The Franchise Memorandum

In a June opinion, the Eighth Circuit Court of Appeals affirmed summary judgment for C.R. Bard, Inc. dismissing an antirust action brought against it and several other defendants by a class of direct purchasers of urological catheters. Saint Francis Medical Center v. C.R. Bard, Inc., 2011 U.S. App. LEXIS 11552 (8th Cir. June 15, 2011). The plaintiff Saint Francis, a Missouri hospital and member of a Group Purchase Organization (GPO), alleged on behalf of the class that Bard, a supplier of catheters, abused its dominant position in the United States catheter market in violation of federal and state antitrust law through the use of sole-source provisions, share-based discounts, and bundled discounts in Bard’s contracts with GPOs.   

The Eighth Circuit ruled that Bard’s share-based discounts were at the heart of its sole-source contracts and the centerpiece of its bundled discounts, and that the plaintiffs’ challenge to the share-based discounts was precluded by the Eighth Circuit’s prior decisions. The court noted that, like the purchasers in the Concord Boat case, the purchasers of catheters in the present case were not required to buy all of their catheter needs from Bard, or to refrain from purchasing anything from Bard’s competitors. Nor did the GPO discount agreements contractually obligate hospitals to purchase anything from Bard. Finally, the Eighth Circuit rejected the plaintiffs’ attempt to prove two relevant product submarkets—one for Foley brand catheters sold under GPO contracts and one for intermittent catheters sold under GPO contracts—because the plaintiffs failed to show that GPOs are specialized vendors.