Commerce Commission asked to authorise health contract
Published02 May 1995
The Waikato CHE, Waikato Health Limited, and regional health authority, Midland Health, applied to the Commerce Commission for authorisation of their proposed mental health services contract today.
Commission Chairman Dr Alan Bollard said it is the first time health organisations have applied for authorisation of a contract.
"How the competition issues involved are viewed and the Commission's decision will be an important precedent for how the Commerce Act applies to the health sector," Dr Bollard said.
He said the Act prohibits contracts which substantially lessen competition in a market. However, the Act also allows for authorisation of an otherwise prohibited contract if it can be shown that the public benefits coming from it are greater than the detriments to competition.
This 10-year contract involves Waikato Health providing mental health services and facilities, including building a new secure unit at Hamilton Hospital, to Midland Health.
Both parties have said that the contract will substantially lessen competition and they will be putting forward their arguments about the public benefits that will come from it.
The Commission will call for people who wish to be interested parties to contact it and will carry out its own investigation. The only issues which can be considered are those which affect competition between organisations in the relevant markets.
The Commission expects to issue a draft determination giving its preliminary view of the application on June 7. Interested parties will have until June 21 to make submissions, a conference of applicants and interested parties may be held if requested and a final determination should be issued by July 26.
