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A company that supplies some of the world’s largest medical device makers with a high-performance polymer used to make spinal and other medical implants has agreed to settle �鶹��ý Trade Commission charges that it violated federal antitrust law by using long-term exclusive contracts to maintain its monopoly.

According to the FTC’s administrative complaint, Invibio was the first company to sell implant-grade polyetheretherketone, known as PEEK, to medical device makers. The FTC’s complaint alleges that two other companies, Solvay Specialty Polymers LLC and Evonik Corporation, later entered the implant-grade PEEK market, but Invibio’s anticompetitive tactics impeded them from effectively competing for customers. As a result, Invibio has managed to retain approximately 90 percent of PEEK sales worldwide.

“This case affirms that the first company to enter a market cannot rely on anticompetitive contract terms to lock up customers and box out rivals,” said Debbie Feinstein, Director of the FTC’s Bureau of Competition. “This settlement is designed to provide buyers a meaningful choice among suppliers, to open the door to price competition, and to enhance innovation.”

According to the FTC, Invibio adopted an all-or-nothing negotiation strategy for its supply contracts that required medical device makers to agree to use only Invibio PEEK for all or nearly all of their PEEK-containing implantable devices. Through these exclusive contracting practices, the complaint alleges that Invibio has been able to maintain high prices for PEEK, despite entry from Solvay and Evonik; to prevent its customers from using more than one source of supply, despite their business preference to do so; and to impede Solvay and Evonik from developing into fully effective competitors. Invibio’s practices also allegedly threatened to stifle incentives to develop new and improved forms of PEEK. The firm’s use of exclusive contracts constitutes monopolization in violation of the FTC Act, according to the complaint.

Under the proposed consent order, Invibio, Inc. and Invibio Limited, along with their corporate parent, Victrex plc, are generally prohibited from entering into exclusive supply contracts and from preventing current customers from using an alternate source of PEEK in new products. In addition, the companies must allow current customers meeting certain conditions to modify existing contracts to eliminate the requirement that the customer purchase PEEK for existing products exclusively from Invibio.

Also under the proposed order, the companies are generally barred from using pricing terms in new contracts that could effectively result in an exclusive arrangement between Invibio and a device maker. These prohibited terms include setting minimum purchase requirements; conditioning discounts or important services on a device maker’s purchase from Invibio of a specified percentage of its PEEK requirements; and providing retroactive volume discounts.

The companies also are required to establish an antitrust compliance program for their employees and officers.

Details about the case are set forth in the analysis to aid public comment for this matter. The Commission vote to issue the complaint and accept the proposed consent order for public comment was 3-0.

The FTC will publish the consent package in the �鶹��ý Register shortly. The consent agreement will be subject to public comment for 30 days, beginning today and continuing through May 27, 2016, after which the Commission will decide whether to make the proposed consent order final. or in paper form by following the instructions in the “Supplementary Information” section of the �鶹��ý Register notice.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000 per day.

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