CSL taken to court over price fixing claims
Eli Greenblat
July 17, 2009 - 1:02PM
The fallout of CSL's failed $US3.1 billion ($4 billion) takeover bid for rival plasma therapeutics firm Talecris Biotherapeutics has spilled into the courts, with a Missouri hospital suing CSL and rival Baxter over allegations they conspired to fix and raise prices for blood plasma products.
Documents filed with the United States District Court, eastern district of Pennsylvania, said the companies used key words to encourage each other to increase supply only incrementally to keep pace with demand and not to increase supply to the extent the companies actually compete for market share.
Lawyers for Pemiscot Memorial Hospital, based in Hayti, Missouri, said in a complaint filed overnight that as a result of the conspiracy, prices for blood plasma products were higher than they otherwise would have been.
Beginning in 2005 and continuing through the present, prices for blood plasma proteins have increased substantially, lawyers for the hospital said.
Baxter and Melbourne-based CSL are the world's largest makers of blood plasma products. Last month CSL abandoned a $3.1 billion bid for Talecris after the regulator, the US Federal Trade Commission, blocked the plan.
The FTC said the merger would leave the two largest companies with 80 per cent of the US market for blood plasma products.
In the FTC's complaint against CSL it claimed the blood plasma company had engaged in a range of market fixing actions to deliberately cut the supply of blood plasma products to the market and push up prices.
In a damning 11-page complaint from the FTC, the four sitting commissioners set out their case for blocking CSL's proposed takeover of Talecris, arguing the industry already operated as a "tight oligopoly".
Among a string of allegations the commission said suppliers such as CSL, Talecris and Baxter have learnt they can maximise profits if each firm does its part to pull back on supply to avoid driving prices lower.
"Firms closely monitor each other, collecting and cataloguing an extraordinary wealth of timely competitive information, to ensure that all are engaging in desired behaviour," the commission statement said.
"CSL and Baxter, in particular, have focused on preventing oversupply of IVIG [intravenous immunoglobulin] and plasma.
"Baxter and CSL have developed sophisticated oligopoly models to estimate and predict changes in supply and demand.
"Firms also engage in signalling - i.e, intentional sharing of competitive information for purposes of securing accommodating reactions from other firms."
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