To Office of Fair Trading – Anti-Competitive Regulating
|
Office of Fair Trading |
One Vision Direct |
Protectionist and anti-competitive regulating by the General Optical Council is disadvantaging UK consumers by restricting innovation and competition in the UK prescription eyewear market.
Dear Sir/Madam
During the last five years there has been a significant and continuing trend for consumers to purchase prescription eyewear over the internet. The General Optical Council (GOC) has failed to review its regulations in the light of this significant change in the eyewear market and has preserved an outdated sight testing regulation which protects the financial interests of its membership, restricts innovation and development in the optical marketplace, and acts against the best interests of UK consumers.
I urge the Office of Fair Trading to investigate this situation with a view to taking appropriate action.
Crucially, GOC regulations fail to require opticians to include a patient’s inter-pupillary distance (PD) on the prescription issued following an eye test. This is a simple piece of information which takes an optometrist only seconds to measure but which is nevertheless essential for a lab technician to prepare corrective eyewear. This means that the patient’s prescription does not currently contain all the information required for glasses to be made up to their precise requirements, which not only defeats the purposes of a prescription but also creates unfair pressure on consumers to purchase their glasses from High Street premises, where there is an optometrist who can take the measurement for them. . This is restricting the operation of a free and efficient market for prescription eyewear. Furthermore, it is contributing to an increasing public perception that there is a real conflict of interest and ethical tension between the clinical aspects of eye examination and the commercial activity of eyewear sales carried out in the same premises by UK opticians.
This situation needs to be urgently addressed by reviewing and updating the sight testing regulations, including mandating the inter-pupillary distance as part of patients’ prescriptions. This will make it easier for consumers to purchase glasses online and will also help to make a clearer distinction between the eye testing and eyewear dispensing activities of opticians. This will have the effect of reducing consumer concerns about the conflict of interest between eye testing and dispensing and go some way to restoring public confidence in the integrity of the eyecare profession.
The GOC is the government-appointed regulatory body entrusted to look after consumer welfare for eye health in the UK. Part of the GOC’s role is regulation of the clinical procedure of sight testing: THE SIGHT TESTING (EXAMINATION AND PRESCRIPTION) (No2) REGULATIONS 1989. Section 5 of this regulation describes the particulars that the clinician must include in the written statement or prescription to be given to patients[1] following an eye examination.
It is the natural and realistic expectation of every patient that the prescription issued following their eye examination will contain all the information necessary for them to purchase corrective eyewear if required. It is also a reasonable expectation of the consumer that they will be free to shop for their glasses wherever they can obtain the best choice or the best service or the best value for money or any combination of these, and that this may or may not be in the shop where they had their eyes tested.
During the mid 1980s the GOC was instructed by government to relax the rules on who could advertise and sell glasses in order to stimulate competition and lower the price of glasses in the High Street. [Incidentally a paper prepared by the DTI in 2006 reported that these attempts to stimulate competition and lower consumer prices have largely failed[2]]. One outcome of the de-regulation process was that from this period onwards opticians were obliged to provide consumers with a written prescription following an eye exam. The purpose of this was clearly to ensure that consumers were free to buy their eyewear with confidence from wherever they chose. The fact that the prescription was issued without the pupillary distance measurement was inconsequential at that time, since consumers were only able to choose between one High Street shop and another, where their physical presence meant that the PD could be measured at the point of sale.
Since 2005, however, the omission of the pupillary distance from the prescription has grown both in significance and consequence in line with the increased numbers of glasses wearers who are choosing to purchase their prescription eyewear over the internet. For this growing customer segment the omission of the PD by clinicians not only poses an annoying and unnecessary obstacle to them making their online purchase, but also raises in their minds the ethical question of precisely where the boundary lies between the clinical process of eye testing (a discretely billed and paid for service) and the entirely separate and distinct commercial transaction of selling glasses.
The fact that these clinical and commercial processes frequently take place under the same roof and by the same personnel is considered irregular by many and is giving rise to increasing concern among consumers about whether or not opticians are acting in the best clinical interest of their patients or the best commercial interest of their practice. There is a widespread view among consumers (as evidenced by the 800 or so signatories to my petition at www.givememypd.epetitions.net) that the PD measurement is being withheld by clinicians in order to coerce patients into the commercial transaction of purchasing glasses in the same premises where they have had their eyes tested, or at the very least forcing them to purchase from another High Street outlet. As consumers become more educated and more discerning, so their concerns about the potential for a real conflict of interest between the clinical and dispensing activities of opticians increase. Only complete transparency in the provision of all the information required to produce the required spectacles can overcome this. This needs to be urgently addressed by the GOC. Line 11 of the Code of Conduct for Individual Registrants (“to ensure that financial and commercial dealings do not compromise the interests of the patient”) is proving to be a wholly inadequate protection for consumers against this conflict of interest, which holds great potential for bringing the profession into disrepute.
The GOC mission statement says: “Our work is built on a foundation of six core values. These values are based on the Better Regulation Commission’s criteria for good regulation.” Ignoring the fact that the Better Regulation Commission was superseded by the Risk and Regulation Advisory Council (RRAC) more than two years ago on 16th January 2008, and that the Code of Practice On Guidance On Regulation now has 8 Golden Rules and not 6 Core Values, both the old and the new codes place a duty on every regulatory authority like the GOC to review and improve their regulations in order to keep them “accurate and current”. The GOC is clearly failing in this requirement, as the current regulations do not reflect the realities of the modern optical marketplace.
Government prioritises the activities of regulatory bodies like the GOC to focus on public protection, proportionality to risk and the removal of unnecessary administrative procedures. With this in mind, and since this complaint relates largely to consumers wanting to purchase glasses over the internet, it is worth reviewing the safety of internet purchases in light of the recent statement made by Jon Levett at the ABDO conference in October 2009. In response to a call from ABDO members for increased regulation in the face of growing internet sales, Mr Levett, Director of Standards and Deputy Chief Registrar of the GOC, said:
“The Department of Health has been presented with no evidence from the industry to show that de-regulation of spectacle sales has resulted in any harm to the public which might lead to a review of the regulatory framework.”
He went further and warned ABDO members that any attempt to re-open the issue could actually result in further de-regulation. These are hardly the words of a man representing an organisation with legitimate grounds for resisting internet sales.
The sight testing regulation is out of date, does not reflect the realities and needs of the current marketplace, is not fit for purpose, and is long overdue for a thorough review. I am calling now for the OFT to compel the GOC to review and update this regulation giving proper consideration not only to the aspect of public safety but also to how the regulation can be modified in the best interests of consumers and of a competitive eyewear market, and in order to reduce the potential for a conflict of interest between clinical testing and commercial dispensing on opticians’ premises.
The statement made by Mr Levett stands in stark contrast to a conflicting statement made in the most recently published annual report of the Optical Consumer Complaint Service. The OCCS, while claiming to be an independent organisation, is contracted solely by the GOC, receives all of its funding from the GOC, reports only to the GOC, is chaired by David Burt OBE, past chairman of the GOC, and is to all intents and purposes part of the GOC.
This is what the OCCS had to say in its 2008 annual report about pupillary distance complaints made by consumers:
“Whilst we acknowledge the right of a consumer to choose where to purchase their glasses, we do not support internet purchases as being in the consumer’s best interest” (my emphasis). The report goes on to say, “An optician has no obligation to measure the IPD if not supplying glasses, and if asked to do so we accept that a reasonable fee should be charged. We fear that with the increase in internet purchases problems will increase and we will continue to explain to complainants that we cannot act on their complaint.”
The report presents no evidence or explanation of why the committee doesn’t support internet sales, or of why internet sales are not in the consumer’s best interest. Given the fact that an executive officer recently made an explicit statement that there has been no evidence of harm to the public from internet sales, the only conclusion which can be drawn from this statement is that the OCCS, and, by direct, exclusive, contractual association, the GOC, are institutionally and systemically biased against internet sales of prescription eyewear. I hope that the OFT will take this into account when considering my account.
My specific objective in writing this letter is for the OFT to compel the GOC to carry out an up-to-date competition assessment with respect to the eye-testing regulation.
As I understand it, the OFT provides government-controlled authorities such as the GOC with a set of guidelines or tests which should be applied to the policies or regulations which they set, to ensure such policies and regulations do not unduly limit or restrict competition in the market place. The competition assessment poses 4 questions, as follows. Does the policy or regulation:
1. Directly limit the number or range of suppliers? [Possibly not in this case]
2. Indirectly limit the number or range of suppliers? [YES: because the regulation gives consumers incomplete information, they don’t have equal access to internet and High Street retailers]
3. Limit the ability of suppliers to compete? [YES: internet retailers become dependent on a small sub-section of the market able and willing to measure their own PD]
4. Reduce suppliers’ incentive to compete vigorously? [YES: it gives High Street retailers an unfair advantage over internet retailers, thereby reducing High Street retailers’ incentive to compete]
When these tests are applied to the current eye testing regulation, as I have done above, it becomes abundantly obvious that it is both protectionist and anti-competitive in its present form.
There is a significant body of evidence to show that the government initiative of stimulating competition in the prescription eyewear market through de-regulation has been completely ineffective. Instead, the effect of de-regulation has been to allow 54% of the UK optical market to be dominated by only two companies, Specsavers (38%) and Boots/D&A (16%), to the detriment of independent practices and consumers. Optician magazine 26/02/10 reported that this trend towards market domination by a small number of High Street multiples is continuing.
More worryingly for the consumer, the same issue of Optician Magazine reported two significant facts: firstly, that glasses sold with reflection-free coatings during 2009 fell by 6% over the previous year to only 42% of all glasses sold, which is one of the lowest levels of reflection-free coatings dispensed in all Europe. And secondly, at the same time the average turnover per eye examination rose by £15.00 (average sale value of £128-£154). In summary, this shows that UK consumers have been paying about 10% more for a poorer specified product during the worst recession for 60 years, and graphically demonstrates how inefficient the prescription eyewear market is in the UK. This is at least partly due to the protectionist regulations set by the GOC which prevent internet retailers competing on an equal footing with High Street shops.
The Office for Fair Trading is aware from the due diligence it carried out on the Boots/D&A merger that the eyewear market in the UK has a value at retail of almost £3 billion per annum. 66% of the UK adult population wear glasses. Like-for-like eyewear purchased over the internet typically costs in the region of 30-50% less than in a High Street shop.
This OFT action, by compelling the GOC to amend the eye testing regulations and thereby allow internet and High Street retailers to compete on a fair and equal basis, could achieve a very significant beneficial outcome for UK consumers.
It should be noted that this restrictive practice is not unique to the UK. Most consumers throughout Europe face similar difficulties in obtaining complete prescription information from their optometrist and this issue needs to be addressed throughout the European Union.
I look forward to receiving your response in due course.
Yours faithfully
Ewan McFarlane
Managing Director
[1] It is recognised that there a small number of exceptions to this rule.
[2] DTI Economics Paper No9 The Benefits from Competition: some illustrative UK cases.