Invibio, the first company to sell the high-performance polymer polyetheretherketone (PEEK) used by medical device makers to construct spinal, orthopedic, and other human implants, has agreed to enter into a proposed consent agreement with the Federal Trade Commission (FTC) settling charges that it violated federal antitrust law by using long-term exclusive contracts to impede competitors and retain a 90 percent monopoly of PEEK sales worldwide.
According to a draft administrative complaint by the FTC, Invibio and Invibio Limited, along with their corporate parent, Victrex plc (Invibio) is the dominant supplier of implant-grade PEEK. Invibio’s only competitors are Solvay Specialty Polymers LLC (Solvay) and Evonik Corporation (Evonik). The complaint further alleged that:
- Solvay and Evonik each began to sell PEEK after Invibio had established market dominance, offering prices significantly below the prices charged by Invibio.
- Invibio supplies PEEK to medical device makers primarily pursuant to long-term supply contracts, which it employed both before and after market entry by Solvay and Evonik, and which included exclusivity terms.
- Invibio employed various strategies to coerce or induce device makers to accede to exclusivity terms, including threatening to discontinue PEEK supply or to withhold access to regulatory support.
- Invibio’s insistence on exclusivity terms was a deliberate and successful strategy to hinder its competitors and to maintain its monopoly power.
- In 2014, years after entry by Solvay and Evonik, and despite Solvay’s and Evonik’s lower prices, Invibio still accounted for over 90 percent of PEEK sales worldwide. A substantial majority of these sales were foreclosed from Solvay and Evonik due to the exclusivity terms in Invibio’s long-term supply contracts.
The complaint concluded that due to Invibio’s conduct, Solvay and Evonik have been hampered in their efforts to compete against Invibio, including in developing valuable customer relationships that would bolster the entrants’ reputations, and in realizing sufficient returns to justify further investment in the business. As a result, the FTC alleged that purchasers of PEEK were deprived of a meaningful choice among suppliers and denied the full benefits of competition.
Proposed consent agreement
Under a proposed consent agreement, Invibio will be prevented from entering into exclusive supply contracts and from keeping current customers from using an alternate source of PEEK in new products. The agreement also requires the following:
- Invibio must allow current customers to modify existing contracts to eliminate the requirement that the customer purchase PEEK for existing products exclusively from Invibio.
- Invibio is 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 (1) setting minimum purchase requirements, (2) conditioning discounts or important services on a device maker’s purchase from Invibio of a specified percentage of its PEEK requirements, and (3) providing retroactive volume discounts.
- Invibio must establish an antitrust compliance program for its employees and officers.
Effect of the consent agreement
The proposed consent agreement is entered into for settlement purposes only and does not constitute an admission by Invibio that it has violated the law as alleged in the administrative complaint, or that the facts as alleged in the complaint, other than jurisdictional facts, are true. The consent agreement is only effective upon execution by the parties and acceptance by the Commission. According to a press release from the FTC’s Bureau of Competition, a Commission vote to issue the administrative complaint and accept the proposed consent agreement for public comment was 3-0.
The proposed agreement package will be published in the Federal Register shortly and subject to public comment for 30 days. The FTC has made available to the public an analysis of the agreement to aid the public in commenting. After the close of the comment period, the Commission may then issue its final decision and order or withdraw its acceptance of the agreement if it deems appropriate.