Australian Competition & Consumer Commission v Ranu Pty Ltd [2007] FCA 1777

FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Ranu Pty Ltd [2007] FCA 1777 TRADE PRACTICES – orthodontists with joint practice arrangements sharing expenses but not in partnership – price fixing – arrangements to share new "unreferred" patients – geographical restraints – injunctions and declarations and order for costs sought by agreement – acting on incorrect legal advice – no pecuniary penalty sought Trade Practices Act 1974 (Cth) ss 4D, 45, 45A, 75B and 86C(2)(b) Yorke v Lucas (1985) 158 CLR 661 cited AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v RANU PTY LTD, P R & G CROWE PTY LTD, HAZEL RIDGE PTY LTD, SAWINDAR RANU, PAUL RICHARD CROWE AND ANTANAS VYTENIS STANKEVICIUS TAD 29 OF 2007

HEEREY J

5 December 2007

HOBART IN THE FEDERAL COURT OF AUSTRALIA

TASMANIA DISTRICT REGISTRY TAD 29 OF 2007

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Applicant

AND: RANU PTY LTD

First Respondent

P R & G CROWE PTY LTD

Second Respondent

HAZEL RIDGE PTY LTD

Third Respondent

SAWINDAR RANU

Fourth Respondent

PAUL RICHARD CROWE

Fifth Respondent

ANTANAS VYTENIS STANKEVICIUS

Sixth Respondent

JUDGE: HEEREY J DATE OF ORDER: 5 DECEMBER 2007

WHERE MADE: HOBART

THE COURT DECLARES THAT: 1. Each of the first and second respondents contravened s 45(2) of the Trade Practices Act 1974 ('the Act') by: 1.1. in about May 1992, making the Associateship Agreement, which contained a provision that the parties to the Associateship Agreement, including the first and second respondents, would agree the professional fees each would charge their respective patients, which provision had the purpose and was likely to have had the effect of fixing the price for orthodontic services to be supplied to patients by the parties to the Associateship Agreement, including the first and second respondents, in competition with each other; 1.2. between about May 1992 and about July 2005, making a number of arrangements containing provisions as to the professional fees the parties to the Associateship Agreement, including the first and second respondents, would charge their respective patients, which arrangements contained provisions that had the purpose and effect of fixing the price for orthodontic services to be supplied to patients by the parties to the Associateship Agreement, including the first and second respondents, in competition with each other; 1.3. between about May 1992 and about July 2005, giving effect to the provision referred to in paragraph 1.1 and to the provisions of the arrangements referred to in paragraph 1.2 by: 1.3.1. meeting to agree on the professional fees (including any changes to those fees) the parties to the Associateship Agreement, including the first and second respondents, would charge their respective patients; and 1.3.2. charging their respective patients professional fees in the agreed amounts in most instances; 1.4. between about July 2005 and June 2006: 1.4.1. making a number of arrangements with each other and the third respondent containing provisions as to the professional fees (including any changes to those fees) each of them would charge their respective patients, which arrangements contained provisions that had the purpose and effect of fixing the price for orthodontic services to be supplied to patients by each of the first, second and third respondents, in competition with each other; and 1.4.2. giving effect to the provisions of the arrangements referred to in paragraph 1.4.1 by charging their respective patients professional fees in the agreed amounts in most instances; 1.5. in about May 1992 making the Associateship Agreement, which contained a provision to the effect that the parties to the Associateship Agreement, including the first and second respondents, who were competitive with each other, agreed that in the event that any party had fewer new patients than the others, then the other party or parties would not supply orthodontic services to new unreferred patients until all parties had the same or close to the same number of new patients, which provision had the purpose of preventing, restricting or limiting the supply of orthodontic services by at least one of the parties to the Agreement to a particular class of potential patients, namely unreferred patients; 1.6. in or about November 1995, making an agreement which contained a provision to the effect that in the event that a party to the agreement, including the first and second respondents, who were competitive with each other, had 20 patients more than any of the other parties, then the first party would not supplyorthodontic services tonew unreferred patients until all parties had the same or close to the same number of new patients, which provision had the purpose of preventing, restricting or limiting the supply of orthodontic services by at least one of the parties to the Agreement to a particular class of potential patients, namely unreferred patients; 1.7. on or about each of 30 June 2000, 14 June 2005 and 1 July 2005, making an agreement which contained a provision to the effect that in the event that a party to the agreement, including the first and second respondents, who were competitive with each other, had 10 patients more than any other, then the first party would not supplyorthodontic services tonew unreferred patients until all parties had the same or close to the same number of new patients, which provision had the purpose of preventing, restricting or limiting the supply of orthodontic services by at least one of the parties to the Agreement to a particular class of potential patients, namely unreferred patients; 1.8. between about May 1992 and about June 2006, giving effect to the provisions referred to in paragraphs 1.5, 1.6, and 1.7 by ceasing or restricting the supply of orthodontic services to new unreferred patients in accordance with the terms of those provisions; 1.9. on or about 3 March 2003, making an agreement with Ashwani Gupta Pty Ltd (all three parties being competitive with each other), which contained a provision that until at least 31 December 2010, with minor exceptions, required the first and second respondents, to only provide orthodontist services in 'the Northern Division of Tasmania' and Ashwani Gupta Pty Ltd to only provide orthodontist services in 'the Southern Division of Tasmania', which provision had the purpose of preventing, restricting or limiting the supply of orthodontic services: 1.9.1. by the first and second respondents to a particular class of persons, namely potential patients seeking orthodontic treatment from orthodontic premises in 'the Southern Division of Tasmania'; and 1.9.2. by Ashwani Gupta Pty Ltd to a particular class of persons, namely potential patients seeking orthodontic treatment from orthodontic premises in 'the Northern Division of Tasmania'; 1.10. between about 3 March 2003 and June 2006, giving effect to the provision referred to in paragraph 1.9 by no longer offering to supply orthodontic services to potential patients seeking orthodontic treatment from orthodontic premises in 'the Southern Division of Tasmania'; and 1.11. on or about 14 June 2005, making an agreement with each other and, on or about 1 July 2005, with the third respondent (all three parties being competitive with each other), which contained a provision that, except with the consent of the other parties, no party and no principal orthodontist of a party would, directly or indirectly, supply orthodontic services, or be engaged or interested in carrying on the profession of an orthodontist, from premises within 20 kilometres of the premises jointly used by the parties, which provision had the purpose of preventing, restricting or limiting the supply of orthodontic services by any of the parties to the agreement to a particular class of persons, namely those potential patients seeking orthodontic treatment from orthodontist premises in Launceston, Burnie or Devonport, in particular circumstances, namely while the party remained a party to the agreement and for 3 years from the date the party ceased to be party to the agreement. 2. The third respondent contravened s 45(2) of the Act by: 2.1. on or about 1 July 2005, making an agreement with the first and second respondents, who were competitive with each other and with the third respondent, which contained a provision: 2.1.1. to the effect that in the event that a party to the agreement had 10 patients more than any other, then the first party would not supplyorthodontic services tonew unreferred patients until all parties had the same or close to the same number of new patients, which provision had the purpose of preventing, restricting or limiting the supply of orthodontic services by at least one party to the agreement to a particular class of potential patients, namely unreferred patients; and 2.1.2. that except with the consent of the other parties, no party and no principal orthodontist of a party would, directly or indirectly, supply orthodontic services, or be engaged or interested in carrying on the profession of an orthodontist, from premises within 20 kilometres of the premises jointly used by the parties, which provision had the purpose of preventing, restricting or limiting the supply of orthodontic services by any of the parties to the agreement to a particular class of persons, namely those potential patients seeking orthodontic treatment from orthodontist premises in Launceston, Burnie or Devonport, in particular circumstances, namely while the party remained a party to the agreement and for 3 years from the date the party ceased to be party to the agreement; 2.2. between about July 2005 and about June 2006: 2.2.1. making a number of arrangements with the first and second respondents containing provisions as to the professional fees (including any changes to those fees) each of them would charge their respective patients, which arrangements contained provisions that had the purpose and effect of fixing the price for orthodontic services to be supplied to patients by each of the first, second and third respondents, in competition with each other; and 2.2.2. giving effect to the provisions of the arrangements referred to in paragraph 2.2.1 by charging its patients professional fees in the agreed amounts in most instances; 2.2.3. giving effect to the provision referred to in paragraph 2.1.1 by ceasing or restricting the supply of orthodontic services to new unreferred patients in accordance with the terms of that provision; 3. Each of the fourth and fifth respondents, by making the agreements and arrangements referred to in paragraph 1 on behalf of the first and second respondents respectively, were knowingly concerned in and party to the contraventions of the first and second respondents, respectively, referred to in paragraph 1 above. 4. The sixth respondent, by making the agreement and arrangements referred to in paragraph 2 on behalf of the third respondent, was knowingly concerned in and party to the contraventions of the third respondent referred to in paragraph 2 above.