Ophthalmological Society Fined $100,000

Ophthalmological Society of New Zealand to pay $100,000 for breaching Commerce Act

The High Court has fined the Ophthalmological Society of New Zealand Inc $100,000 and two ophthalmologists a total of $30,000 for contravening the anti-competitive provisions of the Commerce Act.

In the Wellington High Court, Justice Gendall ordered the Ophthalmological Society to pay $100,000, Dr Brett Rogers to pay $25,000 and Dr Mark Elder to pay $5,000. Justice Gendall also ordered that they, and the other ophthalmologists involved in the case, pay $467,870 towards the Commission's legal costs.

In setting the penalties, Justice Gendall emphasised that they were specifically designed to meet the circumstances of this case and could not be taken as a guide by other professionals or their associations as to what might be the penalties imposed in future. "Indeed they are likely to be many times greater."

Commerce Commission Chair Paula Rebstock said it was difficult to imagine a clearer case of deliberate anti-competitive conduct and the Court's decision ought to send a clear message that a disregard for the principles of the Commerce Act by a professional body will not be tolerated.

"The medical profession, like any other, is subject to the anti-competitive prohibitions of the Commerce Act. They can't avoid the law by raising spurious claims of risks to clinical safety," she said.

"The Courts found that the defendants in this case acted deliberately to thwart entry by Australian ophthalmologists from carrying out routine cataract surgery in Southland in 1997. The society used its collective power to prevent this entry in order to financially advantage one of its own members - Dr Brett Rogers."

Ms Rebstock said that it was disappointing that after 18 years of the Commerce Act being in force, that a major medical professional body did not seem to be aware that it is subject to the Commerce Act.

"What the ophthalmologists did in this case was to use their power to exclude competition and protect one of their own, without any regard to the public good at all.

"This was an abuse of the trust and privilege allowed to this profession, and it is particularly repugnant that the defendants used the language of patient safety as a convenient excuse to disguise their own self interest," said Ms Rebstock.

"The defendants' conduct had an actual and real impact on the burden suffered by a vulnerable group of consumers - those men and women who were forced to wait for their cataract surgery simply because the surgeon wanted to protect his financial position," she said.

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.

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