China’s NDRC Fines Medtronic $17M for Price Fixing

China’s National Development and Reform Commission fined Medtronic’s Shanghai enterprise $17 million for price fixing.

The NDRC took issue with Medtronic for setting minimum wholesale prices for its cardiovascular and diabetes products with its distributors in China, violating Article 14 of China’s anti-monopoly law.

China’s NDRC took the position that Medtronic, the country’s leading medical device maker with about $1.5 billion in China sales in 2015, was using contracts with distributors to tighten its control on the market and drive up prices.

Medtronic Spokesman Fernando Vivanco confirmed that Medtronic was investigated by China’s NDRC related to the country’s anti-monopoly law and he said in an interview that the company accepts the NDRC’s decision. 

An attorney in Shanghai said that the practice of setting a minimum price is considered one of five types of price manipulation in China. She said that the practice “deprives sub-tier distributors from setting their own prices” and that the government is trying to reduce the price of high-value consumables such as medical devices.

Device makers in China can supply directly to hospitals or go through distributors, but the more common practice is to sell directly to hospitals via collective tendering. — Tamra Sami