USA — The U.S. Federal Trade Commission (FTC) has expressed its desire to intervene in Applied Medical Resources’ antitrust lawsuit against Medtronic, as it seeks to address what it considers to be inaccurate legal arguments made by Medtronic in its motion to dismiss.
Applied Medical, based in Rancho Santa Margarita, California, filed the lawsuit earlier this year, accusing Medtronic, the world’s largest medical device company, of leveraging its dominant position to stifle competition in the U.S. market for advanced bipolar devices used in tissue-cutting and blood vessel sealing.
According to Applied Medical’s claims, Medtronic holds a substantial market share of 78% with its Ligasure device, not only in the advanced bipolar device market but also in various other surgical device segments.
Applied Medical alleges that Medtronic has engaged in anti-competitive practices by using its dominance to secure bundling agreements with individual hospital systems and healthcare group purchasing organizations, such as Premier.
These bundling agreements have allegedly resulted in millions of dollars in lost sales for Applied Medical and damaged its brand reputation, preventing it from effectively competing in the market.
Medtronic, in its defense, argued that Applied Medical failed to provide evidence of the percentage of the market supposedly affected by unlawful conduct and merely presented isolated instances where potential business was lost.
Consequently, Medtronic asserted that Applied Medical’s lawsuit lacks sufficient evidence to substantiate the claim of antitrust injury.
Additionally, Medtronic disputed the allegation of exclusionary conduct associated with the bundling agreements, asserting that Applied Medical failed to demonstrate the existence of exclusive contracts or prove that the bundled discounts offered by Medtronic are anti-competitive.
The FTC, in its proposed amicus brief, challenges Medtronic’s arguments and emphasizes the need to assess the practical effects of Medtronic’s actions rather than solely relying on formalistic distinctions.
The FTC contends that Applied Medical’s allegations should be considered in terms of whether they plausibly suggest substantial foreclosure of the market, regardless of whether a precise numerical percentage is provided.
Furthermore, the FTC questions Medtronic’s argument that other distribution channels exist and highlights that exclusive dealing can harm competition by limiting effective channels of distribution.
Regarding pricing concerns raised by Medtronic, the FTC clarifies that an antitrust plaintiff’s challenge to bundled discounts is not based on the assertion that prices are too low.
Rather, the focus is on whether the bundled discounts offered by the defendant truly benefit consumers or if they are a means to create an anti-competitive pricing structure.
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