J&J wins first dispute of its kind in China

Johnson & Johnson has won the first-ever monopolistic dispute between a producer and dealer on the Chinese mainland, with the court rejecting the dealer's compensation request of 14 million yuan ($2.21 million), said Shanghai No.1 Intermediate People's Court.

The US pharmaceutical company, which had cooperated with Ruibangyonghe Trading Company for 15 years, renewed its relationship with the Chinese dealer in 2008, signing a new contract regulating distribution areas and a minimum resale price for Johnson & Johnson products.

But several months later, the pharmaceutical giant claimed that its dealer had been under-selling its products and halted supplies to Ruibangyonghe, an action the dealer claims cost it 14 million yuan. Furious, the Beijing company sued Johnson & Johnson to recover the sum.

Ruibangyonghe argued that Johnson & Johnson had restricted the resale price of its products, in violation of the nation's anti-monopoly laws - permitting the dealer to adjust its prices accordingly.

The court, however, sided with Johnson & Johnson, saying that a lack of evidence failed to prove the US company was guilty of monopolistic behavior, or that its loss was caused by such behavior. Moreover, while the contract restricted the dealer's resale price, the clause did not guarantee that it was part of a monopolistic agreement, the court said.