Chinese authorities slap J&J and rivals with $3M for price fixing

Johnson & Johnson ($JNJ), Bausch & Lomb and rival companies were slapped with a combined 19.6 million yuan (about $3 million) fine by Chinese authorities for price fixing in the country's contact lens and eye-glass market, complicating the companies' growing presence in the country's device sector.

Chinese regulators investigated companies such as Johnson & Johnson, Essilor International, Nikon, and Carl Zeiss Vision Guangzhou for pricing in some areas, as well as Shanghai Weicon Optics and Hoya. The country's National Development and Reform Commission (NDRC) found that some of the eye companies had asked suppliers to sign a contract "strictly" adhering to manufacturers' suggested retail prices, Bloomberg reports. Other companies made resellers hold simultaneous promotions to maintain prices, the NDRC said in a statement on its website.

The news does not bode well for J&J, as the company has been eyeing China's $250 million vision market as a way to strengthen its foothold in the country's device sector. The Chinese government announced earlier this year that it will begin covering vision care, providing a lucrative opportunity for companies with ophthalmological products. J&J--the world's largest healthcare products maker--also said recently that it would introduce plates and screws manufactured at its Suzhou facility as local products. It signed an agreement with Nova Biomedical to supply Chinese hospitals with its StatStrip blood glucose testing system.

Last year, J&J's device sales in China grew 18% to $1.4 billion, the company said in a statement.

J&J orthopedic chairman Michel Orsinger

"More and more we realized the importance of becoming a local player," Michel Orsinger, chairman of J&J's global orthopedics group, told Bloomberg last month. "The Chinese market is about one-third composed of imported products and two-thirds driven by local products. Both markets are growing fast, but the local market is growing faster."

The recent fine also comes on the heels of stronger industry regulation from China as the country attempts to crack down on multinationals for corruption. Last month, Chinese authorities charged GlaxoSmithKline's ($GSK) former country chief and two other top executives with several counts of bribery. In August, 6 infant formula companies including Mead Johnson Nutrition ($MJN) and Danone were fined 669 million yuan for violating antimonopoly laws, Bloomberg reported.

- read the Bloomberg article
- get more from Bloomberg
- here's the NDRC statement (in Chinese)

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