Competition Scrutiny of Medical Imaging-equipment Aftermarkets in South Africa: What Oems, Hospitals and Service Providers Should Know

Competition scrutiny of how original equipment manufacturers (OEMs) control the repair, service and maintenance of high-value medical imaging equipment has intensified in South Africa. The Competition Commission has long examined whether manufacturers restrict independent clinical engineers from accessing spare parts, diagnostic software, service keys, technical information and specialised training. For OEMs, hospitals, independent service providers and in-house counsel, the practical consequences reach directly into contract terms, warranty design and aftermarket service policy. This article explains how an aftermarket competition case can arise, how Competition Tribunal procedure works, the statutory test under the Competition Act, and the concrete contract-review steps affected parties should take now.

It is written as general legal guidance and should not be read as a report of any specific adjudicated matter or finding.

How an aftermarket competition case can arise, facts and legal framing

Aftermarket competition concerns in the medical imaging sector typically centre on conduct in the market for servicing equipment after the initial sale. The kinds of allegation that arise involve claims that manufacturers deny or restrict the access of independent clinical engineers and third-party service providers to the inputs they need to repair and maintain imaging systems: spare parts, diagnostic software, service keys and passwords, technical documentation and specialised training.

It is essential to state plainly that, in any such matter, allegations are not findings. A referral is an accusation placed before an adjudicative body; it is not a determination of liability. The Competition Tribunal hears the evidence and decides whether conduct contravened the Competition Act. Until that happens, a party against whom a complaint is made is entitled to contest the case and advance pro-competitive justifications for its policies.

Specific products and market context

The imaging systems at the heart of such disputes are among the most capital-intensive assets a hospital owns: X-ray units, ultrasound scanners, magnetic resonance imaging (MRI) systems, computed tomography (CT) scanners and PET/CT installations. These machines run for a decade or more, require ongoing calibration and maintenance, and often cannot be moved or substituted at short notice. The servicing market that surrounds them is therefore high-value and recurring, which is precisely why control over parts, software and service access carries such commercial and competitive significance.

The alleged conduct in competition-law terms

In competition-law language, a case of this kind is framed around exclusionary conduct by firms said to hold market power in the relevant aftermarkets. The theories of harm include refusal or limitation of supply, denying independent engineers the spare parts or technical information they need to compete, and tying, where access to servicing is conditioned on the use of proprietary software or service keys controlled by the manufacturer. The practical effect alleged is foreclosure: independent service providers are squeezed out of a market they could otherwise serve, leaving hospitals dependent on OEM-authorised service at OEM-set prices.

What a Tribunal referral means procedurally, from referral to remedy

A referral marks the transition from investigation to adjudication. The Competition Commission investigates complaints and gathers evidence; it does not itself decide liability for the prohibited practices in question. When it concludes that it has a case, it refers the matter to the Competition Tribunal of South Africa, the independent adjudicative body that hears and determines competition disputes. A referral therefore means the Commission has completed its assessment and now asks the Tribunal to rule.

The procedural stages that follow are broadly sequential. The Commission files a referral setting out its allegations and the relief it seeks. The respondents file answering pleadings. The parties exchange discovery and witness statements, and expert economic evidence is often central in abuse-of-dominance cases. The Tribunal then convenes a hearing, considers the evidence and argument, and issues reasoned findings. Where a contravention is established, the Tribunal determines remedies and any penalty. Interim relief may be sought during the process where ongoing harm is alleged.

Typical timeline and immediate compliance steps for named parties

Abuse-of-dominance referrals are evidence-heavy and rarely resolve quickly; hearings may be many months from the referral date once pleadings and discovery are complete. For named parties, the immediate priorities are practical rather than theoretical. Legal hold notices should be issued to preserve all documents relevant to parts supply, software licensing, service-key issuance and training policies. Internal communications touching on independent service providers should be identified and secured. Specialist competition counsel should be instructed early, and a factual narrative assembled that explains the commercial and quality-assurance rationale behind existing aftermarket arrangements. Settlement by consent order with the Commission remains a possibility at various stages, and that option should be assessed on its merits.

Possible remedies the Tribunal can order under the Act

If the Tribunal finds a contravention, the remedies available are substantial. They include behavioural orders, for example, directions requiring the supply of parts or technical information to independent engineers on reasonable terms, as well as administrative penalties. In exceptional cases the Tribunal may consider divestiture or other structural remedies. The precise scope of relief depends on the findings and the Tribunal’s assessment of what is necessary to restore competition. Affected parties should consult the Competition Tribunal’s own guidance for current procedural detail.

Legal test under sections 8(1)(c) and 8(1)(d)(ii) of the Competition Act

The statutory backbone of an abuse-of-dominance case is the prohibition on abuse of dominance in the Competition Act 89 of 1998. Section 8 prohibits a dominant firm from engaging in exclusionary conduct unless the firm can show that any anti-competitive effect is outweighed by a technological, efficiency or other pro-competitive gain. Two provisions are most relevant to aftermarket matters of this kind.

Section 8(1)(c) prohibits a dominant firm from engaging in an exclusionary act, other than those specifically listed in the Act, if the anti-competitive effect of that act outweighs its pro-competitive gain. This is the general exclusionary-conduct provision, and it is the natural home for allegations that a dominant manufacturer withheld parts, software or information in a way that foreclosed rivals.

Section 8(1)(d)(ii) addresses a specific exclusionary act: a dominant firm refusing to supply scarce goods or services to a competitor or customer when supplying those goods or services is economically feasible. In an aftermarket context, this provision speaks directly to the refusal to supply spare parts or the technical inputs required for competing service providers to operate. Pleading both provisions in the alternative is a familiar approach, allowing the Commission to rely on the general test or the specific refusal-to-supply test depending on how the evidence develops.

How an allegation maps to the statutory elements

To succeed, the Commission must establish, first, that each respondent is dominant in a properly defined relevant market, potentially the aftermarket for servicing its own installed base of imaging equipment. Second, it must show an exclusionary act: the denial or restriction of parts, diagnostic software, service keys, technical documentation or training. Third, it must demonstrate an anti-competitive effect, foreclosure of independent engineers and reduced competition in servicing. Finally, the burden shifts to each respondent to justify the conduct by reference to efficiency or pro-competitive gains, such as safety, quality assurance or protection of intellectual property. The statutory architecture is why aftermarket cases of this kind turn on both market definition and the balance of competitive effects.

How the Commission frames OEM aftermarket policies

The Competition Commission has publicly signalled a focus on repair, service and maintenance aftermarkets, and has engaged in market inquiry and guidance processes in this area. Any guidance the Commission issues is published under its power to provide guidance on the application of the Act, and such guidance does not create obligations beyond the statute. What it does is clarify the Commission’s enforcement focus and signal how it intends to assess aftermarket conduct across a range of sectors.

The Commission’s stated concern with aftermarkets is deliberately broad. It can extend to repair, service and maintenance practices across many device categories, including consumer electronics, household appliances, medical equipment and related products. The common thread is the aftermarket: the market for keeping products working after the initial sale. The practices most likely to attract scrutiny include blocking access to spare parts, restricting access to diagnostic and repair tools, withholding repair information, and designing products or licences so that only the manufacturer or its authorised agents can service them.

The practical effect for OEMs across covered sectors is heightened scrutiny of their repair and servicing policies. Industry observers expect published guidance to function as a reference point for how aftermarket complaints are assessed. No OEM should treat such guidance as a safe harbour; compliance is measured against the Act, and guidance merely illuminates how the Commission reads it.

Practical takeaways for OEMs, distributors and hospitals

For OEMs and distributors, the Commission’s focus is a prompt to audit aftermarket policies against the identified harms before a complaint arrives. For hospitals and healthcare groups, it strengthens the case for negotiating contractual access to parts, software and trained support at the procurement stage rather than after installation. For in-house counsel, it provides a structured basis for identifying the practices most likely to attract regulatory attention.

Software licensing, service keys, parts supply and training, contractual design and compliance pitfalls

The issue is ultimately a contract and policy problem as much as a competition one. Modern imaging equipment is controlled by software, and the terms on which that software is licensed, together with the service keys and passwords that unlock diagnostic and calibration functions, determine who can realistically service the machine. Where these controls are used to lock out independent engineers, they can convert a legitimate intellectual-property or safety measure into an exclusionary one.

The legal risk crystallises when access controls are tied to exclusionary outcomes. A software licence that permits use only by OEM-authorised technicians, a service key issued only to in-house teams, a spare-parts supply policy that refuses to sell to independents, or training programmes closed to third parties, each of these can, in combination with market power, foreclose competition. Spare-parts supply terms and authorised-service clauses in warranty documents are therefore prime candidates for scrutiny.

Examples of risky clauses

• Service-authorisation-only clauses. Terms that reserve all servicing to the OEM or its appointed agents, with no pathway for independent providers to qualify.
• Conditional warranties. Warranty terms that are voided if any non-OEM party touches the equipment, even where the independent work is competent and unrelated to the fault.
• “Parts only from OEM” clauses. Supply restrictions that prevent customers or independents from sourcing functionally equivalent spare parts.
• Closed service keys and software. Licensing that makes diagnostic software or service passwords available exclusively to the manufacturer’s own staff.
• Training lock-out. Specialised training offered only to employees, denying independents the competence certification that customers may require.

Lawful design alternatives

Lawful aftermarket design does not mean abandoning commercial control, it means exercising it through non-discriminatory, transparent mechanisms. Options include supplying spare parts to independents on the same terms offered to authorised agents; offering paid access to diagnostic software, service keys and training on fair, reasonable and non-discriminatory (FRAND) terms; and limiting warranty carve-outs to work that genuinely bears on the warranted defect rather than voiding cover for any independent intervention. Where restrictions remain, they should be documented against a clear, evidence-based pro-competitive justification, typically patient safety, device integrity or regulatory compliance, so that the balancing exercise under the Act can be met.

Practical contract and warranty review checklist

The sensible response to increased competition scrutiny of aftermarkets is a structured review of the contracts and policies that govern aftermarket service. The following checklist is designed for hospital legal teams, OEM procurement and compliance functions, and independent service providers alike.

Immediate steps for named parties in a referral

• Issue a document-preservation notice covering all records relating to parts supply, software licensing, service-key issuance, training policies and communications about independent service providers.
• Instruct specialist competition counsel and establish a single point of coordination for the Tribunal process.
• Map the relevant markets internally and assemble the commercial and quality-assurance rationale for existing aftermarket policies.
• Identify and secure potential witnesses, including technical and commercial personnel.
• Assess, with counsel, whether early engagement with the Commission or a consent-order pathway is advantageous.

Drafting red flags and recommended clause language

When reviewing or drafting warranties, service agreements, supply agreements and software licences, treat the following as flags for closer analysis:

• Warranties. Avoid blanket “warranty void if serviced by third parties” wording. Prefer a carve-out limited to damage demonstrably caused by non-conforming parts or incompetent work: for example, “This warranty does not cover defects directly attributable to parts or workmanship that do not meet the manufacturer’s published specifications.”
• Service agreements. Replace exclusive-service clauses with a certification pathway: “Independent service providers who complete the manufacturer’s certification programme and hold current credentials may perform servicing on the same technical terms as authorised agents.”
• Supply agreements. Avoid “parts available only to authorised agents.” Prefer non-discriminatory supply: “Spare parts are supplied to qualifying purchasers on uniform, published terms without discrimination between in-house, authorised and independent service providers.”
• Software licences. Offer a maintenance-only licence tier: “A maintenance licence granting access to diagnostic and calibration functions is available to certified service providers on payment of the published fee, on FRAND terms.”

Build in transparent, published pricing for parts, keys and training; audit rights to protect brand and safety; and clear non-discrimination covenants. These features convert potentially exclusionary arrangements into more defensible commercial models.

Comparison table, OEM policy options vs enforcement risk

The following table compares three broad aftermarket policy approaches across the dimensions that matter most: commercial control, competition risk, operational trade-offs and the contractual protections each demands. It is intended as a strategic orientation, not a substitute for tailored legal advice on specific arrangements.

The pattern is clear: enforcement risk falls as access opens, but commercial control need not disappear. The FRAND middle path lets OEMs monetise their intellectual property and preserve quality while substantially reducing exposure, provided terms are uniform and documented.

What independent service providers and hospitals should do now

For independent service providers, increased scrutiny is both a validation and a prompt. Begin by documenting any instances of refused parts, denied software access, withheld service keys or training exclusions, contemporaneous records of specific requests and refusals are valuable evidence of foreclosure. Build the technical case that your engineers can service the equipment safely to published specifications. Where possible, pursue certification pathways and negotiate paid access agreements, framing requests in terms of non-discriminatory, FRAND access.

For hospitals and healthcare groups, the priority is continuity and leverage. Negotiate service-level agreements that secure guaranteed access to spare parts, software updates and trained support for the life of the equipment. Insert procurement clauses that require the supplier to provide, or allow independent access to, the parts and technical information needed to keep critical imaging systems running. Prepare contingency plans so that a servicing bottleneck does not translate into diagnostic downtime, and ensure any servicing arrangement remains consistent with medical-device regulatory obligations overseen by the South African Health Products Regulatory Authority (SAHPRA).

How to respond if you are named in a referral, immediate legal strategy

If your organisation is named in a Tribunal referral, move quickly and methodically. Appoint experienced competition counsel immediately and establish clear lines of internal authority for the matter. Issue and enforce a document-preservation hold across all relevant functions. Begin assembling witness statements from the commercial, technical and compliance teams who designed and administered the aftermarket policies under scrutiny. Assess, with counsel, whether interim relief is likely and how to respond if it is sought. Consider early, candid engagement with the Commission where it may narrow the issues, and evaluate whether a consent order resolving the matter on agreed behavioural terms serves your interests better than a contested hearing.

Above all, resist ad hoc policy changes made without legal input, as these can complicate the defence or be read as admissions.

Conclusion and next steps

Competition scrutiny of aftermarket policy in high-value medical equipment continues to grow in South Africa. Any case of this kind would be decided against the exclusionary-conduct and refusal-to-supply tests in sections 8(1)(c) and 8(1)(d)(ii) of the Competition Act 89 of 1998, and its outcome would shape how OEMs, hospitals and independent service providers across sectors design parts supply, software licensing, service-key access and training. The practical priority for every affected party is the same: review your contracts and warranties now, align them with non-discriminatory, documented access models, and take tailored legal advice before the enforcement spotlight widens.

For specialist assistance, see Hire a Contract Lawyer, South Africa or the profile of Brendan de Kooker, Contract, and read the announcement that Brendan de Kooker joins Global Law Experts. Further guidance is available through the Contract practice, South Africa page and the Global Law Experts lawyer directory for South Africa.

Sources

1. Competition Commission of South Africa
2. Competition Tribunal of South Africa
3. Government Printing Works, South African Government Gazette
4. South African Government, Competition Act 89 of 1998
5. Department of Trade, Industry and Competition (the dtic)
6. South African Health Products Regulatory Authority (SAHPRA)
7. Law Society of South Africa (LSSA)