Medtronic Faces Antitrust Suit from Colorado Co.
Louisville, Colorado-based Lenox MacLaren Surgical Corporation is accusing Medtronic, Inc., of illegally forcing it out of the market by leveraging its role as distributor of Lenox MacLaren's bone-milling product.
Lenox MacLaren alleges that the Fridley-based medical device manufacturer, through a few of its subsidiaries, obtained a monopoly through anticompetitive actions, according to a complaint filed last week in U.S. District Court in Colorado.
Although Medtronic does not comment on pending litigation, company spokesman Brian Henry said that an earlier suit brought by Lenox MacLaren in 2007 contained the same allegations-and it was dismissed in June.
“It does not appear that there is anything raised that was not resolved in the first case,” Henry said.
Lenox MacLaren is seeking unspecified damages for what it describes as a “calculated, multi-step scheme” implemented by Medtronic.
Medtronic allegedly approached Lenox MacLaren about entering into a distributor agreement for Lenox MacLaren's bone-milling product-which grinds bone fragments into the necessary consistency to be used for grafting in spinal fusion surgeries.
After becoming the exclusive distributor of Lenox MacLaren's bone mill, Medtronic loaned the product to surgeons and hospitals rather than selling it “as reasonably expected by Lenox MacLaren,” according to the suit.
Lenox MacLaren claims that the loans generated “immense interest” in its product, but they prevented actual sales. And while loaning out the bone mill, Medtronic was simultaneously developing a competing product.
“Medtronic used the Lenox MacLaren bone mill to cultivate a market for a sophisticated and novel surgical device, but knew it would have to destroy the Lenox MacLaren Bone Mill's reputation before Medtronic could introduce Medtronic's much costlier product into the market,” according to the suit.
Medtronic then allegedly “initiated a disingenuous, improper recall” and FDA investigation of Lenox MacLaren's bone mill to “tarnish the reputation” of the Colorado company.
Medtronic's voluntary recall was based on “unconfirmed reports and faulty tests” and damaged the Lenox MacLaren brand-even though the FDA's subsequent investigation found that the product was not defective, according to the suit.
Meanwhile, Medtronic allegedly sold its competing product to former customers of the Lenox MacLaren bone mill.
“The market has suffered a loss of competition, loss of a superior product, and the increased cost associated with the remaining monopolist's product,” according to the suit.
Medtronic is Minnesota's ninth-largest public company based on revenue for the fiscal year that ended in April 2009, which totaled $14.6 billion. The company reported revenue of $15.82 billion in its most recently completed fiscal year.