the Council to be admitted to the Fellowship of the Association and on application shall be admitted to the Fellowship and entitled to use the affix F.A.O.I....

15. No person shall be admitted a member of the Association unless he is first approved by the Council and the Council shall have full discretion as to admission of any person to membership."

26. A number of Articles also relate to professional obligations and conduct. In this connection the following are of relevance:

"19. Every member shall be bound to further to the best of his ability the objects interests and influence of the Association and to observe the ethical principles and the Regulations of the Association agreed to by the members in General Meeting.

20. No member of the Association shall advertise his connection with the Association for trade or business purposes, but nothing herein shall operate to prevent any member so long as he remains a member from using the crest of the Association on his stationery."

27. Articles 21, 22 and 24 are concerned with procedures relating to expulsion of a member. Article 21(a) provides that:

"A member who is guilty of conduct which in the opinion of the Council is derogatory of the profession of Optics or renders him unfit to be allowed to remain a member of the Association may be excluded from membership."

21(b) provides that a member associated with a person guilty of such conduct shall also be deemed to be guilty of such conduct. Article 22 provides that at least 21 days' notice must be given to a member of any allegation that a member has engaged in such conduct, and provides the member with a right to be present and be heard at a meeting of the Council where such allegations are considered. Article 24 provides a right of appeal against suspension or expulsion to a Special General Meeting. A majority of three fourths of the members present at such a meeting is needed to overturn such a decision by the Council.

28. The Code of Ethics, which is binding on all members of the Association, gives guidance to optometrists in carrying out their professional services. Details of the Code are outlined below under various headings.

29. The Code contains provisions relating to publicity under the headings 'Premises' and 'Advertising'. In addition certain rules of the Opticians Board are relevant in this context given that the Association requires its members to abide by these rules.

It is recommended that practices be sited in consulting rooms or offices without an external display, or a display within the initial reception area.

The display of a dignified professional plate is recommended. The display of illuminated signs stating "Eye Centre" or "Contact Lens Centre" or such like are unprofessional, and are in contravention of the Rules of the Opticians Board.

Practices should be laid out in such a way that the patient is allowed adequate privacy during waiting or consultations."

Rules 28 and 29 of the Opticians Board state that when not provided in the patient's home, services should be provided in a suitable apartment or space used primarily for such purposes and situated or constructed so as to ensure reasonable privacy for the customer.

Members should attract patients to their practices only by their professional skill and quality of service.

Particular attention should be paid to the Rules of the Opticians Board on advertising. However, the Council feel that any form of window display is unprofessional. For guidance see Association resolution on voluntary abolition of window display.

The declaration at the public level such as press, radio or television of name and profession, is unprofessional. The inclusion of a practitioner's title and qualifications in credits or lists of sponsors for non-optical events is unprofessional. Offering of discounts to clubs or organisations is unprofessional."

A revised code on advertising was issued to members of the Association in June, 1989. The Authority only became aware of this revision on 30 October, 1992. The revised code is as follows :

"Members should attract patients to their practices by their professional skill and quality of service. Particular attention should be paid to the Rules of the Opticians' Board on advertising.

It is unethical and illegal under the present rules to make use of media features or articles to advertise, invite custom or promote a particular name, practice, business or company.

Media advertising is permissible only in the public press as specified in the Rules of the Board and should be in the style of a business card, not more than 3.5 by 2 inches and in accordance with the Rules. [2] Thus, no art-work, drawings, illustrations or photographs shall be used in advertisements.

The inclusion of a practitioner's title and qualifications in credits or lists of sponsors for non-optical events is unprofessional. Offering of discounts to clubs or organisations is unprofessional."

30. The rules of the Board on advertising which members are requested to observe are made under section 52 of the Opticians Act which gives the Board the power to make provision for the control of advertising. Rule 31 of the Board deals with restrictions on advertising. It contained a prohibition on canvassing but allowed a limited form of advertising subject to the following principles :

"- the purpose of such advertising shall be to inform the public of the availability of optical services and shall not seek to make comparisons with other optical practices nor claim any superiority over any other optical practice or business;

- any such advertising shall not be misleading or untruthful or of a character that could reasonably be regarded as likely to bring the professions of ophthalmic optician or dispensing optician into disrepute."

The following forms of advertising were permitted under Rule 31(2)(ii):

"Subject to the preceding principles "Responsible persons may:

(a) exhibit at their practice or business premises:

- signs giving their registered name and occupation;

- notices that they are Optical Benefit Opticians or Medical Card Scheme Opticians, as the case may be;

- notices that they supply and fit contact lenses.

(b) display at their practice or business premises, spectacles, spectacle frames, contact lens accessories, spectacle cases, and illustrated cards displaying spectacles and spectacle frames. Prices may also be displayed and where prices are displayed it shall be clearly indicated what the prices include;

(c) advertise in the public press and in directories and medical publications, and such advertisements shall not contain any photographs or illustrations or references to prices;

(d) exhibit one small illuminated sign at their practice or business premises showing only their occupation as ophthalmic optician or dispensing optician, as entitled;

(e) stamp or print their names, addresses and occupations on billheads, envelopes, notepaper, the case or box in which spectacles are sold or on any material provided for cleaning spectacles."

This is stated to be a penal rule in accord with Section 52 of the Opticians Act (see above).

31. Revised rules on advertising were introduced by the Board on 21 December, 1992. A copy of the revised rules were received by the Authority on 26 January, 1993. These rules are set out at para. 63.

32. The provisions of the Code in respect of 'Fees and Charges' are as follows:

"(1) Practitioners should charge for their service on a professional fee system, e.g. fee for examination, fee for dispensing, plus the cost of appliances or material supplied.

(2) Patients should be entitled to an explanation or breakdown of professional charges."

33. The Code of Ethics provides that employees, on leaving

employment, shall not strive to entice clients away from their former employer. It goes on to state that " Proximity of premises to his former employers for the purpose of enticing patients is unethical."

34. The areas of optometrists' relationships with the patient's family doctor and with their colleagues are also covered by the Code:

"Where a patient is referred to a colleague possessing extra skills or knowledge, e.g. orthoptist or contact lens practitioner, the referral should be done by a proper exchange of case history. The second practitioner should not take advantage of the trust placed in him by his colleague, by carrying out any work which the referring practitioner could carry out himself."

35. The Association has supported the provisions of its code in respect of advertising as follows:

"The opinion of Optometry is that patients should be attracted to a practitioner mainly by the quality of the examinations and advice expected and usually by recommendation. It has been recognised in more recent times that the public has a right to more information about the spectacles they may need and so, as already indicated, the Association took the initiative in seeking a liberalisation of publicity and display rules."

"The restrictions on advertising contained in Rule 31 of the Board are intended to prevent misleading and false information being advertised to the public and, as such,must be in the public interest. These restrictions are subject to review, as indicated, and have been subject to advice and comment from the Director of Consumer Affairs. The purpose of the Opticians Act is the protection of the public and that must be the continuing principle behind any liberalisation of advertising Rules or codes of ethics."

In addition, they have submitted that they do not regard the code on premises "as a rule of the Association - rather as a recommendation...It arose from a belief at the time of its discussion that the public should not be seduced by lavish frame displays in seeking a professional eye-care service which, in our view, should be provided without the overtones of the fashion aspects of whatever appliances might result from the consultation..."

In relation to the restriction on price advertising in the media, the Association have also stated that "the restriction is, as we understand it, the law of the land, determined by the Opticians Board, and imposed under the authority of the Minister for Health. We feel, therefore that we have no option but to abide by those Rules..."

In defence of the prohibition on discounts to clubs and associations, the Association have added that "the prohibition on group discounts sprang from a belief that fees for professional services could not be subject to "discounts". Any person providing such services is at liberty to modify his fees or waive them in the face of the patient's circumstances and that has always been the case in health service professions. Health professions may well be considering this matter at this time..."

In relation to fees and charges, the Association have submitted that:

"In line with the Association's view of the importance of unbiased advice, both in the consultation and in any spectacle dispensing which might follow, it is believed that the remuneration of optometrists should arise from fees for their professional services. This should apply both to consultation and dispensing services and the use of a 'mark-up' margin on appliances should be avoided. This enables objective advice on choice to be given, without monetary overtones."

"...This recommendation was introduced at a time when the fashion aspects of spectacle frames were developed, with corresponding spread of frame costs. It was our view that the work, time and expertise involved in dispensing spectacles had little direct relationship to the cost of frames and that a "mark-up" system of determining charges to a patient created inordinately high prices and an incentive to recommend more costly frames unnecessarily. Many would still hold that view and the belief that the public is afforded more protection by our recommendation than otherwise..."

The Association made the point, in respect of proximity to premises of former employers, that it "does not lay down any guidelines as to what constitutes proximity, nor has it taken any action against any member in such circumstances."

Having regard to the Association's ethics on the referral of clients, they have stated that:

"The reasons for the provisions in the Code of Ethics are precisely the same as those which govern referral of patients by doctors or dentists for specialist opinion or treatment. Such patients are normally returned to the referring practitioner for the provisio n of such assessments and treatment as are within the competence of that practitioner. It is essential for the welfare of patients and for the most suitable assessment of their special needs that health care practitioners should make such referrals. The patient remains the patient of the referring practitioner."

In relation to Article 20 of the Articles of Association, the notifying parties have stated that this is a prohibition on advertising of Council membership, membership of a committee or some special form of membership in order to suggest some professional superiority over other practitioners.

36. An editorial in the Association's newsletter for January, 1992 referred to the danger of bringing the profession into disrepute by means of advertising practices. This article stated inter alia that :

"Bringing the profession into disrepute (to use the legal sounding phrase) is a betrayal of colleagues, vocation and undertaking. On rare occasions this can occur through carelessness or stupidity, but all too often the act is deliberate and material by selfishness in an effort to steal a march on the colleagues of the perpetrator and gain some advantage, usually imagined.

Reneging from the recognised parameters as agreed by the professional group as a whole is the more shabby and selfish when it employs advertising trickery and gimmickry. This style of conduct damages the reputation of the profession by cheapening the dispensing role and taking the emphasis off the vision-care function of optometrists.

If our association is really determined to maintain the public image of the profession as one of integrity, then we must all act as exemplary representatives of our profession and close ranks against attempts to bring us into disrepute."

(g) Views of Third Parties

37. The National Prices Commission (NPC) conducted an investigation into the price of spectacles in the early 1980's. It concluded that:

"We are concerned at the lack of competition and consequently the implication from a price control standpoint which results from (i) the monopolistic situation, arising from the Opticians Act, 1956, which makes it illegal for any person other than opticians to test sight or to supply spectacles or contact lenses, and (ii) the rules made by the Opticians Board under the same Act which prevent opticians from advertising their services or displaying their prices."

38. Following the publication of the NPC Report, an investigation was carried out by the Examiner of Restrictive Practices (The Examiner) in 1983/84 into the restrictions imposed by the Opticians Act 1956 on the supply and distribution of spectacles. The Examiner's investigation concerned two aspects of the Act: confining the sale of spectacles to registered medical practitioners or opticians and restrictions on advertising by opticians.

39. The Examiner considered that non-opticians should be allowed to sell spectacles in certain circumstances, excluding the sale of spectacles to children and the fitting of contact lens. He also concluded that the restrictions on advertising by opticians should be removed, to allow the consumer to be more aware of the prices, locations, services available, speed of dispensing, product guarantee and specialised services offered by opticians. The Examiner conveyed his recommendations for amendments to the Act to the Department of Health in March 1984.

40. The Opticians Board amended some of its rules in 1987. The Examiner welcomed these changes particularly the proposals to permit price displays at premises. He also made the point that while he would not at present urge that price advertising in the media be permitted, he would tend to favour such advertising, within limits.

41. The impetus for the investigations by the NPC and by the Examiner was provided by similar investigations which had been carried out in the UK.

42. In 1982, the Director General of Fair Trading in the UK published a report of a review [3] concerning certain aspects of the UK Opticians Act, 1958. The review was requested by the UK Minister of State for Consumer Affairs. The report suggested that the restrictions on the sale of spectacles could be lifted, but observed that there was a risk of eye disease going undetected. It concluded that restrictions on the location of practices within department stores was not justified on clinical grounds and that such restrictions should be removed. It also concluded that the advertising restrictions resulted in prices being significantly higher and efficiency significantly lower than would otherwise be the case. [4]

43. Subsequent to that report, the opticians' monopoly on the sale of spectacles was ended on 10 December, 1984, when the 'Sale of Optical Appliances Order' came into effect, enabling ordinary retailers to sell complete spectacles, separate lenses and empty frames as long as appliances containing lenses or the lenses themselves were in accordance with a prescription from an ophthalmic optician which was not more than two years old. Under the Health and Medicines Act, 1988, it became legal for ready-made reading glasses (which have simple magnifying lenses) to be sold over the counter without a prescription from 1 April, 1989. The restrictions on advertising by opticians have also now been somewhat relaxed. Price advertising is allowed provided the advertisements are not unprofessional, unethical or misleading.

44. On 31 October 1990, complaints were received by the Director of Consumer Affairs and Fair Trade from solicitors representing Mr. Stephen Keough of Specsavers, Dublin and Messrs. Austin Kelly and Michael O'Connor of Specsavers, Cork. The complaints concerned the restrictions on advertising contained in Rule 31 of the Opticians Board which the complainants contended were unfair under restrictive practices legislation.

45. Mr. Keough had commenced his practice in January/February of 1990 and carried out an extensive advertising campaign to inform the public of his services and the availability of spectacles at "keen" prices. Mr. Keough was contacted by the Opticians Board and was informed that his advertising was in breach of the advertising rules as prescribed by the Board.

46. The practice commenced by Messrs. Kelly and O'Connor was also widely advertised in the public press. They were also contacted by the Board and their attention was drawn to Rule 31, specifically to the prohibition on advertising in the public press and in directories and medical publications with advertisements which contained illustrations, photographs, reference to prices and the overriding principle that advertisements should not seek to make comparisons with other optical practices.

47. The Opticians Board submitted to the Director that selling spectacles was not like selling commercial products such as television sets, washing machines and cereals, which came in standard weights and sizes and could be compared in press advertisements.

48. The Board made the point that it was not just representative of the opticians profession, it was the statutory body appointed by the Minister for Health to act in the public interest in the carrying out of its functions under the Opticians Act and included in its membership persons appointed by the Minister who were not opticians. It claimed that its advertising rules were not unreasonable and did not constitute unfair practices. The Rules were stated to be in the interests of proper professional standards and the real difficulty was in getting other practitioners to abide by them in view of the deliberate and repeated breaches by Specsavers.

49. Mr. Keough, one of the complainants, stated that the ban on advertising photos and illustrations made an advertisement less useful and interesting and he could not see how such advertisements could harm the consumer. On the matter of prices, Mr. Keough considered that the absence of price information reduced competition and that opticians had been able to charge as much as they liked, due to the lack of consumer awareness. Until that time, Specsavers advertised the price of frames and contact lenses, only, but he did not preclude the possibility of advertising the price of their services. He acknowledged that there was no such thing as a "standard eye test" as testing would depend on the professional opinion of the optician. There were a number of other variables which he acknowledged could make a standard "all-in" price meaningless, such as the variations in the sight test, the type of lens considered necessary and dispensing charges, nevertheless he was satisfied that some prices could be illustrated.

50. As regards whether there were any grounds for concern that standards could drop, Mr. Keough pointed out that Specsavers operated under the highest standards. Their operation depended on getting repeat business, therefore their services, products and equipment had to be top quality. The volume of sales enabled Specsavers to afford the best equipment.

51. The Director concluded that consumers should have access to as much information as possible in order to make a reasoned choice. He saw price advertising as an important element in this respect. He added that the restrictions on advertising were a restraint on competition and that they might exclude new entrants to the profession or at the very least make it more difficult to establish a new practice. He did not see any basis for the contention that the lifting of the restrictions on advertising would lead to a lowering of standards. He was of the view that the maintenance of standards was a separate issue from the question of advertising and competition.

52. The Director recommended a change in the Rules to remove the restrictions on specific advertising, i.e. press advertising, shop advertising, signs, letterheads, etc. As regards canvassing, he recommended that the rules should not prohibit the distribution of advertising material. He accepted, however, the recommendation of the Fair Trade Commission that professional bodies should be allowed to retain a degree of control over their members' advertising to ensure that the profession was not brought into disrepute and therefore recommended the same criteria as those established in the case of the accountancy profession. [5] The Opticians' Board might, therefore, provide that advertisements placed by their members:

- should not be such as would bring the profession into disrepute;

- should not be false or misleading in any respect;

- should not be in bad taste;

- should not reflect unfavourably on other persons in the profession.

In taking this decision, the Director was satisfied that the provisions of the Consumer Information Act 1978 and the assistance of the Advertising Standards Authority of Ireland (ASAI) would provide deterrents to any optician intending to abuse the new system. Furthermore, there were adequate legal sanctions in the Act should anyone publish a misleading advertisement.

53. The Department of Health was informed of the views of both Specsavers and the Board and the Director's concern that the Board's Rules were anti-competitive. It was indicated to the Director that the chief medical officer of the Department was not opposed to a liberalisation of the advertising rules.

54. New Rules on Advertising have been approved by the Minister for Health. The text of the new requirements is set out in para. 62. Many of the restrictions were formerly contained in Rule 31 on advertising.

55. These revised Rules allow price advertising provided that it is clearly indicated what precisely is included in the price quoted.

56. The Authority's attention was also drawn to proceedings instituted by the Opticians Board in 1991 against Specsavers for infringement of the Board's rules on advertising. Specsavers argued in reply that the Board's rules on advertising infringed Articles 85(1) and 86 of the Treaty of Rome and the Restrictive Practices Acts. The Opticians Board indicated to each registered optician in a letter of 13 March, 1991, that it had withdrawn from pursuing this prosecution for breaches of the advertising rules. In its letter the Board explained that "what was becoming the issue was not whether there was a breach of the Rules but the legality of the Rules themselves and that a referral of this issue to the European Court of Justice would be sought during the pending court proceedings. At the same time the Board was aware that these same issues had been referred to the Office of the Director of Consumer Affairs and Fair Trade for investigation ... It was in these circumstances the Board decided, on legal advice, not to embark on what could be very costly legal proceedings pending the clarification of the legality of the Board's Rules."

57. Donal MacNally Opticians Limited submitted to the Authority that the Association's rules on advertising and discounts contained in the Code of Ethics restrict competition within the meaning of Section 4(1) of the Act.

58. The comments of Donal Mac Nally Opticians Limited on advertising are set out below:

"The present Association rules on advertising are based on those of the Opticians Board. Both sets of rules have been in force, substantially unchanged, for the last thirteen years or so. The original purpose of the rules was to prevent any form of advertising which could possibly encourage members of the public to choose an optometrist on any basis other than that he was a qualified practitioner.

In the past it was felt that, as all optometrists had to achieve a common standard of education before registration as an optometrist, the quality of the sight test offered would be the same, whichever practitioner was chosen. The sight test was seen as the primary function of optometrists whilst the spectacle frames, which ultimately hold the corrective lenses, were purely functional. The dispensing of spectacles was thus a secondary function and it was felt that promotion of this function would cause patients to choose their optometrist for the "wrong" reason.

The current situation is dramatically different. Spectacle frames are now very much fashion accessories. In addition, there is a wide choice of lenses in different forms, different materials and with different surface treatments. The average member of the public demands information, the right to make an informed choice and to buy from a competitive retailer. This situation will be brought about more quickly by the use of advertising and promotions, as it would any other high fashion retail sector, but will happen whether advertised or not. The advertising can then be controlled by the sort of general control imposed by the Advertising Standards Authority, in just the same way as any other retail function.

The Association's rules on advertising have, therefore, the effect of seriously restricting competition in the optical market in Ireland, particularly given the recent changes in the market. Advertising is a vital element of competition. However, the rules permit advertising in only very limited circumstances. By restricting members of the Association from advertising and, therefore, competing with each other, the Company believes that the rules of the Association are in breach of Section 4(1)."

59. Donal Mac Nally Opticians Limited stated that the entry into the Irish market of large foreign companies had intensified competition and placed Irish companies in a position where they had to respond or their market position would be undermined. They pointed to the fact that two of the Company's branches had to be closed as evidence of this. In these circumstances, the company decided to introduce an advertising campaign at the end of 1991 in an attempt to maintain market share. Subsequently, the Council of the Association took proceedings against Mr.Mac Nally alleging that the advertisements in question constituted a breach of the Code of Ethics. Donal Mac Nally Opticians Limited claimed that if the Association were to expel a member, the optometrist concerned would have to arrange his own professional indemnity insurance and could expect to incur premium costs in excess of those presently negotiated by the Association on behalf of its members. They also claimed that this rule would appear to place practitioners who were not members of the Association at an advantage as they could advertise without fear of any legal action from the Association for breach of its rules.

60. In relation to discounts, the company submitted that:

"The Association has also complained about certain discount vouchers which the Company has offered.... The Council is alleging that the vouchers breach the Code of Ethics.

Discounts are an important element of competition, as much as prices, terms and conditions of sale, payment periods, credit facilities, etc. Consequently, the Company believes that any restriction on discounts is also a breach of Section 4(1) of the Act."

61. In a submission of 3 July, 1992, Lynx Optique, a company with 65 optical outlets internationally, stated that:

"Where we can wholeheartedly accept certain restrictions on advertising, we do feel it is unprofessional to deprive the consumer of a minimum of information...The consumer has a right to a minimum of information to guide his choice of eye-care specialist."

62. The Authority expressed its concerns to the Association in respect of certain aspects of its code of ethics and, following a meeting with the Authority, the Association indicated by letter dated 22 December 1992, its intention to amend its code as follows:

"Those sections of the Code of Ethics which:

(a) specify the siting of practices in a specific way,

(b) recommend a particular method of charging for services and appliances, and

(c) the entire section on advertising, including the reference to discounts,

should be suspended pending the coming into effect of new Rules on Advertising through the Opticians Board and the consequential and necessary re-writing of the entire Code of Ethics..."

They also stated that " those Members who have been suspended are now free to resume full Membership should they so wish..."

63. The revised advertising rules of the Opticians Board were made on 21 December, 1992. They are as follows :

"31 The following is the Rule under Section 52 (1) of the Act for the control of advertising.

(1) The Rule applies to

(a) a registered optician in relation to the dispensing of prescriptions for spectacles or the sale of spectacles

(b) a registered optician in relation to the prescribing of spectacles or the provision of orthoptic treatment and

(c) every person (including a corporate body) whether a registered optician or not in relation to the sale of spectacles conducted by a registered optician.

(2) Registered opticians, and corporate bodies or other bodies employing the services of registered opticians shall not canvass for business whether on their own behalf or on behalf of any other person or body corporate. Communication with, or issue of reminders to persons who have previously been provided with services or optical appliances shall not be regarded as canvassing.

(3) (i) Registered opticians, and corporate bodies or other bodies employing the services of registered opticians, may publicise their businesses or practices in relation to the prescribing, display or sale of spectacles, subject to the overriding principle that the main purpose of such publicity shall be to inform the public of the availability of optical services and the nature of the services provided.

(ii) Prices may be advertised or displayed, and if so it shall be clearly indicated what precisely is included in the price quoted.

(iii) Spectacles, spectacle frames, contact lens accessories, spectacle cases, and illustrated cards displaying spectacles and spectacle frames may only be displayed at practice premises.

(iv) Any publicity engaged in shall not

(a) be false or misleading in any respect;

(b) be of a character that could reasonablybe regarded as being in bad taste or likely to bring the professions of ophthalmic optician or dispensing optician into disrepute;

(c) seek to make comparisons with other optical practices or claim superiority over or reflect unfavourably on other optical practices or businesses.

(4) All practices shall show in their windows or on nameplates, at their practice or business premises the names and designation of the registered opticians providing services at those premises, and if the registered opticians are not in attendance on a full time basis, the days and times at which they provide services at those premises.

This Rule is hereby stated in accordance with Section 52 (2) of the Act, to be a penal rule."

64. The Association informed the Authority by letter of 23 March, 1993, that a circular was issued to members in February, 1993. This circular stated inter alia that

"The Council has therefore decided to suspend the sections of the Code, pending a re-writing of the entire document;

(1) PREMISES

(2) ADVERTISING

(3) FEES AND CHARGES."

65. Section 4(1) of the Competition Act states that ´all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State are prohibited and void'.

66. The present arrangements involve the Memorandum and Articles of Association along with the Code of Ethics of the Association of Optometrists Ireland, which is incorporated as a limited company. The Association is a representative body established primarily to promote the interests of its members.

67. The present notification differs from those previously dealt with by the Authority in that it concerns the activities of a professional association. The members of the association are optometrists registered with the Opticians Board in accordance with the Opticians Act, 1956. The members include optometrists who are self-employed operating their own practice as well as optometrists employed either in the practice of another member or by a company. Section 3(1) of the Act defines an undertaking as ´a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service.' The provision of ophthalmic and dispensing services by optometrists constitutes the provision of services while the selling of spectacles and other lenses clearly constitutes the supply of goods. Optometrists who are self-employed or running their own practice are clearly engaged for gain in the provision of goods and services and are undertakings. The Authority has previously stated in a number of decisions that individuals who own or control a business constitute undertakings within the meaning of the Act. [6]

68. EC precedents under Article 85 of the Treaty of Rome, on which Section 4(1) is based, offer some guidance concerning the definition of associations of undertakings. Many of these have involved trade associations. Van Bael and Bellis define a trade association as follows.

´A trade association is an organisation that reflects, encourages and promotes the interests of a given industry or economic sector. In its ´typical' form a trade association is composed of undertakings - usually competitors - that have come together to share experiences and ideas which may contribute to a general improvement of the industry.' [7]

69. Under EC law, as Bellamy and Child point out:

´Although trade associations of various kinds are the commonest ´associations of undertakings' the word ´associations' is not limited to any particular type of association. It includes agricultural co-operatives, associations without legal personality, non-profit making associations, associations of associations and an association outside the Community.' [8]

The legal form of the association has been found to be irrelevant. [9]

70. The Authority recognises that a professional association differs in some respects from a trade association. In its view, however, there is no reason to treat a professional association any differently under the Competition Act to any other type of association. The view that professional associations were by their nature exempt from competition laws was rejected by the US Supreme Court. [10] An association whose object is to represent the interests of its members as undertakings is, in the Authority's view, an association of undertakings. Consequently the Association of Optometrists is an association of undertakings within the meaning of section 4(1), as many of its members are undertakings and its object is to promote its members' professional interests.

71. The Association's Memorandum and Articles of Association, together with its Code of Ethics, constitute decisions of an association. This view is also supported by EC precedents.

´The concept of ´decision' includes the rules of the association in question, decisions binding upon the members and recommendations. Agreements implemented within the framework of the association concerned may be analysed either as ´decisions' of that association or ´agreements' between the members.' [11]

72. As pointed out in para 24 the notification states that the arrangements contain no restrictions on members' freedom to take individual commercial decisions ´other than a requirement that members abide by the provisions of the Opticians Act, 1956 and the Rules of the Opticians Board.' The Code of Ethics expressly states that; ´Particular attention should be paid to the Rules of the Opticians Board on advertising.' Both these requirements also constitute decisions by an association of undertakings and the notified arrangements, therefore, include the provisions of the Opticians Act and the Rules of the Opticians Board in so far as members of the Association are obliged to observe such rules. This is in line with previous decisions where the Authority regarded arrangements which constituted part of the notified agreement as being part of that agreement. [12] The Authority's view is supported by the fact that in applying Article 85 of the Treaty of Rome on which Section 4(1) of the Competition Act is based, the EC Commission and Court of Justice have accepted that: ´A series of connected agreements will be read together as one agreement'. [13]

73. The Opticians Act restricts the prescribing of spectacles and dispensing of prescriptions for spectacles to registered opticians and medical practitioners and generally regulates trade in such goods and services. A number of the provisions in the Act, including the restriction on entry, restrict competition in the market for spectacles. The Authority does not believe, however, that these restrictions come within the scope of the Competition Act as they are enshrined in separate legislation. The Association's requirement that members abide by the terms of the Opticians Act does not offend against section 4(1) of the Competition Act.

74. The Opticians Act allows the Board to establish rules for the profession. The Authority, however, takes the view that the Association's requirement that its members observe the Rules of the Board would offend against section 4(1) of the Competition Act, if those rules were in conflict with that section. This decision is without prejudice to any view as to whether the Opticians Board is itself subject to the provisions of the Competition Act.

75. The Competition Act does not contain any blanket prohibition on the existence of trade or professional associations or on their activities. It is only decisions of associations of undertakings which have as their object or effect the prevention, restriction or distortion of competition which are prohibited under section 4(1).

´As a general rule, activities that are lawful when engaged in by competitors acting jointly are lawful for trade associations. Conversely, activities that are unlawful when engaged in by individuals acting together are quite simply unlawful when undertaken by trade associations.' [14]

76. The Association claimed that its Code of Ethics merely set out recommendations for its members. The European Court of Justice has ruled however, that:

´A recommendation of an association of undertakings, even if it has no binding effect, cannot escape that article [85(1)] where compliance with the recommendations by the undertakings to which it is addressed has an appreciable influence on competition in the market in question.' [15]

Consequently the claim that the Code merely contains recommendations does not put it outside the scope of Section 4(1).

77. Article 3(2) of the Memorandum of Association provides that one of the objects of the Association is:

´The protection of the Members of the Association from influences inimical to the prosperity of the profession of an Optician.'

The Authority recognises that the protection and promotion of its members' interests is a legitimate activity for a professional association to engage in, and, in general, such activities are not anti-competitive. The Authority notes, however, that anti-competitive activities are frequently justified on the grounds that they are necessary to protect the interests of those engaging in them or the broader public interest. The Authority has no reason to believe that this Article has been used or interpreted in that way. The Authority considers that the Article does not offend against Section 4(1) of the Competition Act per se , but notes that where measures to protect members interests extend to include restrictions on competition, they are prohibited under 4(1).

78. Entry to this particular market, as already stated, is restricted by the provisions of the Opticians Act. Given such legal restrictions, however, the Authority considers that any additional restrictions on entry would constitute a serious restriction on competition.

79. Article 6 of the Articles of Association outlines the procedures for admission to membership of the Association. In particular, Article 6(d) specifies that three-fourths of the Council members present must vote in favour of an applicant to be elected to membership of the Association. In addition Article 15 provides that: ´No person shall be admitted a member of the Association unless he is first approved by the Council and the Council shall have full discretion as to admission of any person to membership.'

80. Virtually all optometrists are members of the Association. [16] 315 of the 330 members of the Association are fellows. The Association has indicated that only 1 applicant for membership was refused in the past 5 years. It indicated that this applicant was refused due to the lack of a qualified proposer and seconder.

81. Membership of the Association is not compulsory in order for an individual to practise as an optician. Van Bael and Bellis point out, however, that under EC competition law membership of a trade association should be open to any interested party in that sector on the grounds that an association normally serves to represent the interests of an entire industry. [17] Again, while noting that there are differences between a trade association and a professional association, the Authority considers that membership of such bodies should generally be open to all those engaged in the profession.

82. EC decisions under Article 85(1) indicate that membership rules must be based on reasonable and objective standards. [18] In the Cauliflowers case, the European Commission decided that a requirement that a majority of the Board of Directors of an association be in favour before a new member could be admitted was in breach of Article 85(1), on the grounds that a new entrant would be competing with the directors who would therefore be unlikely to agree to admit the applicant. In that case, however, only members of the association concerned could operate in the market in question. While membership of the Optometrists' Association is not compulsory in order to compete in the relevant market it may be that individuals unable to join would be placed at a serious competitive disadvantage relative to members. In particular if the public felt that non-members were in some sense less qualified than members, then restrictions on entry to the Association could distort competition. Members also enjoy some advantage over non-members as a result of the lower rates of professional liability insurance that the Association has negotiated. This could also place non-members at a competitive disadvantage.

83. The fact that only one application for membership has been refused during the past 5 years indicates that Articles 6 and 15 have not been operated in such a way as to restrict competition. Consequently the Authority does not believe that these Articles offend against Section 4(1).

84. Article 7 provides for three classes of members; ordinary, dispensing and fellows. The Association has stated that the distinction between ordinary members and fellows dates from a time when many optometrists received their training and qualifications overseas. Admission to fellowship is restricted to those who have passed the Association's clinical examination in Optometry. As the Association's clinical examination constitutes one of the requirements for qualification for inclusion on the Opticians Board register of opticians, all Irish trained optometrists are entitled to be elected as fellows. The Board may admit to the Register anyone who can establish that they have passed an examination of equivalent standard. Consequently individuals with overseas qualifications which are deemed to be the equivalent of the Association's examination will be registered by the Board. Yet such individuals may only be admitted as ordinary members and not as fellows of the Association despite having qualifications which the Board deems to be equivalent to those required for admission to fellowship.

85. The Association have claimed that individuals who qualified overseas may sit for the Association's clinical examination and, if they pass, they will be admitted to Fellowship. The Association has also argued that individuals who hold recognised overseas qualifications are entitled to cite such qualifications. Provided the Association does not seek to create the impression that Fellows of the Association are more highly skilled than overseas trained optometrists, thereby placing the latter group at a competitive disadvantage, the Authority believes that the restriction of the title of Fellow to those who have passed the Association's examination does not offend against Section 4(1).

86. Article 7(b) provides that an ordinary member may not use the initials of the Association in connection with his practice or in any other way whatsoever but may indicate his membership by printing in reasonable small type on letter headings or business forms the words ´Member of the Association of Optometrists, Ireland'. Article 7(c) provides that fellows are entitled to use the suffix F.A.O.I. Article 20 then provides that no member shall advertise his connection with the Association for trade or business purposes. The Association has indicated that the latter restriction only applies to individuals advertising their membership of the council of the association or of a particular committee or working party set up by the association. It is to ensure that members of such groups do not seek to convey the impression to the public that they offer a superior service by virtue of such membership. The Authority has considered the wider issue of advertising restrictions included in the Code of Ethics. It does not believe that the restrictions in articles 7 and 20 offend against section 4(1).

87. Articles 21, 22 and 24 are concerned with the procedures relating to the expulsion of a member. Article 21(a) provides that:

´A member who is guilty of conduct which in the opinion of the Council is derogatory of the profession of Optics or renders him unfit to be allowed remain a member of the Association may be excluded from membership.'

21(b) provides that a member associated with a person guilty of such conduct shall also be deemed to be guilty of such conduct. Article 22 provides that at least 21 days notice must be given to a member of any allegation that he has engaged in such conduct, and provides the member with a right to be present and be heard at a meeting of the Council where such allegations are considered. Article 24 provides a right of appeal against suspension or expulsion to a Special General Meeting. A majority of three fourths of the members present at such a meeting is needed to overturn such a decision by the Council.

88. Again the Authority does not consider that these Articles per se offend against Section 4(1) of the Competition Act. If, however, expulsion or the threat of expulsion effectively represented a means of enforcing anti-competitive practices, then it would take the opposite view. It is relevant, in this context, that certain acts described in the Association's Code of Ethics as unprofessional or unethical are, in the Authority's view, anti-competitive. The Association have indicated that unprofessional or unethical behaviour could be regarded as being in breach of Article 21(a) although it would depend on the form of the conduct and its duration or persistence. It has been submitted to the Authority that some members have in fact been suspended and threatened with expulsion for breaching the Association's rules on advertising and offering discounts. As the Authority regards these rules as anti-competitive, it believes that the suspension or expulsion of a member for breaking such rules offends against Section 4(1).

89. The Board is empowered under the terms of the Opticians Act to establish rules for the courses of training and examinations to be taken by candidates in order to be registered as ophthalmic or dispensing opticians. Rule 21 of the Board provides that to be admitted to the register of ophthalmic opticians an individual must pass the examination held by the City of Dublin VEC, who provide the training course prescribed by the Board for such candidates, and an examination in clinical practice approved by the Board. The Association of Optometrists is the only body recognised to conduct the Board's clinical examination for ophthalmic opticians, and this is also the examination specified in Article 7(c) as a requirement for admission to Fellowship of the Association.

90. The Authority notes that only 20 new applicants are accepted each year by the DIT for the diploma in optometry course from a total of 1,000 applicants. This serious mismatch between the number of applicants and the number of places available is a matter of some concern to the Authority as it suggests that many individuals who would like to enter the profession are being denied the opportunity of doing so. The number of places was said to be limited to 20 per year due to shortages in the number of staff available to teach the relevant courses and because the College Authorities felt that 20 per year represented the number of optometrists required. The Authority accepts that without an increase in resources the level of student intake could not be increased. It is concerned, however, at any notion that intake is being decided on the basis of perceived demand. Certainly if such a limit reflected a view of the Association on perceived requirements, the Authority would regard this as a serious restriction on competition.

91. The views expressed by the Fair Trade Commission in its Report on the Legal Profession are particularly relevant in this context. [19] It noted specifically that:

´The fact that each profession, however, exercises complete control over the numbers of persons admitted to the profession, and their qualifications, is clearly of direct and critical relevance to the Commission. Barriers to entry are one of the most important factors in the analysis of competition. If the barriers to entry are set at a very high level, with relatively few entrants as a consequence, there tends to be a lessening of competitive pressures, and a weakening, in particular, of price competition. As a group or individually, members of a profession may be enabled to exercise market power, to raise prices above competitive levels, and to enjoy monopoly profits. Within the scope of the practices listed in the 1972 Act restrictions on the numbers entering imposed by a profession itself appear to the Commission to be designed to exclude new entrants to the profession, and they appear to restrict or to be likely to restrict the exercise by any person of his freedom of choice as to what services he will supply. Such entry restrictions are likely also to secure a substantial or complete control of the provision of a class of services, and are likely to have the effect of limiting or restraining free and fair competition, and of being in restraint of trade.' [20]

92. The Commission went on to state that:

´The great danger arising from a situation where the existing members of a profession can determine precisely how many new entrants are admitted to the profession, in the opinion of the Commission, is that the number admitted might be restricted to a level which was believed to match the perceived requirements of the profession, and not of the public. If the power of controlling entry to the profession is exercised in the light of the profession's own perception of the demand for members of the profession, this is quite likely to lead to a situation where the protection and promotion of the interests of those already within the profession becomes paramount, however much this might be claimed to be in the public interest. The Commission considers that such self-protection would amount to both a restrictive practice and an abuse of a dominant position which would be seriously disadvantageous to the common good. In principle, the Commission favours freedom of entry to a profession, consistent with the maintenance of acceptable, but not excessive, standards, with the market for professional services being allowed to determine the numbers of practitioners.' [21]

The Code of Ethics

93. A number of the provisions of the Code of Ethics raise questions from a competition perspective. These are now considered.

94. The Code provides that where a member refers a patient to a colleague possessing extra skills or knowledge, e.g. contact lens specialist, the second practitioner ´should not take advantage of the trust placed in him by his colleague, by carrying out any work which the referring practitioner could carry out himself.' It could be argued that this prevents patients from obtaining all of their requirements from the more highly qualified practitioner, albeit at a possibly higher cost. It is claimed by the Association that it is essential for the welfare of patients and for the most suitable assessment of their special needs that health care practitioners should make such referrals. The Authority accepts this point and would regard it as detrimental to patients' welfare if in fact practitioners were to be discouraged from referring patients to more specialised colleagues for necessary treatment because they would lose the patient's custom. Similarly it may be that if only a small number of practitioners can provide specialist services, it is in the overall interests of consumers that they specialise in the provision of such services and not offer services available from the general body of practitioners. In the Authority's view this requirement does not offend against Section 4(1).

95. The Code also provides that a practitioner should not deal professionally with a patient whilst the patient is currently receiving attention from a colleague. Provided this is not interpreted in such a way that the patient is effectively denied the option of changing from one optician to another, if dissatisfied with the service offered, the Authority believes that it would not offend against Section 4(1).

96. The Code as notified set out certain guidelines relating to premises. In particular, it recommended that practices be sited in consulting rooms or offices without an external display, or a display within the initial reception area. (The question of displays is considered in the context of the restrictions on advertising below). It also provided that practices should be laid out in such a way that the patient is allowed adequate privacy during consultation.

97. These guidelines reflect requirements set out in the Rules of the Opticians Board. Rules 28 and 29 provide that examination, refraction, fitting and all consultations should either be carried out in the patient's home or in a suitable apartment or space used primarily for such purposes, so situated or constructed as to ensure reasonable privacy of the patient. These are penal rules under Section 51 of the Opticians Act which allows the Board to make rules for the regulation and control of the prescribing, dispensing and sale of spectacles by registered medical practitioners, or registered opticians.

98. As pointed out in para 42 the UK Director General of Fair Trading found that guidelines issued by the relevant UK opticians' associations concerning the siting of optical practices were unnecessary. These guidelines related to the siting of practices within department stores and set out minimum standards, including reference to the need for privacy and comfort along with a requirement that the practice should be a fully enclosed unit with doors capable of being made secure. The Report argued that such restrictions might prevent new or existing practices from offering services in a new or innovative way, or in a manner or setting which would be more convenient to the customer. It also argued that such restrictions were not related to clinical matters but were instead concerned with the levels of privacy preferred by patients, which patients could decide for themselves.

99. The Authority agrees with the sentiments expressed in the UK report, that such restrictions are unnecessary, and are not concerned with clinical practice but with matters of patient privacy. Patients are quite capable of deciding for themselves to what extent they require privacy when obtaining such services. Such rules may in fact prevent, restrict or distort competition in so far as they could prevent new entrants or existing practitioners from offering services in a new or innovative way, or in a manner or setting which would be more convenient to the customer. The Authority notes that any attempts to provide such innovative services could not succeed unless there was a demand for them. As the Association have indicated that they are withdrawing the references to premises from their Code of Ethics, the question of offending against Section 4(1) no longer arises.

100. As pointed out the Authority is only concerned with the Board's rules in so far as the arrangements notified by the Association of Optometrists require members to abide by such rules. It recognises, however, that even without such a requirement, optometrists face a strong incentive to observe the Board's rules where such rules are designated as penal rules. The Authority believes that individuals or firms offering a particular service should be largely free to decide upon the type and location of premises they wish to operate from. The location of the premises combined with its lay-out and other features are a component part of the various factors which attract consumers to a particular supplier and are therefore a means by which suppliers compete with one another in attracting customers. Rules 28 and 29 of the Opticians Board concerning premises could prevent, restrict or distort competition. Admittedly the Rules do not appear to have been interpreted in a restrictive way and have not prevented a number of innovative developments such as the location of optometrists premises in high street retail outlets, in offices adjoining other types of retail premises or the provision of services in business premises to any employee of such business who wishes to avail of them. The Authority believes, however, that a less restrictive rule may be possible.

101. The Code, as originally notified to the Authority, contained a number of restrictions on advertising. Members were also required to adhere to the Board's Rules on advertising. During the proceedings the Authority was informed that this section of the Code had been amended by a letter dated June 1989. Details of the amendments are given in para 29 above. The Authority is concerned that considerable time was devoted to considering obsolete rules since amendments made to these rules had not been notified.

102. The Authority believes that the restrictions on advertising set out in the Code of Ethics involved a serious restriction on competition. In particular it considers that individuals should be free to advertise their qualifications and the services offered in whatever manner they think fit. Consequently in its view restrictions on the content, type and size of advertisements, together with restrictions on members' names, titles and professions being referred to in media articles, and in the sponsorship of non-optical events, restrict competition and offend against Section 4(1). In addition the requirement to observe the Board's rules by which members of the Association were precluded from (a) advertising in media other than newspapers, (b) quoting prices in media advertisements and (c) from using signs which did not conform to certain specifications, also constituted a restriction of competition which offended against Section 4(1).

103. The Authority believes that restrictions on advertising generally serve to prevent new entrants from becoming established in the market and that they therefore protect existing undertakings from competition. It is significant, in this regard, that in recent years one third of newly qualified graduates is estimated to have emigrated. While it has been suggested that this reflects the fact that there is insufficient demand for additional practitioners, the Authority believes that it may indicate that it is extremely difficult for new entrants to establish themselves in the business due to the restrictions on advertising. It is relevant in this context that UK based firms have successfully entered the market as a result of extensive advertising campaigns.

104. Specific restrictions on advertising prices represent, in the Authority's view, a further serious restriction on competition. Such a restriction by denying important information to consumers makes it difficult for them to choose an optometrist. In addition, the Authority notes that overseas evidence indicates that restrictions on price advertising by health care service providers, and by optometrists in particular, have been found to result in higher prices to consumers than would otherwise be the case. [22]

105. The Authority does not consider that there is any good reason for preventing price advertising. Indeed the fact that the Board has allowed window displays, including prices since 1981, indicates that price advertising is possible. The Authority welcomes the fact that restrictions on price advertising in the media have now been abolished by the Board.

106. Advertising, including the quoting of prices is, in the Authority's view, a legitimate means of attracting business. The Authority also believes that, in general, restrictions on price advertising represent a serious restriction on competition which cannot be justified. In this respect its view is in accord with those expressed by the Fair Trade Commission in its reports on the legal, [23] engineering [24] and accountancy [25] professions. In particular the Authority agrees with the views expressed in the latter report to the effect that:

´If a practitioner cannot advertise his fees, there is less incentive for him to engage in fees competition, and clients are not likely to become aware very rapidly that lower fees are available. If price competition is allowed, then it is virtually axiomatic that advertising of fees should not be forbidden, and in most cases, freedom to advertise fees is essential for effective price competition.' [26]

107. The Authority notes that the Board, in a letter dated 13 March 1991, indicated to opticians that it had withdrawn actions against certain firms after they had claimed that the restriction on advertising might be in breach of Articles 85 and 86 of the Treaty of Rome, and that, following complaints to the Director of Consumer Affairs regarding the restrictions on price advertising, the Board proposed to amend its rules so as to allow optometrists to advertise in all forms of news media and to quote prices in such advertisements. In spite of this the Association suspended some members who were alleged to have breached these rules.

108. It was claimed to the Authority that expulsion from membership of the Association could have adverse effects on the businesses concerned by increasing the cost of insurance. In addition, given that the vast majority of optometrists are members, non-members might be regarded by the public as offering inferior services. A report that a member had been suspended could adversely affect the member's business since the public might consider that the member must have been guilty of improper behaviour in order to merit such action.

109. The Association claimed that it felt it right to take action against members who were in breach of the law as it understood it. The legality of the Board's rules had been challenged and, as the Board decided not to pursue the case, the exact legal position was unclear. In the Authority's view the Board has responsibility for enforcing such rules and it is not for a private organisation to seek to ensure compliance with rules whose legality has been challenged. The Association suspended members for breaching rules of the Board, which the Board had not sought to enforce following a challenge to their legality, and at a time when the Board had stated that it was amending such rules. The fact that the Association took such action to try and dissuade members from advertising prices suggests that the provisions of the Code in relation to advertising cannot be regarded as mere recommendations. Rather such actions must be seen as an attempt to dissuade members from advertising their prices.

110. The Authority's attention was also drawn to the editorial contained in the Association's newsletter of January 1992 (see para 36 above). The editorial criticised what it described as bringing the profession into disrepute although no specific activity was mentioned. It stated inter alia that:

´Reneging from the recognized parameters as agreed by the professional group as a whole is the more shabby and selfish when it employs advertising trickery and gimmickry'

It also stated that:

´all too often the act is deliberate and material by selfishness in an effort to steal a march on the colleagues of the perpetrator and gain some advantage...'

111. In sum the Authority believes that restrictions on the content, type and size of advertisements, together with restrictions on members' names, titles and professions being referred to in media articles, and in the sponsorship of non-optical events contained in the Code of Ethics as amended by the letter of June 1989, offended against Section 4(1) of the Competition Act. In addition the Authority believes that the requirement to observe the Board's rules which precluded advertising in media other than newspapers, the quoting of prices in media advertisements while setting out specifications for the type of signs which may be used, together with the implementation of sanctions by the Association for alleged breaches of those rules also constituted restrictions of competition which offended against Section 4(1).

112. Rule 31 of the Board also forbids canvassing by optometrists. It has been indicated to the Authority that this is primarily aimed at preventing door-to-door selling or cold calling, (unsolicited telephone approaches), while allowing distribution of promotional material by direct mail and other means. Cold calling, it is argued, is an objectionable practice while also being something of a nuisance to consumers. Consequently it is claimed that such behaviour brings the profession into disrepute. If in fact consumers object to such selling methods then they are likely to prove counterproductive and it is not clear that restrictions of this kind are necessary.

113. The Authority believes that a requirement that advertisements not be misleading or untruthful or of a character that could reasonably be regarded as likely to bring the profession into disrepute, as exists in Rule 31(2)(i) of the Board would not normally be anti-competitive. It does not believe that a requirement to adhere to such a rule offends against Section 4(1). The Authority would be concerned if such a rule were to be interpreted in a way that sought to restrict competition or to prevent innovative marketing of services by members of the profession.

114. The Association indicated to its members by letter dated February, 1993, that it had suspended all references to advertising pending a complete rewriting of the Code of Ethics. [27]

115. As has been stated the Authority is not concerned with the Rules of the Opticians' Board per se . It, however, welcomes the decision by the Board to amend Rule 31, thereby removing the prohibition on price advertising in the media and on advertising in media other than newspapers, which in the Authority's view were anti-competitive. The Authority notes, however, that there is still a restriction on canvassing, although it believes that this will be limited to door to door selling and cold calling. It nevertheless believes that this still restricts competition to some degree as such activities are legitimate forms of advertising and should be permitted. If consumers object to such activity then it will not benefit any individual to engage in such practices.

116. The Association's Code of Ethics required that practitioners should charge on a professional fee system e.g. fee for examination, fee for dispensing, plus the cost of appliances and material supplied. It was submitted by them that the rationale for this was that by avoiding a system of mark-ups on materials it removed the incentive for members to sell more expensive types of frames.

115. This requirement of the Association did not, as far as the Authority is aware, involve actual agreements between members on the scale of fees to be charged for different services. The Authority would regard any such agreement which eliminated or greatly reduced price competition as an anti-competitive practice of the most serious kind, which is specifically cited in the Act as offending against Section 4(1).

118. In Esso [28] the Authority indicated that it would regard even the exchange of price information by competitors as a breach of the prohibition on anti-competitive behaviour contained in Section 4(1) of the Competition Act. In this case the Authority can see no reason why members should not be free to set charges in any way they choose. It is concerned that requiring members to set charges in a particular way could facilitate agreements between some or all of the members of the Association on prices. For this reason it believes that the requirement to set charges in the manner prescribed in the Code of Ethics may prevent, restrict or distort competition.

119. The Code also prohibited the granting of group discounts by members as unprofessional. It was submitted to the Authority that members who had offered such discounts were suspended and/or threatened with expulsion from the Association. The Authority regards such a rule and the actions taken to enforce it as a restriction on price competition. It is relevant in this context that it has been found in EC cases that:

´the prohibition of Article 85(1) covers not only "prices" in the narrow sense but also discounts, margins, rebates and credit terms.' [29]

120. The requirement to determine fees in a particular manner and the restriction on the offering of discounts also prevented, restricted or distorted competition and offended against Section 4(1). As the Association has deleted these provisions from the Code, it no longer offends against Section 4(1).

121. The Code states that a practitioner employed in a practice shall not, on leaving such employment, strive to entice patients away from his former employer. Proximity of premises to his former employers for the purpose of enticing patients is unethical.

122. If this requirement were to be used to restrict former employees from competing with the business of their former employers the Authority would regard it as offending against section 4(1). The Authority has indicated in its notice on employee agreements that it would regard a restriction on a former employee setting up his own business in competition with his former employer as offending against section 4(1) and it would generally not grant a licence to such an agreement. In the Authority's view, employees generally should be free to enter the market on the same basis as any other new competitor and this implies that they should be free to do business with customers of their former employer. The Authority accepts, however, that an employee may not use information which is properly confidential to the employer, such as lists of customer names and addresses, to set up in competition with his former employer. In this instance the Authority also accepts that a restriction on former employees directly soliciting their former employers' customers is not of itself anti-competitive. [30]

123. The Association of Optometrists is an association of undertakings within the meaning of the Competition Act. The Memorandum and Articles of Association together with the Code of Ethics of the Association constitute decisions by an association of undertakings within the meaning of Section 4(1) of the Competition Act.

124. The Authority believes that the rules on premises, advertising, fee determination and discounts originally contained in the Association's Code of Ethics had the effect of preventing, restricting or distorting competition and offended against section 4(1). As the Association has advised its members by letter dated February, 1993 that the offending provisions have been suspended and since members suspended for breaching such provisions are now free to resume full membership, the Memorandum and Articles of Association and Code of Ethics no longer offend against Section 4(1) of the Competition Act, 1991.

124. The Authority considers that certain other rules could be interpreted and used in such a way as to prevent, restrict or distort competition. The Authority found no evidence that they had been used in this way. If this were to happen the Authority has power to revoke this certificate under Section 8(6).

125. The Competition Authority has issued the following certificate:

The Competition Authority certifies that in its opinion, on the basis of the facts in its possession, the Memorandum and Articles of Association and the Code of Ethics of the Association of Optometrists, (notification no. CA/9/92E), notified on 6 March 1992 under Section 7 and amended by letter of 22 December 1992, do not offend against Section 4(1) of the Competition Act, 1991.

For the Competition Authority

Patrick Massey

Member

29 April, 1993.