Eyes surgeons to pay $85,000 for breaching Act

Media Release

Issued 28 October 2005/049

Eyes surgeons to pay $85,000 for breaching Commerce Act

Four Palmerston North eye surgeons have admitted breaching the Commerce Act by fixing the prices to be paid for eye services, and have been ordered by the High Court in Wellington to pay a total of $85,000 in fines and costs.

The settlement followed a Commerce Commission investigation into the surgeons’ dealings with the District Health Board, MidCentral Health Limited.

“This judgement sends a clear message that the health sector is not exempt from the Commerce Act,” said Commerce Commission Chair Paula Rebstock.

“The Commission hopes that others in the health sector, both service providers and those purchasing services, including District Health Boards, will take note and recognise that consumers must be allowed to benefit from competition in the health sector.”

In 1999 the surgeons agreed among themselves the prices they would charge for publicly-funded eye services, and then negotiated a collective agreement with the MidCentral Health Limited.

By fixing prices instead of competing with each other on price, the surgeons effectively created a monopoly, potentially resulting in higher prices for eye surgery in the Palmerston North area.

“The Commerce Act is there to ensure that New Zealanders reap the benefits of competition,” said Ms Rebstock.

“In this case, the end consumers were patients of the public health service. Competition is important in the health sector because artificially high prices for one service mean less money to spend on other services.”

The Commerce Commission has previously prosecuted the Opthalmological Society and two eye surgeons for anti-competitive behaviour in Southland. The case resulted in fines and costs of nearly $600,000.

The Commission remains concerned about anti-competitive conduct in the health sector, said Ms Rebstock.

Background

The four surgeons who admitted breaching the Commerce Act are Thomas Ellington, Archibald Mackillop, Phillip Boulton, Lesley Boulton.

ENDS

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