Zimmer, Striker Give Info on DOJ Investigation Scope
A month ago Hospital Buyer mentioned subpoenas sent by the DOJ to four orthopedics manufacturers for possible violations of antitrust laws. At the time little was publicly known about the scope of this investigation. In its release about its Q2 2006 financial results, Zimmer clarified it as far as they are concerned:
“it is the Company’s belief that the following events gave rise to the Antitrust Division’s investigation. In the fall of 2005, a single hospital conducted a bid process for orthopaedic implant pricing. As part of that process, a representative of the hospital sent an e-mail containing the hospital’s proposal to the local representatives of various orthopaedic companies, including Zimmer’s local independent distributor.
Upon receipt of that e-mail, a representative of one of Zimmer’s competitors sent an unsolicited message to the same group of competitors that received the hospital’s original message. The competitor’s e-mail proposed that the orthopaedic companies adopt a uniform pricing strategy in responding to this hospital.
When Zimmer learned of the competitor’s proposal, the Company advised its local independent distributor to reject it on behalf of both the distributor and Zimmer, which the distributor did. The written rejection stated emphatically that neither Zimmer nor its distributors will participate in pricing discussions with competitors and that Zimmer’s policies insist on full compliance with the antitrust laws.
Throughout the fall and winter, Zimmer continued to engage in its own one-on-one pricing negotiations with the hospital, and successfully concluded a new Zimmer-specific pricing arrangement in early 2006.”
Last week Stryker provided less details but said the scope of its probe had been narrowed.
July 28, 2006 Related topics: Legal & legislative, Orthopedic