Foreign companies should carefully study the antitrust law while operating in China, a senior official with the nation's top antitrust enforcer said after it announced on Wednesday the first penalty in the medical instrument manufacturing industry.
The China unit of U.S. company Medtronic, a leading supplier of high-end medical devices such as an insulin pumping system, was fined 119 million yuan ($17.3 million), or 4 percent of the company's annual sales in China last year, for eliminating market competition in the medical industry, according to the National Development and Reform Commission.
Investigations found that the company had fixed resale prices through monopoly agreements with its dealers.
Compared with the record-high 6.088 billion yuan fine imposed on Qualcomm in 2014, the amount is at the medium level of the penalty system, which ranges from 1 to 10 percent of the sales of the investigated company in the previous fiscal year.
The company is the first in the medical device industry to face such a fine, which came after the commission investigated several major medical companies before announcing the decision, according to Zhang Handong, director of the commission's Price Supervision Bureau.
The decision was made after nearly one year of investigation and after more than 10 visits for on-site evidence collection, according to Zhang.
"Fixing the resale price is among the leading causes that drive up the prices of high-end medical devices to unusually high levels in China," said Zhang. "We hope the case can become a good example as we strive to promote fair market competition."
Zhang said the commission treats all market players equally, without discrimination toward foreign or domestic companies, while conducting anti-monopoly enforcement actions.
Xu Xinyu, a veteran commission official who was in charge of the investigation in the landmark case against Qualcomm in 2014, said that foreign companies should study local antitrust law and comply with rules while operating businesses in China.
"Some foreign companies violate the law willfully," he said, without revealing any company names.
Xu said the commission had not imposed stricter enforcement on Medtronic to boost growth of domestic companies.
"Setting minimum resale prices is not legal per se in the United States, either," he said.
"Medtronic failed to prove that its conduct could be exempted according to the criteria prescribed by China's Anti-Monopoly Law," he said.
Medtronic said in an email to China Daily that the company accepts the decision.
It also said that it is committed to ensuring that it is in full compliance with local laws and regulations.
Xu said the commission would enhance anti-monopoly enforcement in the future and strengthen pricing supervision.
In a document released earlier this year, the NDRC said it will pay close attention to antitrust investigation of the pharmaceutical, medical equipment, automobile and industrial raw materials industries.
