China court rules against Johnson & Johnson in anti-monopoly lawsuit
US health care company Johnson & Johnson has become the latest global firm accused of misconduct in China after a court ordered it to pay damages to a local distributor in a lawsuit brought under an anti-monopoly law.
US health care company Johnson & Johnson has become the latest global firm accused of misconduct in China after a court ordered it to pay damages to a local distributor in a lawsuit brought under an anti-monopoly law.
The ruling by a Shanghai court expands use of the five-year-old law and comes amid a flurry of investigations of possible bribery, price-fixing and other misconduct by global firms on the mainland.
The court, in a ruling issued on Thursday, said J&J was guilty of "vertical monopoly" for setting minimum prices for surgical sutures.
It said that caused the mainland distributor to lose potential sales and awarded 530,000 yuan (HK$670,000) for lost profits.
J&J was accused of improperly setting minimum sale prices to maintain its image as a premium brand, according to a court announcement. It said J&J has since stopped imposing that condition on distributors.
Mainland regulators are stepping up scrutiny of the activities of global firms and have intervened in some cases to require changes to proposed acquisitions and business practices. Lawyers watch anti-monopoly rulings closely because there have been few such court cases. That has raised uncertainty among global firms eager to expand in the world's second-largest economy.
Business groups welcomed the 2008 law as a step toward clarifying operating conditions on the mainland. Since then, they have said it was enforced more actively against foreign firms than their local rivals.
The central government is especially sensitive to consumer prices at a time when it faces pressure to contain surging living costs.
Mainland news reports said the J&J case was the first time a court ruled against a Fortune 500 firm in an anti-monopoly case.
Last month, two dairies - Nestle and FrieslandCampina - announced price cuts after authorities launched an investigation into possible price-fixing by foreign milk suppliers. They also were accused of using vertical monopolies to raise prices.
Also last month, police detained four employees of GlaxoSmithKline on charges they bribed doctors to prescribe the British pharmaceutical firm's drugs.
