China fines Johnson & Johnson in landmark price-fixing case

August 2, 2013 by Brad Perriello

The Chinese government fines Johnson & Johnson for setting a price floor and firing a Chinese distributor, Rainbow Medical, for breaking it.

China fines Johnson & Johnson in landmark price-fixing case

Johnson & Johnson (NYSE:JNJ) won the dubious distinction of being the 1st Fortune 500 company to be fined for price fixing in China, according to a newspaper there.

The healthcare giant was fined 530,000 yuan (about $86,456) by the Shanghai High People's Court yesterday to compensate a former Chinese distributor, Rainbow Medical, China Daily reported.

The court found that J&J set a price floor for products sold by Rainbow in their contract, later penalizing the company and finally failing to renew the contract, according to the newspaper.

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"The practice of placing a minimum resale price made Johnson & Johnson avoid price competition and confined the market competition of similar products, which kept the price of the equipment at a high level and damaged consumer interests," chief judge Ding Wenlian said, according to the report. "The market for medical instruments in China faced a lack of competition."

It's the 1st vertical monopoly lawsuit and the 1st ruling in favor of the plaintiff in an antitrust case in China, according to the newspaper.