The College of Optometrists of Ontario Conflict of Interest Regulation

Interventions

June 19, 2008

Hon. George Smitherman
Ministry of Health and Long‑Term Care
Suite M1‑57, Macdonald Block
900 Bay Street
Toronto, ON
M7A 1R3

Dear Hon. Smitherman:

RE: The College of Optometrists of Ontario Conflict of Interest Regulation

I am writing to share with you the views of the Competition Bureau (the "Bureau") with regard to issues affecting the current state of competition in Ontario between optometrists (regulated by the College of Optometrists of Ontario) and opticians (regulated by the College of Opticians of Ontario). I understand that you are presently reviewing amendments to the conflict of interest regulation of the College of Optometrists of Ontario. The Bureau would like to take this opportunity to comment on certain aspects of the proposed amendments as they relate to competition.

The role of the Competition Bureau

The Competition Bureau is an independent agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.

The Commissioner of Competition is responsible for the administration and enforcement of the Competition Act (the "Act"), a federal statute of general application to all sectors of the Canadian economy. The primary purpose of this legislation, as set out in section 1.1 of the Act, is to maintain and encourage competition in Canada in order to promote the efficiency of the Canadian economy and to provide consumers with competitive prices and product choices.

The Bureau promotes competition in two ways. Firstly, we are a law enforcement agency. We investigate allegations of anti‑competitive conduct seeking judicial and quasi‑judicial remedies to stop anti‑competitive behaviour. We also act as an advocate for competition. To that end, we frequently make submissions to federal and provincial legislative bodies or regulators on how to implement reforms that encourage competition. By engaging in advocacy for competition, the Bureau has the opportunity to ensure that competitive factors are taken into consideration in the formulation of policies, rules and regulations.

Self‑regulated professions

Self‑regulated professions have been an ongoing area of interest to the Bureau, and we have a long history of interaction in and study of such markets. On December 11, 2007, the Bureau published the attached study on self‑regulated professions in Canada (the "Study"). The purpose of the Study is to examine whether the governing bodies of the professions studied impose restrictions that create barriers to effective competition and, when necessary, to provide recommendations on whether or not to eliminate such barriers.

In total, five groups of professionals were studied: accountants, lawyers, optometrists, pharmacists and real estate agents. The goal of the Study is to encourage regulators to review existing rules taking into consideration whether the rules are necessary for the public interest, whether there are other less restrictive ways of achieving public interest goals and whether regulators have gone beyond their intended objective at the expense of competition. It is our hope that the Study will shed some light on the types of regulations that select groups of professionals are using which have the potential to unnecessarily restrict competition. We believe that the Study identifies many opportunities for improving regulation so that Canadians can benefit from the best combination of regulation and competition.

The Bureau recognizes that regulating professional services can be important for protecting consumers. We do not argue blindly in favour of competition at the expense of all other possible policy objectives. There may indeed be legitimate public interests at issue other than the efficient functioning of markets. The Bureau does, however, advocate that to be effective, regulatory decisions must be fully informed, keeping in mind the many direct and indirect effects they may have on consumers through reduced competition. Regulation that is excessive or restricts competition beyond an equally effective alternative can come at a great cost and expense to consumers, and therefore should be removed or modified.

In chapter 2 of our Study, the Bureau has put forward guiding principles to assist regulators – comprising provincial and territorial governments and self‑regulating organizations – develop and maintain strong, efficient regulation that maximizes consumer welfare. Those principles are that:

  • Regulation should have clearly defined and specific objectives
  • Restrictions should be directly linked to clear and verifiable outcomes
  • Regulation should be the minimum necessary to achieve stated objectives
  • The regulatory process must be impartial and not self serving
  • A regulatory scheme should allow for periodic assessment of its effectiveness and be subject to regular reviews
  • A primary objective of the regulatory framework should be to promote open and effectively competitive markets

Restrictions on business structure

The Bureau’s Study identified six categories of restrictions that have the greatest potential to harm competition: restrictions on entering the profession, mobility, overlapping services and scope of practice, advertising, pricing and compensation, and business structure such as multidisciplinary practices.

In multidisciplinary practices, members of different professions can work together and take advantage of economies of scope and scale by allocating overhead or fixed costs across a larger employee base, can benefit from a pooled advertising and marketing budget, and can share resources and knowledge across professional practice areas.

Specifically, the economies of scope and scale resulting from inter‑professional collaboration can benefit consumers by reducing firms’ costs and prices. Moreover, they can enhance the ability of firms to offer high‑quality and innovative services. Consumers may also benefit from the convenience of purchasing a range of professional services from a single firm. This convenience may also reduce consumers’ search costs and transaction costs. Multidisciplinary practices may also offer lower prices to consumers who buy a number of professional services from a single practice.

Conversely, restrictions that prohibit professionals from being involved in multidisciplinary practices may limit innovative and cost‑efficient business structures, ultimately to the detriment of consumers, who are deprived of the resulting benefits of lower prices and increased convenience.

Optometrists and opticians in Ontario

As you know, optometrists and opticians operate as two distinct professions within the province of Ontario and are governed by their own respective regulatory bodies. However, while they are distinct, opticians, as a self‑regulated profession, provide services that complement or are substitutes for the services offered by optometrists.

Specifically, opticians compete with optometrists in the filling of prescriptions for and the sale of eyeglasses.

In Ontario, the College of Optometrists of Ontario has enforced a statutory provision that prohibits optometrists from practising "in association, partnership or otherwise with or while employing or under the employment" of a registered opticianFootnote 1.

Given the complementarities between the activities of optometrists and opticians, it is our view that it would be natural for members of both professions to work together. Such multidisciplinary arrangements would likely result in efficiencies not available to professionals currently working separately. Thus, by not allowing these relationships, the College of Optometrists of Ontario is preventing the potential development of more efficient business models and future innovation. Moreover, the Bureau believes that these restrictions may discourage prospective optometrists from entering the market and also protect inefficient incumbent optometrists from competition from more efficient rivals. Accordingly, costs are likely being kept inefficiently high, resulting in higher prices to the consumer. A further anti‑competitive result of these rules is that they force most optometrists into the same business model, thus ensuring that they all face a similar cost structure. This makes it less likely that meaningful competition or cost innovation will develop.

As such, the Bureau’s Study recommended that the "Colleges of optometry should remove restrictions that prohibit or discourage optometrists from working in multidisciplinary arrangements with opticians". We note that shortly after the release of this Study, the College of Optometrists of Ontario sent a letter to their members to put them on notice that there exists regulation prohibiting optometrists from practising "in association, partnership or otherwise with or while employing or under the employment" with a registered optician.

Conflict of interest regulation and proposed amendments

As you know, the basis for the prohibition against combined practices is section 26 of the Optometry Regulations, R.R.O. 1990, Regulation 550 made pursuant to the Ontario Drug and Pharmacies Regulation Act.

The alleged purpose of section 26 of this regulation is to avoid conflicts of interest. The conflict is said to arise if optometrists could be, or appear to be, motivated by financial incentives to over‑prescribe eyewear. However, optometrists are permitted to sell eyewear within their practice, a clear conflict that has presumably been addressed through standards of conduct. It is difficult to understand why the College of Optometrists of Ontario believes this conflict can be remedied in this instance, but not in the instance of association with opticians. Moreover, other jurisdictions, such as British Columbia, permit optometrists to practice in association with opticians, without any suggestion that optometrists in these jurisdictions have over‑prescribed or otherwise acted in an unprofessional manner.

I understand that the College of Optometrists of Ontario has recently proposed amendments to the aforementioned regulation to provide some basis to permit optometrists to practise in association with opticians. It is my understanding that the proposed amendments introduce the possibility of open association with opticians under situations where "a reasonable person knowing the relevant facts would conclude that the member or an optometry professional corporation was engaging in the practice of optometry as an independent contractor"Footnote 2. We understand that the College of Optometrists of Ontario has introduced this "independent contractor" condition as a means of reducing the conflict of interest, or perceived conflict, of optometrists and opticians working together.

While this is no doubt an improvement to the status quo, the Bureau is not satisfied that the proposed amendments meet our above‑listed criteria of regulation being the minimum necessary to achieve stated objectives. We question why the concerns of the College of Optometrists of Ontario surrounding lack of independence cannot be addressed by imposing standards of conduct that clearly state that being an employee or partner with an optician will not change the professional standards to which an optometrist must adhere. To further assuage these concerns, the College of Opticians of Ontario could amend its professional misconduct regulation such that it would amount to professional misconduct for an optician to influence an optometrist to violate their own professional standards of conduct.

Conclusion

Due to the competitive benefits of multidisciplinary practices outlined above, and our knowledge in this area, it is the opinion of the Bureau that the amended regulation must not unnecessarily restrict or discourage optometrists from working in multidisciplinary arrangements with opticians.

As stated above, while the Bureau believes the proposed amendments are an improvement to the status quo, we are of the view that the potential conflict of interest arising from association between optometrists and opticians can be addressed in a way that is even less restrictive than the proposed amendments. That said, if the "independent contractor" criteria is adopted, it should be defined more clearly. In its current form, there is potential risk surrounding how this term will be interpreted. To avoid an overly restrictive and/or inconsistent interpretation of this definition, we suggest that the proposed amendments fully define the term "independent contractor" so that its meaning is clear to all parties concerned.

In closing, our goal at the Bureau is to ensure that all markets deliver the benefits of competition including low costs, high quality and variety of choice to Canadian consumers and businesses. If we can be of further assistance to you, I invite you to contact Eric Ferron at 819‑994‑6288.

Sincerely,

Chris Busuttil
A/Assistant Deputy Commissioner
of Competition (Civil Matters)

cc. Murray Turnour, Registrar, College of Optometrists of Ontario
Caroline MacIsaac‑Power, Registrar, College of Opticians of Ontario
Glenn Campbell, Executive Director, Canadian Association of Optometrists
Lorne Kashin, President, Opticians Association of Canada

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