Med­i­cal in­stru­ment maker fined $17.3m

China Daily (Hong Kong) - - BUSINESS - By WANG YANFEI wangyan­fei@chi­

For­eign com­pa­nies should care­fully study the an­titrust law while op­er­at­ing in China, a se­nior of­fi­cial with the na­tion’s top an­titrust en­forcer said af­ter it an­nounced on Wed­nes­day the first penalty in the med­i­cal in­stru­ment man­u­fac­tur­ing in­dus­try.

The China unit of US com­pany Medtronic, a lead­ing sup­plier of high-end med­i­cal de­vices such as an in­sulin pump­ing sys­tem, was fined 119 mil­lion yuan ($17.3 mil­lion), or 4 per­cent of the com­pany’s an­nual sales in China last year, for elim­i­nat­ing mar­ket com­pe­ti­tion in the med­i­cal in­dus­try, ac­cord­ing to the Na­tional Devel­op­ment and Re­form Com­mis­sion.

In­ves­ti­ga­tions found that the com­pany had fixed re­sale prices through mo­nop­oly agree­ments with its deal­ers.

Com­pared with the record­high 6.088 bil­lion yuan fine im­posed on Qual­comm in 2014, the amount is at the medium level of the penalty sys­tem, which ranges from 1 to 10 per­cent of the sales of the in­ves­ti­gated com­pany in the pre­vi­ous fis­cal year.

The com­pany is the first in the med­i­cal de­vice in­dus­try to face such a fine, which came af­ter the com­mis­sion in­ves­ti­gated sev­eral ma­jor med­i­cal com­pa­nies be­fore an­nounc­ing the de­ci­sion, ac­cord­ing to Zhang Han­dong, direc­tor of the com­mis­sion’s Price Su­per­vi­sion Bureau.

The de­ci­sion was made af­ter nearly one year of in­ves­ti­ga­tion and af­ter more than 10 vis­its for on-site ev­i­dence col­lec­tion, ac­cord­ing to Zhang.

“Fix­ing the re­sale price is among the lead­ing causes that drive up the prices of high-end med­i­cal de­vices to un­usu­ally high lev­els in China,” said Zhang. “We hope the case can be­come a good ex­am­ple as we strive to pro­mote fair mar­ket com­pe­ti­tion.”

Zhang said the com­mis­sion treats all mar­ket play­ers equally, with­out dis­crim­i­na­tion to­ward for­eign or do­mes­tic com­pa­nies, while con­duct­ing anti-mo­nop­oly en­force­ment ac­tions.

Xu Xinyu, a vet­eran com­mis­sion of­fi­cial who was in charge of the in­ves­ti­ga­tion in the land­mark case against Qual­comm in 2014, said that for­eign com­pa­nies should study lo­cal an­titrust law and com­ply with rules while op­er­at­ing busi­nesses in China.

“Some for­eign com­pa­nies vi­o­late the law will­fully,” he said, with­out re­veal­ing any

We hope the case can be­come a good ex­am­ple as we strive to pro­mote fair mar­ket com­pe­ti­tion.” Zhang Han­dong, direc­tor of the Na­tional Devel­op­ment and Re­form Com­mis­sion’s Price Su­per­vi­sion Bureau

com­pany names.

Xu said the com­mis­sion had not im­posed stricter en­force­ment on Medtronic to boost growth of do­mes­tic com­pa­nies.

“Set­ting min­i­mum re­sale prices is not le­gal per se in the United States, ei­ther,” he said.

“Medtronic failed to prove that its con­duct could be ex­empted ac­cord­ing to the cri­te­ria prescribed by China’s Anti-Mo­nop­oly Law,” he said.

Medtronic said in an email to China Daily that the com­pany ac­cepts the de­ci­sion.

It also said that it is com­mit­ted to en­sur­ing that it is in full com­pli­ance with lo­cal laws and reg­u­la­tions.

Xu said the com­mis­sion would en­hance anti-mo­nop­oly en­force­ment in the fu­ture and strengthen pric­ing su­per­vi­sion.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.