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Masimo Says Appeals Court Upholds Antitrust Liability Verdict Against Tyco

Masimo Corporation (Masimo) announced that the Ninth Circuit Court of Appeals has affirmed the 2006 Federal District Court decision against Tyco Healthcare (Tyco). The court has found that Tyco, now Covidien Ltd./Tyco Healthcare., violated the antitrust laws through anticompetitive business practices related to the sale of its Nellcor pulse oximetry products.

The 2006 decision found that Tyco had unlawfully maintained monopoly power in violation of Section 2 of the Sherman Act, and that Tyco’s sole-source agreements and market-share based compliance pricing contracts were unlawful restraints of trade in violation of Section 1 of the Sherman Act and unlawful exclusionary dealing arrangements in violation of Section 3 of the Clayton Act. The Ninth Circuit also held that above-cost bundling discounts when combined with sole-source or market-share-based pricing can be anticompetitive when such practices involve a significant portion of the market. The suit was originally filed by Masimo in 2002.

Joe E. Kiani, Founder and CEO of Masimo, stated: “We hope that the results that we have fought for will help improve patient care and reduce the cost of care by improving caregivers’ access to cost-effective, innovative products. Medical products, from drugs and implantable devices to pulse oximeters, should be judged on their own merits and not based on artificial restraints on hospital purchasing placed by large manufacturers. America is struggling with rising health care costs. The best medicine for this challenge is innovation and competition. Since Masimo began our travails in the Senate and the courts to restore competition, American hospitals and care givers have begun to have more choice. That choice in pulse oximetry has not only caused pulse oximetry pricing to decrease by over 30%, but many people’s lives were either saved or improved as a direct result of their access to Masimo pulse oximeters. We hope this ruling will improve the accessibility of all life-saving products for the best care at lowest price possible for patients.”