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South Island VetLife warned over price fixing

Monday 8th January 2018

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South Island veterinary practice VetLife, which operates 17 clinics, has been warned by the Commerce Commission for probably fixing prices of a restricted medicine with an unnamed competitor for a brief period in 2015. 

The antitrust regulator today said it formally warned the Timaru-based company over an agreement with a rival practice setting a price for supplying the Cepravin medicine to a VetLife customer in 2015, the commission said in a statement. The regulator decided against prosecuting VetLife because of the limited harm caused by the conduct and the limited duration of the agreement, it said. 

"The commission reached the view that the agreement had the purpose of fixing, controlling or maintaining the price of the medicine supplied to the customer," chair Mark Berry said. "This warning is a reminder to VetLife, veterinarians and businesses in general that they need to make independent decisions about pricing or risk breaching the Commerce Act which can attract large penalties." 

The Commerce Act prohibits contracts, arrangements or understandings between competitors containing provisions that have the purpose or effect of fixing, controlling or maintaining the prices charged for goods or services. An individual can be fined up to $500,000 and be prohibited from being a company director or manager, while a body corporate can be fined $10 million, three times the commercial gain from the breach, or 10 percent of turnover. Each separate breach of the act may incur a separate penalty.

In a letter to VetLife managing director and majority shareholder Adrian Campbell, Commerce Commission head of competition Kate Rusbatch recommended the company's staff be "mindful of the act when attending meetings and/or otherwise interacting with competitors, particularly in circumstances where the conduct involved may interfere with any party's independent decision about a price, component of price, or any other matter relating to prices, such as a discount."

VetLife came out of the South Canterbury Vet Club, purchasing other vet clubs and merging with North Otago Vet Services in 2006. The firm is one of the largest vet organisations in the South Island employing 140 people, according to its website. 

(BusinessDesk)

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