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AdC sanctions medical devices company for restricting distributors sales

Christian Fernsby |
Portugal Competition Authority AdC sanctioned Natus Medical Incorporated for restricting competition in the distribution of essential medical devices in the Portuguese market.

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The investigation, opened by the AdC in June 2020 following a complaint, revealed that Natus limited sales outside the geographic areas assigned to distributors and also defined the portfolio of products that could be sold by distributors to specific customers, from September 2018 until at least December 31, 2020.

Natus supplies the Portuguese market with medical devices for detection, tracking and treatment of common medical conditions in neonatal care, hearing impairment, neurological dysfunction, epilepsy, sleep, balance and mobility disorders.

The US-based company sells medical devices for electroencephalography, polysomnography, intraoperative monitoring, portable dopplers and others, to national distributors, who in turn resell them to retail companies, clinics, and hospitals.

The AdC’s investigation established the existence of a vertical agreement involving the supplier Natus and its two national distributors, Mundinter and Sano-Técnica. Such an agreement provided for market sharing and a ban on passive sales, with potential impact on the determination of prices and other commercial conditions to be practiced by distributors, thereby creating artificial conditions for market activity.

Specifically, Natus determined that Mundinter's commercial activity would be limited to the regions north of Lisbon and the autonomous regions of Madeira and the Azores, and that Sano-Técnica's would be limited to the regions south of Lisbon (including the latter).

Competition Law expressly prohibits the limitation and control of distribution and the sharing of markets. Such behaviour is anticompetitive and reduced competition between distributors, as well as freedom of choice of customers and consumers, preventing them from benefiting from any price differentiation between regions.

The infringement of competition rules not only reduces consumer welfare, but also damages the competitiveness of companies, therefore harming the economy as a whole.

The company benefited from a fine reduction for having admitted the practice, collaborated with the AdC and renounced from litigating in court by agreeing to the settlement procedure. The fine imposed on the company, €100,000, has since been paid.

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