Tyco Healthcare, the corporate ancestor of Covidien plc (NYSE:COV), agreed to pay $32.5 million to settle a class-action antitrust lawsuit filed by a Louisiana hospital and a drug company accusing it of seeking to monopolize the market for the disposal of needles and syringes.
The Natchitoches Parish Hospital Service District and Smith Drug Co. sued Tyco in the U.S. District Court for Massachusetts, accusing Tyco of entering into exclusive purchasing contracts for sharps containers with individual customers and group purchasing organizations. Under the terms of the latter deals, the GPOs allegedly agreed not to broker sharps container sales by Tyco’s competitors.
"Plaintiffs allege that these antitrust violations substantially foreclosed competition in the nationwide market for sharps containers, thereby forcing members of the Class to pay artificially inflated prices for sharps containers," according to court documents.
Tyco denied the allegations, claiming that its marketing practices were lawful, not anti-competitive and did not amount to unreasonable restraints of trade. The company also denied having monopoly power, claiming that the higher prices it charged while enjoying a 50 percent share of the sharps disposal market from 2001 to 2007 were justified "because Tyco produced a superior product and service as compared with its competitors," according to court documents.
The proposed settlement must still be approved by Judge Patti Saris and the members of the class action suit.