Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Johnson & Johnson’s contact lens resale pricing policy unlawful: Maryland AG, (Mar 8, 2016)

By Greg Hammond, J.D.

Johnson & Johnson Vision Care, Inc. has violated the Maryland Antitrust Act by establishing a minimum retail price for the sale of contact lenses to consumers, according to a complaint filed by Maryland Attorney General Brian E. Frosh (Maryland v. Johnson & Johnson Vision Care, Inc., February 29, 2016).

The complaint alleges that Johnson & Johnson responded to eye care professionals’ requests that the company limit competition from “discounters” by implementing a resale price maintenance policy fixing minimum retail prices for all retail sellers of Johnson & Johnson contact lenses. After Costco objected to the policy, however, Johnson & Johnson and Costco engaged in negotiations, resulting in Johnson & Johnson revising its resale price maintenance policy to allow “club stores”: (1) to offer a $50.00 store gift card to customers who purchased a year’s supply of lenses; and (2) to offer an in-store credit of 10 percent off the purchase price, in the form of a gift card to the customer, when less than an annual supply of lenses is purchased.

The Maryland Attorney General claims that Johnson & Johnson’s participation in agreements with Costco that establish a minimum price for the sale of contact lenses constitute an unreasonable restraint of trade or commerce in violation of the Maryland Antitrust Act. “According to documents obtained during an investigation, customers are paying 35 percent more for a monthly supply of Acuvue lenses based on a pricing strategy imposed on club membership discount stores,” Attorney General Frosh announced.

Frosh consequently seeks a permanent injunction, barring Johnson & Johnson’s implementation or enforcement of a resale price maintenance agreement in Maryland; civil penalties in the amount of $100,000; and attorney fees and costs of suit.

Companies: Johnson & Johnson Vision Care, Inc.

News: Antitrust MarylandNews