Professional regulations keep prices high

THE cost of legal, medical and professional services could fall by up to 30% with the removal of anti-competitive practices, it was claimed yesterday.

Alan Gray, the author of a report commissioned by the Competition Authority, said the rules and regulations of many professional bodies resulted in unnecessarily high prices for consumers.

"The experience in other countries suggests that where barriers are removed, price reductions of 20%-30% would not be uncommon," said Mr Gray, managing director of consultancy firm Indecon.

He predicted consumers could benefit significantly from greater competition among eight groups of professionals: solicitors, barristers, doctors, veterinary surgeons, dentists, optometrists, engineers and architects.

Mr Gray said restrictions on entry to the professions, as well as advertising rules and the prevailing corporate structures, had eroded competition between members of the various professions, resulting in higher prices for consumers.

Doctors, lawyers and barristers were among the most heavily-criticised groups in the 600-page report, over their restrictions on practice by non-nationals, as well as the limited number of student places on professional courses. The same three professions were also judged to operate anti-competitive bans on advertising and the establishment of limited companies.

However, the report found engineers and architects operated with relatively few restrictions that impacted adversely on competition.

Among the report's main findings were:

Restrictions operated by solicitors affect competition;

Very little price competition among barristers;

Limited competition among vets because of restrictions to entry, conduct and organisation;

High prices among medical professionals because of regulations;

No justification for lack of competition among dentists.

Competition Authority chairman John Fingleton declined to comment on the report’s findings.

He said however that the report would act as the base for a detailed examination of the eight professions.

The Competition Authority will shortly publish a consultancy paper on each profession, starting with engineers, to be followed by oral hearings with interested parties. The publication of a final report on all professions is due to be completed by 2004.

Last night, the Bar Council claimed the report’s analysis was insufficient to justify findings that barristers’ practices were restrictive. It also described the report as “unbalanced.”

The Law Society said it was important to maintain a balance between competition and “public protection.”