Economic law case study Johnson & Johnson Shanghai, Johnson & Johnson China's behavior constitutes resale price maintenance, and why

This morning at 9:30 a.m., the final judgment in the case of the dispute over the vertical monopoly agreement between Beijing Ruibang Yonghe Science and Trade Company Limited (hereinafter referred to as Ruibang) and Johnson & Johnson (Shanghai) Medical Devices Company Limited and Johnson & Johnson (China) Medical Devices Company Limited (the two companies are hereinafter referred to as Johnson & Johnson) was underway in the Courtroom No. 12 of the Shanghai Higher People's Court. The Shanghai High Court reversed the judgment of the original trial and ruled in the second trial that the appellee, Johnson & Johnson, should compensate the appellant, Ruibang, for the economic loss of RMB 530,000 within 10 days from the effective date of the judgment, and rejected the rest of Ruibang's litigation requests.

After the judgment was pronounced, the agent of Ruibang Company immediately said, "This final judgment reflects the principle of reasonable analysis in the judicial interpretation, and the court is very professional. At 10:15 p.m. after the verdict, the Shanghai High Court held a media conference to introduce the case to dozens of media and answered questions from the media.

So far, the monopoly case, which has attracted a lot of attention from domestic and foreign academics and the industry, has finally been settled after three years of trial at two levels of courts. On the fifth anniversary of the implementation of the anti-monopoly law, the case became the first effective judgment in China's history in which the plaintiff won the case, which also indicates that the plaintiff, who is in a relatively weak position in monopoly disputes in the future, will be able to be protected by law as long as it can prove its case adequately.

The monopoly lawsuit between Ruibang and Johnson & Johnson began in 2008 with a bidding process for the sale of Johnson & Johnson's medical sutures. Reebok is a distributor of Johnson & Johnson's medical sutures, anastomoses and other medical device products, and the two sides have a 15-year distribution relationship, with the distribution contract signed annually. in January 2008, Johnson & Johnson and Reebok entered into the "2008 Distribution Contract" (hereinafter referred to as the Distribution Contract) and attachments, which stipulates that Reebok shall not sell products in the relevant areas designated by Johnson & Johnson in the Axiomatic Sutures Division. During this period, Reebok was not allowed to sell the products at a price lower than that stipulated by Johnson & Johnson.

In March of that year, Reebok won the tender for the sale of Johnson & Johnson's medical sutures at Peking University's People's Hospital with the lowest bid. in April, Johnson & Johnson personnel warned Reebok about its low bidding behavior.

In July, Johnson & Johnson canceled Reebok's distribution rights at Fu Wai Hospital and Plastic Surgery Hospital on the grounds that Reebok had lowered its prices privately. from August 15, Johnson & Johnson stopped accepting orders for Reebok's medical suture products. in September, Johnson & Johnson stopped supplying suture products and anastomoses altogether. in 2009, Johnson & Johnson did not renew the distribution contract with Reebok. after 2009 Johnson & Johnson modified the distribution agreement and abandoned the contract. After 2009, Johnson & Johnson amended the distribution agreement to waive the minimum resale price restriction that had been in place. During the 15 years of cooperation between Reebok and Johnson & Johnson, the price of the medical suture products in question remained virtually unchanged.

On August 11, 2010, Ruibang sued the court, requesting Johnson & Johnson to compensate for the economic loss of more than 14 million yuan caused by the enforcement of the monopoly agreement to penalize Ruibang's low bidding behavior.

On May 18, 2012, the Court of First Instance issued a judgment, holding that Ruibang's evidence was insufficient to prove that the agreement on the restriction of the minimum resale price had caused the harms of exclusion and restriction of market competition, and that it could not prove that the agreement had caused the harms of exclusion and restriction of market competition.

The Court of First Instance ruled that Ruibang's evidence was insufficient to prove that the agreement on minimum resale prices had caused the harm of excluding and restricting market competition, and that it could not be deemed to constitute a monopoly agreement as stipulated in the Anti-Monopoly Law.

The company appealed, and the Shanghai High Court held three hearings in which the company and Johnson & Johnson launched a new round of verbal sparring in the courtroom, and commissioned Gong Jiong, a professor at the University of International Business and Economics, and Tan Guofu, a professor at the Shanghai University of Finance and Economics, two well-known economists, to provide the court with expert advice. The lawsuit has attracted a great deal of attention from domestic and foreign insiders, and has been dubbed "China's first vertical monopolization case.

After the verdict was announced today, Prof. Huang Yong, a well-known domestic anti-monopoly law expert, deputy head of the expert advisory group of the State Council's Anti-Monopoly Committee, and director of the Competition Law Center of the University of International Business and Economics (UIBE), said after being informed of the verdict, "This is a landmark judgment. This is a landmark judgment, with more than 44,000 words and more than half of the judgment being devoted to insightful argumentation, indicating that after the United States and the European Union, Chinese courts not only have sufficient professional ability to adjudicate anti-monopoly cases, but also have developed their own distinctive adjudication concepts.