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South Island veterinary business warned over likely price fixing with competitor

8 January 2018

The Commerce Commission has warned VetLife Limited (VetLife) that it is likely to have breached the Commerce Act by price fixing with one of its competitors.

The warning relates to VetLife entering into and giving effect to an agreement in 2015 with a competing veterinary practice relating to the supply of a restricted veterinary medicine.

The agreement arose when a buying group presented a prescription to the competing practice on behalf of a long-standing customer of VetLife. Instead of independently deciding what price the competing practice would offer, VetLife and the competing practice agreed that the competing practice would not compete to supply the product.

Commission Chair Dr Mark Berry 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.

“We have decided to issue a warning rather than commence court proceedings due to the limited extent of harm caused by the agreement and the limited duration of the anti-competitive conduct,” Dr 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.”

A copy of the warning letter can be found on our website.

More information about price fixing can be found here.

Background

The Commerce Act prohibits contracts, arrangements or understandings between competitors that have the purpose or effect of fixing controlling or maintaining the prices for goods and services. An individual can be fined $500,000 and/or prohibited from directing or managing a company. A body corporate can be fined the greater of $10 million or three times the commercial gain from the breach (or 10% turnover) for each separate breach.