China’s pricing department, the National Development and Reform Commission (NDRC), announced on December 7 that they had imposed a 118.5-million yuan (US$18.3m) fine on the Shanghai branch of Medtronic, a leading international medical instrument supplier based in the US, for monopoly practices in the diabetes, cardiovascular diseases and after-treatment sectors.
From 2014, the company, according to Chinese media reports, reached oral and written agreements with its sales agents and platforms on a resale price threshold for these medical instruments, and forced them to implement the prices by performance appraisal and an elimination system. Meanwhile, they strengthened the monopoly by limiting sales targets and restricting agents from selling opponents’ products.
Given the lack of market competition for expensive medical materials and instruments on the Chinese mainland, the NDRC believed that Medtronic’s moves limited the normal competition between different brands and kept the price of these instruments high, which has violated the rules of the market economy and increased the burden on patients.
Medtronic Shanghai has accepted the punishment and already moved to rectify the issue. This is China’s first punishment issued for a medical instrument monopoly.
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