Medtronic owes $382M after jury finds it violated monopoly laws

A federal jury ordered Medtronic to hand a competitor about $382 million after ruling the Minnesota-run medtech company violated anti-monopoly laws by selling technology to hospitals with unlawfully bundled discounts.

Applied Medical, a California-based surgical equipment competitor, first sued Medtronic in 2023 saying it bundled the discounted cutting-and-sealing devices with other products “in a way that is unhealthy for competition, hospitals, and patients.”

Medtronic denied the complaint, saying its pricing strategy is procompetitive and allows buyers “to get more for less, which benefits customers and patients.”

In a 10-day trial last week, a California jury found Medtronic violated federal antitrust laws as well as California law. The jury found Medtronic had contracts that illegally tied discounts on some surgical products to purchases of other devices, forcing hospitals to stick with the brand despite any differences in price.

Medtronic plans to appeal the ruling, a spokeswoman said.

Applied Medical said in a news release that the jury’s ruling should increase innovation and lower health care costs.

“This is not just a legal victory for Applied; it is a validation of fair competition,” said Gary Johnson, the group president for advanced energy at Applied. “We believe this decision marks a turning point for hospitals and health care providers struggling to dismantle complex contractual barriers that have long prevented them from access to innovation, choice and value.”

Medtronic’s stock price, which has increased in recent months, did not appear to substantially shift due to the ruling.

Common surgical devices that cut body tissue and seal blood vessels afterward were central to the case. Applied — which launched a product called Voyant in this category of “bipolar” devices in 2015 — said Medtronic controls 78% of the market with its LigaSure brand.

Medtronic includes its discounted bipolar cutting and sealing devices within a bundle of surgical equipment — a practice Applied called anticompetitive. To receive discounts for bipolar devices, Medtronic requires hospitals and groups purchasing supplies for them to buy other medical devices, the competitor added.

Applied said Medtronic is selling its bipolar devices for below cost after accounting for the bundle’s discount. The Medtronic competitor said the practice prevents hospitals from purchasing its bipolar devices because it cannot offer a low-enough price to offset the bundle’s discount.

“This is supported by hospital statements that they will not purchase advanced bipolar devices from Applied — a [less expensive] competitor — at any price because of the exclusionary discounts that would be lost on other products," the company said in the complaint.

Applied said Voyant costs 15%-20% less than competing devices and outperforms in “numerous metrics.”

The Medtronic spokeswoman said surgeons choose LigaSure because it outperforms Voyant.

“The bottom line is that we deliver the best product to our customers at the value they expect,” the spokeswoman said.

Applied said Medtronic’s competitors will be crammed into a small segment of the market for these devices if the conduct continues. The company said Medtronic violated the Sherman Act and the Clayton Act — which are antitrust laws fighting monopolistic behavior — as well as California legislation outlawing restraints to trade.

Applied’s Johnson said the jury heard “an extensive evidentiary record supporting its unanimous verdict.”