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Ophthalmologists withdraw appeals

15 December 2004

Ophthalmologists withdraw appeals against High Court ruling of anti-competitive behaviour

The Ophthalmological Society of New Zealand Inc and five ophthalmologists have withdrawn their appeals against a High Court ruling that found they had each colluded to block competition in the provision of cataract surgery, in breach of the anti-competition provisions of the Commerce Act.

Commerce Commission Chair Paula Rebstock said the Commission welcomed the conclusion of what had been a long running proceeding and a very significant case under the Commerce Act.

"This is an important outcome for the application and development of New Zealand's competition law for the benefit of New Zealanders. The case brings home to the medical profession and professionals generally, that the Commerce Act applies to them. Professional associations must always be careful that they do not use their market power to restrict competition in their markets. This case was about the collective behaviour of senior professionals acting in their own self interest to preserve their control over the waiting lists for their financial gain," she said.

In March this year, the Wellington High Court found the Ophthalmological Society and five ophthalmologists had contravened section 27 of the Commerce Act by entering into arrangements to block entry by Australian ophthalmologists from carrying out routine cataract surgery in Southland.

In June, 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.

The Ophthalmological Society and four of the five ophthalmologists filed an appeal against the finding that they had contravened the Act, and the Commission filed an appeal against the level of penalties imposed.

Ms Rebstock said the Commission decided to withdraw its appeal against the penalties imposed when the Society and the ophthalmologists withdrew their appeals against the High Court findings.

"The Society is no longer functioning and has only about $89,000 in funds. The Society is paying what it has towards penalty and is being wound up. The Commission has accepted this payment towards penalty, and has now received payment of all the costs awarded, as well as the penalties from Dr Elder and Dr Rogers. The Commission will pass the penalty payments on to the Crown," she said.

The Commission and the defendants have formally notified the court of the abandonment of the appeals.

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.

ENDS

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