Court Finds Ophthalmologists Breached Commerce Act

Media Release

Issued 2 March 2003-04 / 097

High Court finds ophthalmologists breached Commerce Act

The Commerce Commission is pleased with the High Court judgement finding the Ophthalmological Society and five ophthalmologists contravened the anti-competitive provisions of the Commerce Act.

In his judgement delivered yesterday, Justice Gendall, found that the ophthalmologists and the Society entered into arrangements in 1996 to block entry by Australian ophthalmologists from carrying out routine cataract surgery in Southland in 1997.

"The Commission welcomes this judgement following the long running proceeding, commenced in 1998," said Commission Chair Paula Rebstock.

"The Court has found that some of the defendants are sufficiently sanctioned by the Court's findings. The Society and two other ophthalmologists face the prospect of financial penalties being imposed and the Commission will now prepare for the necessary penalty hearing."

Ms Rebstock added that as the matter is still before the Court, the Commission is unable to provide any further comment at this stage.

Background

The Commerce Commission took action against the Ophthalmological Society of New Zealand and five individual ophthalmologists over their alleged anti-competitive collusion which led to the cancellation of cataract operations to be performed in Invercargill by Australian ophthalmologists.

The Commission alleged the Society and the ophthalmologists contravened section 27 of the Commerce Act dealing with anti-competitive arrangements which have the purpose of, and/or effect of, substantially lessening competition in a market.

The cancelled operations were to have started in January 1997 as part of arrangements between the Southern Health CHE and an Australian ophthalmologist.

Late in 1996, Southern Health received extra funding from the government Waiting Times Fund for an additional 225 cataract operations to be performed. It sought to have Australian ophthalmologists perform the operations.

The Commission alleged that the Society and the New Zealand ophthalmologists involved colluded to ensure that the Australian ophthalmologists did not carry out the additional operations.

Section 27 of the Act prohibits contracts arrangements or understandings that substantially lessen competition.

The relevant maximum penalties at the time of the contravention were $5 million against an organisation and up to $500,000 against an individual. The maximum penalties under the Commerce Act have since been increased in respect of organisations.

ENDS

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