SAO PAULO, Jan. 31, 2017 /PRNewswire/ -- Psychemedics Brasil Exames Toxicologicos Ltda. (Psychemedics Brazil) and LaboratoriosOmega Brasil Ltda. (O. Brazil) were ordered on January 20th, 2017 to compensate Omega Laboratories, Inc. USA for losses caused by anticompetitive practices
In a recent decision, the judge of the 23rd Civil Court of Brasilia reviewed and upheld the termination of an exclusivity agreement and ordered O. Brazil and Psychemedics Brazil to indemnify Omega USA, for among other things, lost profits.
After the submission of an overwhelming amount of evidence and testimony, the judge's ruling found that O. Brazil sought out an exclusive partnership with Omega USA with false claims to represent and sell Omega USA's hair drug testing to the Brazilian market, when in fact the agreement was intended to lock out Omega USA's access to the market.
When Omega USA terminated this deceptive agreement with O. Brazil, O. Brazil filed lawsuits against them to further prevent their entrance into the market. By locking Omega USA out of the market, Psychemedics Brazil was free to operate with limited competition.
Psychemedics Brazil is the longtime partner of the United States based Psychemedics Corporation (Psychemedics USA, NASDAQ: PMD) as stated in the Psychemedics USA December 2013 press release; "Psychemedics has a very strong partner in Psychemedics Brazil, who we have worked closely with for over 15 years."1 Raymond Kubacki, CEO of Psychemedics USA, has commended Psychemedics Brazil's disproportionate market share, stating "They've done a great job in securing the business that is there… hair-testing business. They've certainly been the leader down there, no question."2
The ruling notes that Psychemedics Brazil and O. Brazil used "cartel practices," in an attempt to form a drug testing monopoly which included unenforceable and exclusive contracts with collection sites, "all with a view to limit the entry and operation of new companies in the market." The court ruling further asserts that "The practice carried out by (O. Brazil) and Psychemedics (Brazil) is nothing more than a distortion aimed at undermining competition."
Court documents revealed that O. Brazil is "controlled by the nephew of the majority partner of Psychemedics Brazil." As a result of this, Omega USA was not permitted to sell their services due to O. Brazil and Psychemedics Brazil, "reducing competition and increasing the market in favor of the latter."
The ruling states that O. Brazil must immediately "refrain from using the Omega brand in any form in all its products, services, roles and forms, including its corporate name and internet domain, under penalty of a daily fine of R $ 5,000.00 (five thousand reais)." This ruling has been made to prevent undue exploitation of and damage to the Omega Laboratories USA name, brand, and reputation.
This ruling also ordered O. Brazil and Psychemedics Brazil "to indemnify Omega Laboratories Inc (Omega USA) for loss of profits," among other damages. While the final amount has not yet been released, the ruling states that "profits relating to these examinations shall be passed on to Omega USA as compensation for lost profits." It is currently expected that this indemnification may total in the millions of dollars (US).
The ruling also indicated that there may be further investigation of Psychemedics Brazil and O. Brazil by Brazil's Administrative Council for Economic Defense (CADE).
The full decision (only available in Portuguese) can be found at
Contact:Gabriel Figueira55-11-3094 7810
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/figueira-hong-amaral-bertoni--advogados-landmark-legal-ruling-orders-psychemedics-brazil-to-compensate-omega-laboratories-usa-for-anticompetitive-practices-in-hair-drug-testing-market-300398834.html
SOURCE Figueira, Hong, Amaral, Bertoni - Advogados
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