Ninth Circuit Affirms Antitrust Verdict Against Tyco in Pulse Oximetry Market

The Ninth Circuit has upheld a jury verdict against Tyco (now known as Covidien) for anticompetitive sole source agreements and market share discounts.  Masimo Corp. v. Tyco Health Care Group, L.P., No. 07-55960, 2009 WL 3451725 (9th Cir. Oct. 28, 2009).  The appellate court affirmed the District Court’s post-trial decision, which struck part of the jury verdict but left a significant liability finding intact.

The Ninth Circuit agreed with the trial court that Tyco had engaged in anticompetitive conduct in the market for “Pulse Oximetry Systems,” which are non-invasive sensors sold to hospitals that make use of red and infrared light to measure blood oxygen levels through the skin.

In March 2005, a jury found 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 District Court vacated the jury’s liability finding in connection with certain bundled discounts, as well as its finding of some $420 million in trebled damages.  After a bench retrial on damages, the District Court found Tyco liable for $14.5 million, trebled under the Clayton Act.

On appeal, the Ninth Circuit agreed with the trial court that while the evidence was sufficient to support the jury verdict that the sole source and market share agreements violated the antitrust laws, the evidence did not support the jury verdict that Tyco’s bundling agreements violated Section 2 of the Sherman Act. click here for more »