J&J, Bausch & Lomb Fined Millions over China Price Fixing

China may finally be getting serious about cleaning up corruption, at least where big foreign-owned companies are concerned, as Johnson & Johnson (JNJ), Bausch & Lomb, and others have just found out to the tune of a combined total of over $3 million in fines..

The latest crackdown, in a country long known for bribery and other corrupt practices, is over alleged price fixing in the contact and eyeglass lens markets. Other companies involved in the investigation include Essilor International SA, Nikon Corp., and Carl Zeiss Meditec AG.

In a statement on its website, the Chinese National Development and Reform Commission (NDRC) said the companies had ordered their dealers to set the price of lenses strictly in accordance with a "suggested level," and also made resellers hold similar promotions at the same time in order to maintain pricing consistency.

This comes just weeks after Mark Reilly, the former head of GlaxoSmithKline's China operations, was charged with graft. As reported on our sister publication European Medical Device Technology (EMDT), Reilly is accused of systematically bribing doctors and other hospital staff to boost the company's drug sales and, if convicted, he could face from three years to life imprisonment.

And it remains to be seen what effect, if any, this fine will have on JNJ's business in China, of which eyeglasses and contact lenses are only a part. We recently described the company's impressive overall year-on-year increase of 18 percent, to a $1.4 billion sales total in 2013.

But, according to Reuters, following the 10-month investigation of GlaxoSmithKline, that company's in-country revenues plunged 61 percent in the third quarter of 2013 and were still down by 20 percent in the first quarter of this year, from a year earlier. Official Chinese media have said that the firm may have suffered "irreparable damage" in the Chinese market.

The Reuters report continues, saying that its "legal sources and one source with direct knowledge of the GSK investigation said China's authorities might still try to charge the company itself, which could potentially put GSK's business licenses to operate in China at risk."

This is not the first time that Johnson & Johnson has been accused of bribery. Recent headlines related to the firm include:

Many other U.S. multinationals have also had troubles in recent years as well.  

Stephen Levy is a contributor to Qmed and MPMN.