Johnson & Johnson loses anti-trust lawsuit in Shanghai

By Zhao Yinan

Johnson & Johnson lost an anti-trust lawsuit in Shanghai on Thursday concerning the distribution and sale of its products.

The verdict overturns a ruling by a lower court last year.

The healthcare giant is expected to pay 530,000 yuan ($86,490) in compensation to Rainbow Medical Equipment & Supplies Co, a medical appliance trader in Beijing who used to retail medical sutures and other products of Johnson & Johnson Medical (China) Ltd.

The Shanghai High People’s Court agreed with the plaintiff who said Johnson & Johnson’s dealership contract, which set a minimum resale price for distributors, was anti-competitive.

It is the first anti-trust lawsuit in China in which the plaintiff won since the Anti-Monopoly Law went into effect in August 2008.

Both parties signed a distributor contract in 2008.

This restricted Rainbow to sell only within the distribution area designated by Johnson & Johnson and set a minimum price.

The healthcare company sent a warning to Rainbow in April 2008, after the trader won a bid for medical suture lines at a Beijing hospital at a price below what the contract allowed. Rainbow’s dealership was later annulled.