Opinion ID: 3051840
Heading Depth: 2
Heading Rank: 1

Heading: The Underlying Antitrust Claims

Text: In December 2005 and January 2006, Bamberg, DVSS, and Niagara independently filed suit against J&J, claiming they were direct purchasers of J&J’s endomechanical products. Their complaints allege that J&J’s conduct is an unreasonable restraint of trade in violation of § 1 of the Sherman Act, 15 U.S.C. § 1, and an unlawful exclusive dealing in violation of § 3 of the Clayton Act, 15 U.S.C. § 14. The plaintiffs further allege that J&J monopolized or attempted to monopolize the relevant markets in violation of § 2 of the Sherman Act, 15 U.S.C. § 2. More specifically, the plaintiffs assert that J&J impermissibly leveraged its monopoly power in sutures to create a monopoly in the endos market. They contest J&J’s “market share purchase requirements,” under which J&J enters into contractual arrangements that condition discounts and rebates on a buyer purchasing the bulk of its products from the company. This scheme, plaintiffs suggest, was coercive and resulted in artificially inflated prices. Plaintiffs also object to the bundled discounts offered to hospitals that purchase both sutures and endos from J&J. They allege that these bundled discounts are exclusionary because of J&J’s dominance in the sutures market. II. Bamberg’s Contracts with J&J and the Distributor Bamberg is a member of “Premier,” a GPO which negotiated agreements with J&J on Bamberg’s behalf. Those agreements set the pricing options for sutures and endo products. Bamberg then executed its own contracts with J&J pursuant to the terms of the Premier agreements. Those contracts noted that Bamberg would order products either directly from J&J or from an authorized distributor of J&J’s products. Bamberg 4668 DELAWARE VALLEY v. JOHNSON & JOHNSON chose the latter option and selected as its distributor Owens & Minor (“O&M”). Bamberg entered into a separate contract with O&M, which specified the terms of purchase for J&J products. Accordingly, Bamberg’s contract with J&J did not result in the procurement of any goods directly from J&J. Bamberg did not pay J&J directly for any goods, and J&J did not ship any goods directly to Bamberg. The distributor, O&M, is not owned or otherwise controlled by J&J. O&M’s distributorship agreement with J&J specified that if products were sold to a J&J contract customer, the distributor would pay the manufacturer the set price that was negotiated between J&J and the GPO. In turn, Bamberg’s contract with O&M permitted the distributor to charge a markup percentage. Accordingly, the final contract price paid by Bamberg was equal to the price negotiated under the Premier agreement with J&J, plus O&M’s markup. Indisputably, Bamberg paid O&M directly for its orders, and O&M delivered the products to Bamberg.