Johnson & Johnson’s monopoly dispute
Johnson & Johnson has won its vertical price fixing dispute
Issue: July/August 2012
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Johnson & Johnson
vertical price fixing
In March 2008, Johnson & Johnson found Rainbow Medical Equipment & Supplies, which had been distributing J&J’s suturing products for 15 years under annually-renewed distribution agreements, was selling the products below the minimum contracted price and winning business outside its allocated region of Beijing. J&J terminated Rainbow’s distribution rights in July that year and ceased delivery in August 2008.
Rainbow subsequently filed a lawsuit alleging that J&J engaged in resale price maintenance, violating Article 14 of the PRC Anti-monopoly Law (中华人民共和国反垄断法), which prohibits setting a minimum price and claimed damages of Rmb14.4 million ($2.3 million).
Price maintenance is just one type of restriction placed on distributors. It is common in manufacturer and distributor...
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