PROJECTS

Ophthalmologists’ Price-Fixing Prosecution, New Zealand

The problem

The Commerce Commission suspected that established ophthalmologists in New Zealand’s Southland region were price-fixing. These ophthalmologists refused to provide post-operative care for the cataract surgery patients of ophthalmologists new to the area, which imposed extra costs on the newcomers. The Commission was concerned that these actions created barriers for new ophthalmologists to enter the market, lessening competition. This would explain the large public waiting list of elderly people in Southland who required cataract surgery, who could not afford private surgery.

How we helped

We assessed the ophthalmologists’ actions, using economic principles. We confirmed that their actions created barriers to market entry for new ophthalmologists, which substantially lessened competition. The Commerce Commission sued the ophthalmologists for anti-competitive behavior, and we provided expert evidence for the Commission in a High Court case.

Impact

The High Court agreed with Castalia’s evidence and ruled in favor of the Commission, finding that the defendants had colluded in price fixing, and that their actions substantially lessened competition, which put them in breach of the Commerce Act 1986.