Monopoly prices for medical devices pose threat to the interest of patients

of US company Medtronic, a leading supplier of high-end medical devices, was fined 119 million yuan ($17.3 million) for monopolistic practices, the National Development and Reform Commission announced on Wednesday. Beijing News commented on Saturday:

The Chinese antitrust authorities issued their first punishment in the medical device industry to Medtronic, which was fined for fixing prices by seeking monopoly agreements with its dealers.

The company even attempted to thwart the official investigation. During a “surprise” visit by Chinese anti-monopoly enforcers, the company’s China branch refused to cooperate and stopped the investigators from taking any action for over six hours.

Impeding an investigation undoubtedly constitutes a serious violation of China’s Anti-Monopoly Law, so do the companies’ monopolistic practices in the country’s medical instrument manufacturing market, which is now the world’s second largest.

Price-fixing can cause bigger damages to fair competition than a technological monopoly. In Medtronic’s

case, its China unit had resorted to behind-the-scene operations to make illicit gains and grab market share, according to the antitrust investigation that lasted for almost a year.

Such tricks have played a major role in driving up the prices of high-end medical devices to unusually high levels in China, posing a grave threat to the interests of not just other market players but also patients.

Not just the manufacturers and their local dealers, some hospitals were reported to have a stake in the sales of imported medical equipment. Their conspiracy comes at the cost of patients. The Medtronic scandal should be a wake-up call to China’s top antitrust enforcer, who has pledged to pay closer attention to antitrust investigation of the pharmaceutical and medical equipment industries.