Health profession and trade practices: price-fixing by orthodontists

In ACCC v Knight penalties were imposed for anti-competitive conduct by surgeons.

Now, in Australian Competition & Consumer
Commission v Ranu Pty Ltd
[2007] FCA 1777, the Federal Court of Australia found that three orthodontic
businesses, each operating in northern Tasmania, had contravened
section 45 of the Trade Practices Act 1974 by engaging in price fixing and market sharing.

Justice Peter Heerey, found that the respondent orthodontists, in
various combinations, entered into a series of illegal anti-competitive
arrangements to:

  • fix the price of the orthodontic services they each provided to consumers in northern Tasmania
  • restrict their respective supply of orthodontic services to new patients when an orthodontist had more customers than the others
  • restrict the ability of the orthodontists to supply their
    respective services from separate premises or work with other
    orthodontists within 20 kilometres of the existing practices in
    Launceston, Devonport and Burnie, and
  • stop another orthodontist from setting-up a competing practice in northern Tasmania.

The orthodontists provided their
services from shared premises in the cities of Launceston, Devonport
and Burnie, and the majority of the illegal arrangements were
written into the shared premises co-location agreement.

Because the orthodontists relied on faulty legal advice that the Trade Practices Act did not apply to them and because the respondents cooperated with the
investigation, the ACCC took the unusual step of not seeking a monetary
penalty. The court decided that in
all the circumstances it was sufficient to deal with the matter by way
of a series of injunctions restraining the orthodontists from again
engaging in the anti-competitive conduct.

The court also ordered the
respondent orthodontists to attend an annual trade practices law seminar of at least 4 hours duration for the next 3 years and to
make available to staff a trade practice compliance manual at the co-located
premises.

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