Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC approves final order in polymer monopolization suit, explains position on exclusive contracts, (Jul 14, 2016)

By Greg Hammond, J.D.

The FTC has approved a final order that settles monopolization claims against Victrex plc, Invibio Ltd., and Invibio, Inc. (collectively, Invibio)—companies that supply some of the world’s largest medical device makers with high-performance polymer used to make spinal and other medical implants (In the Matter of Victrex plc, FTC File No. 141 0042, Dkt. C-4586).

Invibio, according to the FTC’s administrative complaint, is the dominant supplier of implant-grade polyetheretherketone (PEEK), a specialty polymer used by medical device makers to construct spinal, orthopedic, and other human implants. Solvay Specialty Polymers LLC and Evonik Corp. are purportedly Invibio’s only competitors in the sale of implant-grade PEEK. The FTC claimed that Invibio insisted on exclusive terms in its long-term contracts with medical device makers, allegedly using strategies to coerce or induce device makers to agree to the exclusive terms, such as threatening to discontinue PEEK supply or to withhold access to regulatory support.

As a result of the exclusive terms, the FTC alleged that a substantial majority of sales have been foreclosed from Solvay and Evonik, and that Invibio’s insistence on exclusive terms has been a deliberate and successful strategy to hinder its competitors and to maintain its monopoly power. PEEK purchasers also purportedly have been deprived of a meaningful choice among suppliers and have been denied the full benefits of competition, the complaint asserted.

The final order "generally prohibits Invibio from entering into exclusive supply contracts and from preventing current customers from using an alternative source of PEEK in new products," according to a statement released by the FTC. In addition, Invibio is prohibited from: imposing contract terms that would deter a customer from purchasing additional units of PEEK from a rival; conditioning price or other sales terms on a customer’s purchase of a specified portion or percentage of its PEEK requirements from Invibio; and offering volume discounts that are applied retroactively once a customer’s total purchases of Invibio PEEK reach a specified threshold.

The order, however, allows Invibio to offer volume discounts that are not retroactive. In addition, the FTC recognized that collaborative research and development efforts raise different issues. The Commission consequently left room for limited exclusive arrangements, in which Invibio and a device maker may jointly research and develop new or custom PEEK products or devices.

"[O]ur order appropriately addresses Invibio’s exclusionary conduct, provides its rivals a meaningful opportunity to compete, and opens the door for price competition, innovation, and more choice for PEEK customers," the Commission stated.

Companies: Victrex plc; Invibio Ltd.; Invibio, Inc.

News: Antitrust FederalTradeCommissionNews