Justice Department opens imaging probe

July 27, 1994

The anti-trust divisionof the U.S. Department of Justice has launched an investigationinto the possibility of anti-competitive practices in the medicalimaging device industry, a spokesperson for the division confirmedlast week. The agency would not

The anti-trust divisionof the U.S. Department of Justice has launched an investigationinto the possibility of anti-competitive practices in the medicalimaging device industry, a spokesperson for the division confirmedlast week. The agency would not comment on further details ofthe investigation, declining to say which or how many vendorsare involved.

The investigation rose to the surface earlier this month whenindependent service organization (ISO) Imaging Equipment Servicesof Pittsburgh received a civil investigative demand (CID) forall its documents related to long-standing litigation with Picker(see story, page 4).

According to the CID, the department is investigating whetherthere has been conduct or proposed conduct involving "tyingproducts in the CT scanner market" and "monopolizationof (the) service market." Picker was unable to respond tothe CID prior to publication of this article.

ISOs will take heart in the language of the CID referring toa service market, said IES president Tom Quinn. Vendors, includingPicker in the IES case, have argued for a "single-brand theory"that lumps service with equipment in defining a market for anti-trustpurposes, he said.

Picker holds over a 90% share of the service work for its ownCT scanners, Quinn alleged. The vendor was previously found guiltyof tying supply of Dunlee CT tubes to service contracts in litigationwith now-defunct ISO Etek (SCAN 1/30/91 and 4/8/92). Dunlee isa Picker subsidiary.

Alleged tying of products by scanner OEMs more frequentlyinvolves outside suppliers, which have formal or informal agreementswith the scanner vendors, Quinn said.

Vendors often put their own technology into the developmentof these products and are concerned about losing this edge bymaking the products available to competitors. If a tying chargeholds, however, this means that restriction of the products isconsidered a method of restricting competition in service workthat requires the parts or software.

If access to the purchase of parts from independent suppliersis opened up, ISOs would be provided with a more level playingfield on which to compete with OEMs for the service business,Quinn said.