Anesthetists price fixing allegations settled

17 December 1998
Price fixing allegations against four NSW anaesthetists and the Australian Society of Anaesthetists have been settled in the Federal Court.

Justice Hill today accepted undertakings from the anaesthetists and the Society and made consent orders to conclude legal proceedings brought by the Australian Competition and Consumer Commission for alleged price-fixing in breach of the Trade Practices Act 1974.

'This case is a clear warning to all medical professionals and their associations that they are subject to the Trade Practices Act,' ACCC Chairman, Professor Allan Fels, said today. 'The ACCC will always take action where serious allegations of breaches occur.

'Professionals taking collective action on price or collectively withdrawing services risk serious consequences, including large pecuniary penalties.

'Professional associations that assist or coordinate such collective conduct are also at serious risk under the Act.

'The ACCC is also examining the specialist college arrangements that determine the number of specialists being trained in Australia, and may impinge recognition of international qualifications or experience'.

The Competition Policy Reform Act 1995, and State/Territory application law, extended the restrictive trade practices provisions of the Trade Practices Act to those engaged in unincorporated business, including (unincorporated) medical practitioners, from 21 July 1996. Pecuniary penalties came into effect from July 1997 for contraventions by firms and individuals covered by the Act for the first time as a result of the CPR Act. Monetary penalties of up to $10 million per contravention for companies and $500 000 for individuals now apply for any contravention of Part IV of the Act.

'In this case, the ACCC did not seek penalties as it was the first enforcement action against medical professionals following the CPR Act.

'But as price fixing and boycotts are serious breaches, the ACCC will not hesitate to seek penalties in future'.

The conduct

The ACCC instituted proceedings in October 1997. It alleged unlawful agreements were reached by anaesthetists at St George Private Hospital, Kareena Private Hospital and Greenoaks Private Hospital (now Bankstown Private Hospital) to charge $25 per hour for 'on-call' services which ensured an anaesthetist, although not on site, was available for emergency and after hours anaesthetic services at the hospitals.

The ACCC had also alleged that on 3 April 1996 certain anaesthetists reached an unlawful agreement to tell the St George Hospital administrators that unless the hospital agreed to pay for the supply of on-call services from 1 May 1996 those anaesthetists would not supply such services (a 'boycott agreement').

The ACCC alleged that in late 1994, the ASA (NSW section) formed a sub-committee to formulate guidelines for the provision of on call services in private hospitals. A sub-committee report was circulated to members in 1995. It said the ASA should 'recommend and set an appropriate on call fee to be paid by private hospitals to on call anaesthetists' and that this fee should be $25 per hour.

It was alleged that the sub-committee's recommendations were endorsed by the ASA (NSW) Committee of Management in September 1995 and further endorsed at the annual general meeting of the NSW ASA in March 1996.

It was alleged that the anaesthetists, through their medical practice companies, arrived at agreements with other anaesthetists to charge a $25 per hour on-call services fee. It was alleged that the ASA and its NSW chairman induced or attempted to induce and were knowingly concerned in, or a party to one or more of the agreements.

The outcome

The anaesthetists and the ASA today gave undertakings to the Court that they would not engage in fixing, controlling or maintaining prices offered or charged by them for the supply of on-call services, and that they would not enter into agreements having the purpose, effect or likely effect of substantially preventing, hindering or lessening competition in the market for the supply of on call services.

The ASA also undertook to the Court to develop and implement, at its own expense, a program of compliance with the Trade Practices Act. The program will be based on Australian Standard AS 3806. The Court ordered that the respondents pay $60,000 toward the ACCC's costs.

'The matter was resolved without an expensive and protracted trial,' Professor Fels said. 'The move to resolve the matter is to be welcomed'.

Professor Fels noted that a breach of the undertakings to the court would put the specialists or their association at risk of contempt of court.
Release number: 
MR 237/98
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