Business and Commerce News

In the Wellington High Court, Justice Gendall ordered the Ophthalmological Society to pay $100,000, Dr Brett Rogers to pay $25,000 and Dr Mark Elder to pay $5,000. Justice Gendall also ordered that they, and the other ophthalmologists involved in the case, pay $467,870 towards the Commission’s legal costs.

In setting the penalties, Justice Gendall emphasised that they were specifically designed to meet the circumstances of this case and could not be taken as a guide by other professionals or their associations as to what might be the penalties imposed in future. “Indeed they are likely to be many times greater.”

Commerce Commission Chair Paula Rebstock said it was difficult to imagine a clearer case of deliberate anti-competitive conduct and the Court’s decision ought to send a clear message that a disregard for the principles of the Commerce Act by a professional body will not be tolerated.

“The medical profession, like any other, is subject to the anti-competitive prohibitions of the Commerce Act. They can’t avoid the law by raising spurious claims of risks to clinical safety,” she said.

“The Courts found that the defendants in this case acted deliberately to thwart entry by Australian ophthalmologists from carrying out routine cataract surgery in Southland in 1997. The society used its collective power to prevent this entry in order to financially advantage one of its own members – Dr Brett Rogers.”

Ms Rebstock said that it was disappointing that after 18 years of the Commerce Act being in force, that a major medical professional body did not seem to be aware that it is subject to the Commerce Act.

“What the ophthalmologists did in this case was to use their power to exclude competition and protect one of their own, without any regard to the public good at all.

“This was an abuse of the trust and privilege allowed to this profession, and it is particularly repugnant that the defendants used the language of patient safety as a convenient excuse to disguise their own self interest,” said Ms Rebstock.

“The defendants’ conduct had an actual and real impact on the burden suffered by a vulnerable group of consumers – those men and women who were forced to wait for their cataract surgery simply because the surgeon wanted to protect his financial position,” she said.

Background

The Commerce Commission took action against the Ophthalmological Society of New Zealand and five individual ophthalmologists over their alleged anti-competitive collusion which led to the cancellation of cataract operations to be performed in Invercargill by Australian ophthalmologists.

The Commission alleged the Society and the ophthalmologists contravened section 27 of the Commerce Act dealing with anti-competitive arrangements which have the purpose of, and/or effect of, substantially lessening competition in a market.

The cancelled operations were to have started in January 1997 as part of arrangements between the Southern Health CHE and an Australian ophthalmologist.

Late in 1996, Southern Health received extra funding from the government Waiting Times Fund for an additional 225 cataract operations to be performed. It sought to have Australian ophthalmologists perform the operations.

The Commission alleged that the Society and the New Zealand ophthalmologists involved colluded to ensure that the Australian ophthalmologists did not carry out the additional operations.

Section 27 of the Act prohibits contracts arrangements or understandings that substantially lessen competition.

The relevant maximum penalties at the time of the contravention were $5 million against an organisation and up to $500,000 against an individual. The maximum penalties under the Commerce Act have since been increased in respect of organisations.

The trend series for the number of new dwelling units, excluding apartment units, has been declining since November 2003. Consents were issued for 2,238 new dwelling units, excluding apartment units, in May 2004.

Consents for 31,793 new dwelling units were issued in the year ended May 2004, which was 11 percent higher than in the year ended May 2003. The total number of new dwelling units for the year ended May 2004 is the largest total recorded for a May year since 1975.

Nine out of 16 regions recorded more new dwelling units in May 2004 than in May 2003. Waikato (up 33 units) recorded the largest increase when comparing the two May months, followed by Northland (up 20 units) and Taranaki (up 19 units). The Auckland region contributed 835 units (33 percent) to the total number of new dwelling units in May 2004.

The total value of consents issued for non-residential buildings in May 2004 was $243 million. Consents issued for factories and industrial buildings were worth $44 million (18 percent of the total) in May 2004. This was followed by consents issued for shops, restaurants and taverns worth $38 million (16 percent), office and administration buildings worth $37 million (15 percent), and education buildings worth $34 million (14 percent).

The total value of consents issued for all buildings in May 2004 was $830 million, following totals of $774 million in April 2004 and $996 million in March 2004. For the year ended May 2004, the total value of consents for all buildings was $9,854 million, which was an increase of $1,699 million (21 percent) compared with the year ended May 2003.

The two contracts were written at different times and effectively offset each other in all respects, except that they contain different hedge prices. Because they offset each other, the contracts (and their termination) do not have any impact on the market for hedges.

The parties have agreed to terminate these hedges, and Contact will receive a net one-off sum of approximately $69 million from Mighty River Power to compensate it for termination of the contracts.

Contact welcomes this agreement as it reduces administrative costs, and eliminates any future uncertainty over the interpretation of the contracts. In a separate arrangement, Contact has also agreed to sell two surplus 24 MW geothermal generator units to Mighty River Power. The surplus units were acquired as part of Contact’s purchase of the Poihipi Rd power station. Contact has been marketing these units for some time, and is pleased to have concluded an arrangement for their sale.

The area lies close to a number of permits held by other parties, which have recently shown encouraging results from test drilling. As a condition of receiving the permit, Contact will begin a programme of studies to further assess prospectivity within the permit area. Provided the results of these studies are positive, Contact expects the drilling of an exploration well would begin in 2007.

Contact Energy’s chief executive, Mr Stephen Barrett said “The move to obtain this permit is part of Contact’s broad strategy to identify and secure a range of future energy sources for New Zealand.”

“There is general consensus in the industry that the level of exploration activity in New Zealand needs to be significantly stepped up if domestic gas is to remain a key energy source for the country” said Mr Barrett.

“We have been working across a range of fronts to stimulate greater upstream gas activity. Earlier this year we announced an initiative with Mighty River Power to establish a gas exploration drilling fund. This fund will target gas prospects that can be brought into production in the next few years. This is a critical period as it coincides with the rundown of the Maui gasfield.”

“Looking out beyond the end of this decade, the most likely source of significant domestic gas is the offshore Taranaki basin. We have been in dialogue with a number of parties who have interests in that basin, and we have signalled our interest in purchasing gas from successful explorers”.

“While those discussions have been encouraging, Contact is concerned that relying solely on existing explorers may not result in a sufficient level of activity. For this reason, Contact has decided to become more directly engaged in progressing upstream activity.

“It is important to get timely information on the real gas supply potential in the Taranaki basin. The long lead-time to develop a sizeable new discovery means that it would need to be identified in the next few years, if it is to play a useful role in meeting gas demand.

“Conversely, if the Taranaki basin proves to be unproductive, it is important to know that soon so that New Zealand can make the best choice from among the alternatives which include more renewables, coal and/or liquefied natural gas.”

“This initiative will be progressed within an appropriate framework to reflect its risk profile, and will be pursued in parallel with the other workstreams that Contact already has underway.

This will significantly reduce the risk of forced power outages this winter.

The inter-trip schemes are being commissioned with the support and co-operation of lines companies in the region. The first was commissioned this morning (Friday) and raised the load limit by 10 MW.

The schemes provide identified blocks of load, which could be switched off automatically if a voltage stability problem occurred on the electricity grid.

This back-up protection allows more electricity to be sent through the grid, increasing the load limit for the upper South Island to 1055 MW, from the previous maximum of 1030 MW.

The peak demand so far this winter has been 968 MW, recorded on the 9th June.

Transpower’s General Manager System Operations Kieran Devine says electricity supply into the upper South Island continues to be actively managed.

“Since early April when we first called the industry together, it has been our firm belief that security of supply into the region could be maintained with the active co-operation of all parties.

“These new schemes, which provide automatic under voltage load shedding, are an innovative solution, and are attracting interest from our counterparts overseas.

“Added to the other measures already taken, the risk of power shortages in the upper South Island this winter has been greatly reduced,” Kieran Devine said.

Increased returns from exports of goods and lower income payments to foreign investors were the main contributors to the decrease in the current account deficit this quarter. These changes were largely offset by: rising imports of goods; a fall in expenditure by foreign tourists in New Zealand; and lower receipts of non-resident withholding tax (reflecting lower dividend payments abroad).

March 2004 quarter export receipts rose, driven by higher volumes, particularly for meat. The rise in goods export volumes was supported by rising world commodity prices, but the appreciation of the New Zealand dollar reduced the New Zealand dollar prices received. The appreciating New Zealand dollar also reduced import prices. This, in turn, partly offset the impact of a rise in import volumes in the March quarter. Overall, the value of goods exported rose $402 million (5.6 percent) and the value of goods imported rose $185 million (2.5 percent).

Revenue from overseas travellers’ expenditure in New Zealand fell $149 million in the March 2004 quarter compared with the December 2003 quarter. This fall was driven by a fall in the average amount spent by each visitor, partly due to a fall in the average time each visitor spent in New Zealand, although visitor numbers were up.

Income earned by foreign investors from their investments in New Zealand fell $306 million this quarter. This was primarily the result of a fall in profits reported by New Zealand companies that have significant overseas ownership. Dividends distributed to foreign investors also fell this quarter, and resulted in a fall in receipts of non-resident withholding tax by Inland Revenue. This fall in dividends follows a large increase in dividends paid to foreign investors in the December 2003 quarter.

The current account balance for the year ended March 2004 was a deficit of $5,700 million. This compares with a December 2003 year ended deficit of $5,874 million, and a March 2003 year ended deficit of $4,316 million.

At 31 March 2004, New Zealand’s net international debtor position was $107.5 billion (liabilities exceed assets). This position was $1.8 billion (1.7 percent) higher than the position at 31 December 2003. While both international assets and liabilities rose, liabilities rose more than assets did. The main contributors to the rise in New Zealand’s international assets were New Zealand fund managers investing in overseas company shares, and New Zealand banks lending abroad. The rise in international liabilities was dominated by New Zealand banks funding their activity by borrowing from abroad.

PTP is a world-class manufacturer of speciality Medium Density Fibreboard (MDF) and flooring products, drawing on sustainably managed plantation timber to service the high growth domestic Chinese furniture, flooring and panels markets.

Chief Executive Officer, Peter Springford said the acquisition was consistent with the company’s growth strategy and a positive step into a market well known to Carter Holt Harvey: “The acquisition of PTP is part of Carter Holt Harvey’s commitment to growing its wood products segment in Australia, New Zealand and Asia. It is a clear demonstration of our ‘multi-domestic’ approach, giving us immediate scale and in-market processing close to our important Chinese customers.”

“PTP is China’s leading specialty MDF manufacturer with a history of high returns in a market forecast to achieve double-digit growth each year for the next six years. The business is a natural fit for Carter Holt Harvey, with two modern, low cost operations and an established distribution network that complements our existing panels manufacturing, product and market expertise. PTP also enjoys secure log supply through long-standing agreements with the Shishou Forestry Bureau and the Leshan Forestry Bureau – joint shareholders in the PTP operations.”

“This is a considered move, coming after 12 months of ‘on the ground’ assessment and extensive due diligence. Carter Holt Harvey has served the Chinese market for more than 25 years, exporting log, pulp, paper and wood products from both Australia and New Zealand. In addition, we already operate representative offices in Shanghai, Beijing and Hong Kong,” said Mr Springford.

PTP employs approximately 1700 people and operates a country-wide network of eight regional sales offices and twenty-six warehouses. The company’s two primary facilities at Leshan and Shishou in central China have a combined MDF capacity of 350,000 cubic metres, increasing Carter Holt Harvey’s focus on speciality MDF and expanding its existing MDF capacity by more than fifty percent.

In its seven years of operation, PTP has established a reputation for quality products and a formidable market presence with strong brands and access to a wider distribution network of more than 770 PTP-branded retail outlets. Demonstrating Carter Holt Harvey’s confidence in the business, PTP will continue to trade as a stand-alone company led by its existing management team.

Four Carter Holt Harvey appointees will sit on the five-person PTP operating company Board of Directors, with at least one senior Carter Holt Harvey manager likely to join PTP to ensure it can draw on the full support and expertise of Australasia’s leading forest products company.

Carter Holt Harvey intends to finalise the purchase of PTP in July 2004. A 15% shareholding in the PTP operations will continue to be held by the Shishou Forestry Bureau and the Leshan Forestry Bureau, long-term suppliers of plantation timber to PTP.

The gold medal for 42 BELOW Manuka Honey Vodka will be collected on behalf of the bees by 42 BELOW’s Chief Vodka Bloke and bee subjugator Geoff Ross at the Salon International de L’Alimentation (SIAL) International Food Exhibition in October 17-21 at the Paris-Nord Villepinte exhibition centre in Paris.

The SIAL win comes just weeks after 42 BELOW won a gold medal for 42 BELOW Pure Vodka and a silver medal for SOUTH Gin at the 42nd World Selection 2004 of Spirits and Liqueurs, Monde Selectionâ, run by the International Institute for Quality Selections in Brussels.

“These wins boost the prestige of our brands in the eyes of key sales agents, distributors and buyers in our new and developing export markets. Winning Gold at the Salon International de L’Alimentation has meant resounding export success for previous winners,” said Geoff Ross, 42 Below’s Chief Vodka Bloke.

The awards are decided quite differently in the two competitions. At the Monde Selectionâ decisions are made by a jury that is comprised of a group of specialists appointed for their professional knowledge. But they do not rely on sensory analysis alone – they often carry out chemical and bacteriological analysis at official or approved European laboratories, also checking conformity of the labelling.

The Brussels spirit competitions are rated among the most important in the world for the alcoholic beverages category while SIAL is recognised as the most important event in the world for the grocery, supermarket and food service sectors. SIAL attracts over 130,000 trade buyers and 5500 exhibitors from 98 countries.

Just getting picked for the Salon International de L’Alimentation is difficult. Peter Mitchell, publisher of New Zealand’s FMCG magazine, selected 42 BELOW Manuka Honey Vodka as one of 12 best New Zealand packaged goods products that entered the market in the two years since the last exhibition, submitting them with samples and performance descriptions. Publishers from 27 other countries on the international jury also submit their 12 products covering the various categories. They then meet in Paris and spend three days evaluating and judging the products to eventually come up with 12 gold medal winners worldwide, one for each category. Of these 12 Gold Medals three went to New Zealand companies. 42 BELOW, Sealord and Tegel.

Each of the 12 category winners receives their awards at a ceremony that for the past dozen years has been broadcast live on French television. 42 BELOW Manuka Honey Vodka, as winner of the alcoholic beverages category, will then be on prominent display in a special section in front of the exhibition, exposing it to the large number of international buyers.

Secret voting by the 28 judges then identifies a Grande SIAL D’Or winner - the best single new product in the world for the past two years from the category winners, and this is announced at a special function during the show in October attended by senior French Government Ministers, world supermarket industry leaders, diplomats and trade commissioners from many countries

Both of the awards allow 42 BELOW to use the awards and medals on product packaging and in promotions. The Monde Selectionâ win allows 42 BELOW to use the medal for 5 years on bottles, packaging, and in the promotion of 42 BELOW Pure Vodka and SOUTH Gin.