Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Medical supply manufacturer allegedly used exclusionary contracts to suppress competition, (Jul 20, 2015)

By Linda O’Brien, J.D., LL.M.

Medical supply manufacturer Becton, Dickinson and Company used its dominant market share to suppress competition and maintain its monopoly for the sale of by hypodermic syringes and intravenous catheters to acute care providers, according to a hospital operator’s complaint filed in the federal district court in Brunswick, Georgia (Glynn-Brunswick Hospital Authority v. Becton, Dickinson and Company, July 17, 2015).

According to the complaint, rather than compete, Becton engaged in an integrated strategy to suppress competition and maintain its monopoly in the market for the sale of syringes and IV catheters. Further, Becton’s “minor and ineffective changes to its conventional syringes” perpetuated problems with needle sticks for hospital staff.

The hospital operator, Glynn-Brunswick Hospital Authority, contends that Becton used exclusive rebate bundling to avoid competition from rivals, such as Retractable Technology Inc., which sells patented syringes which reduce needle sticks to a minimum but has limited product lines. In addition, Becton allegedly employed contracts to penalize an acute care provider if it displays a lack of “loyalty” to Becton by not making a certain volume of purchases and/or entering into multi-year purchase contracts. Becton’s third alleged scheme was to employ sole-source contracts with medical supply distributors and group purchasing organizations (GPOs) that require them to handle and promote only Becton syringes. Also, GPOs are paid administrative fees according the sales volume of Becton products.

Fourth, Becton purportedly infringed Retractable’s patented technology to introduce its own line of retractable syringes. Becton used the infringing syringes to block sales of Retractable’s syringes and reduce the erosion of Becton’s market power. Fifth, Becton allegedly used deceptive and false advertising to disparage Retractable’s syringe products, which had the effect of suppressing sales of Retractable’s technology and prevented acute care providers from having full access to Retractable’s innovative and safer product. Lastly, Becton suppressed competition by purchasing a significant safety syringe rival, Safety Syringes, Inc., and a primary IV catheter rival, CareFusion Corporation, according to the complaint.

Becton’s market share is over 70 percent by revenue. By employing these schemes, Becton maintained its market power and used its monopoly to charge acute care providers supracompetitive prices and denied them access to innovative technology needed to combat the spread of deadly blood pathogens, the plaintiff alleged.

The case is No. 2:15-cv-00091-LGW-RSB.

Attorneys: Wallace H. Harrell (Glibert, Harrell, Sumerford & Martin, P.C.) and R. Stephen Berry (Berry Law PLLC) for Glynn-Brunswick Hospital Authority and Southeast Georgia Health System, Inc.

Companies: Southeast Georgia Health System, Inc.; Becton, Dickinson and Co.

News: Antitrust GeorgiaNews