Domestic CPAP Businesses

1368th Commissioners' Meeting (2018)

Case:

Domestic CPAP businesses was complained for violating the Fair Trade Law by engaging in joint monopolization

Keyword(s):

Monopoly, continuous positive airway pressure devices

Reference:

Fair Trade Commission Decision of January 24, 2018 (the 1368th Commissioners' Meeting)

Industry:

Manufacture of Other Medical Instruments and Supplies (3329)

Relevant Law(s):

Articles 15 and 19 of the Fair Trade Law

Summary:

1. A private citizen filed with the FTC a complaint that the prices of continuous positive airway pressure (hereinafter referred to as CPAP) devices in the country were not transparent and normally three times more expensive than prices overseas. In addition, it was also complained that getting CPAP reports interpreted required payment of large fees, and CPAP device suppliers would jointly exercise pressure and cut supply on medical equipment retailers selling the devices at lower prices. To understand whether any violation of the Fair Trade Law was involved, the FTC initiated an ex officio investigation into the matter.
2. Findings of the FTC after investigation:
   A.According to related regulations in the country, CPAP devices could not be sold on the Internet and domestic prices lacked transparency. The price of a fixed-pressure CPAP device marketed by the importer complained about was about 40% higher than the price (transportation included) quoted on websites in foreign countries, nowhere near the three-fold difference suggested in the complaint. The supplier provided an import customs declaration for automatic-pressure CPAP machines to prove its unit import price was high, already close to the price quoted for the same product on websites overseas. Moreover, the supplier had to pay importation expenses and also offered pre-sale and after-sale services such as a trial period and warranties which were not available to people purchasing the product from foreign websites. Therefore, it was inappropriate to compare the retail prices in the country with the prices indicated on foreign websites. Meanwhile, a number of CPAP device businesses expressed that the marketing approaches adopted in and outside the country were dissimilar and the difference of the market scales was considerably large. Hence, although price difference existed, it was not a result of any concerted action.
   B.Another finding of the investigation indicated that a medical equipment business had violated the Pharmaceutical Affairs Act by marketing CPAP machines on the Internet and was reported to the Department of Health of Taipei City Government. That was inconsistent with the complaint accusing CPAP suppliers of pressuring medical equipment retailers. Furthermore, the marketing patterns and conditions, pricing strategies, the technologies and functions of products and promotional activities of CPAP machine suppliers were not entirely the same. The prices were not consistent and there was no evidence that a mutual understanding on joint decision of prices had been established among related businesses. Nor had business activity restrictions been imposed. In other words, with available evidences, the FTC could not conclude the businesses at issue had engaged in any conduct in violation of regulations set forth in the Fair Trade Law against concerted actions. The FTC also visited and interviewed related businesses as well as requested retailers to provide their statements and evidences for the FTC to find out whether CPAP machine suppliers had restricted resale prices. Contracts signed between CPAP machine suppliers and retailers were inspected as well. Eventually the FTC did not discover any resale price restriction imposed.
   C.Furthermore, regarding CPAP treatment report interpretation fees, the FTC’s investigation did not show any excessively high fees had been charged or anything involving competition regulations in the Fair Trade Law had occurred on the market.