Competition Law in Eye Clinic Referral Agreements in China

1. Introduction

Eye-clinic referral agreements arise where an ophthalmology clinic, hospital, optometrist, optical retailer, diagnostic centre, cataract/refractive-surgery centre, or physician agrees to refer patients exclusively or preferentially to another eye-care provider.

Examples include:

• an eye clinic agreeing to send all cataract patients to one hospital;
• an ophthalmologist receiving a commission for referrals;
• a hospital requiring affiliated clinics to refer patients only to its ophthalmology department;
• an optical chain directing patients exclusively to a particular surgical centre;
• competing clinics agreeing to divide patients by disease, geography or income group;
• a dominant hospital conditioning access to equipment, specialists or diagnostic services on exclusive referrals; and
• a digital medical platform ranking or directing eye patients exclusively to affiliated clinics.

China's Anti-Monopoly Law (AML) can become relevant when these arrangements restrict competition between eye-care providers, foreclose competing clinics, facilitate market allocation, or exploit market power.

A particularly important point is that China does not appear to have a reported final antitrust decision specifically concerning an “eye-clinic referral agreement.” Therefore, the legal analysis has to be constructed from Chinese cases concerning healthcare, pharmaceuticals, medical devices, vertical restrictions, exclusive dealing, market allocation and abuse of dominance.

China's 2025 Anti-Monopoly Guidelines for the Pharmaceutical Sector also provide an important contemporary framework. They expressly address vertical agreements, exclusive dealing, market definition, refusal to deal and other restrictions in healthcare-related markets.

2. Relevant Chinese Legal Framework

A. Anti-Monopoly Law

The principal provisions are:

Article 17 — Horizontal Monopoly Agreements

Competitors cannot enter into agreements involving, among other things:

• fixing or changing prices;
• restricting output or sales;
• dividing markets or customers;
• restricting new technologies;
• jointly boycotting transactions; or
• other agreements eliminating or restricting competition.

Thus, if competing eye clinics agree:

“Clinic A will refer cataract patients and Clinic B will handle glaucoma patients,”

the arrangement may constitute customer or market allocation.

Similarly:

“Clinic A takes Beijing patients; Clinic B takes Tianjin patients,”

may constitute geographic market allocation.

B. Article 18 — Vertical Monopoly Agreements

Vertical arrangements between an upstream and downstream operator may attract scrutiny, particularly where they:

• fix resale prices;
• impose minimum resale prices; or
• otherwise restrict competitive freedom in the supply chain.

The 2025 pharmaceutical guidelines specifically explain that vertical price restrictions can be imposed through written contracts, oral agreements, notices, rebates, penalties, supply termination and monitoring mechanisms.

For eye clinics, this becomes relevant where an equipment manufacturer, pharmaceutical supplier, hospital network or dominant medical platform imposes pricing or referral conditions on affiliated clinics.

3. Is a Referral Agreement Automatically Illegal?

No.

A referral agreement is not automatically a monopoly agreement merely because it contains exclusivity.

A legitimate arrangement may exist where:

• patients voluntarily choose the specialist;
• the referring doctor receives no improper economic inducement;
• the parties remain free to compete;
• there is no market allocation;
• the arrangement is reasonably necessary for continuity of care;
• the parties do not possess significant market power; and
• competing providers remain able to reach patients.

The competition concern becomes substantially greater when the agreement is exclusive + commercially significant + supported by market power + capable of foreclosing rivals.

4. Important Forms of Anti-Competitive Eye-Clinic Referral Agreements

A. Exclusive Referral

Example:

Eye Clinic A must refer every retinal patient exclusively to Hospital B.

If Hospital B has substantial market power, the arrangement may prevent competing hospitals from accessing patients.

B. Referral Fees and Commissions

Example:

Hospital B pays Clinic A 20% of the surgical fee for every patient referred.

This creates a potential conflict between:

• clinical decision-making; and
• commercial incentives.

From a competition perspective, the critical question is whether the arrangement artificially diverts patients away from competing providers.

It may also create separate risks under China's anti-commercial-bribery and healthcare regulation framework.

C. Reciprocal Referral Arrangements

Two clinics may agree:

“You send cataract patients to us and we send pediatric ophthalmology patients to you.”

A reciprocal arrangement is not necessarily unlawful.

But if competing clinics use such an arrangement to divide customers systematically, it may resemble market allocation.

D. Geographic Referral Allocation

For example:

• Clinic A receives patients from northern Beijing;
• Clinic B receives patients from southern Beijing;
• neither clinic solicits patients from the other's territory.

Where the parties are competitors, this may constitute territorial allocation.

E. Disease-Based Allocation

Competitors may agree:

• A handles cataract;
• B handles glaucoma;
• C handles retinal disease.

This may be legitimate specialization.

But if it is actually an agreement between competing providers not to compete for particular categories of patients, Article 17 concerns become significant.

5. Market Definition

A major issue is defining the relevant market.

The relevant product/service market might be:

Broad market

“Private ophthalmic healthcare services in China.”

Narrow market

“Cataract surgery services in Beijing.”

Even narrower market

“Premium femtosecond-laser cataract surgery in central Beijing.”

The narrower the market, the easier it may be to establish substantial market power.

The 2025 pharmaceutical guidelines state that healthcare-related market definition can consider factors such as use, therapeutic function, price, treatment characteristics, patient preferences and regulatory/insurance policies.

For eye-care services, regulators could correspondingly consider:

• type of eye disease;
• treatment method;
• patient preferences;
• physician specialization;
• hospital accreditation;
• insurance coverage;
• geographic accessibility;
• waiting times;
• technology;
• equipment;
• physician reputation; and
• switching possibilities.

6. Referral Networks and Market Power

Referral systems can be particularly important because healthcare markets are heavily influenced by professional networks.

Research examining Chinese patient-referral data has identified a “rich-club” structure in which Class-III hospitals occupy disproportionately central positions in referral networks, suggesting that referral structures can contribute to oligopolistic characteristics.

This does not itself establish an AML violation, but it demonstrates why referral arrangements can have competition significance.

A dominant eye hospital with a large referral network could potentially use contractual restrictions to make it difficult for independent eye clinics to compete.

7. Exclusive Referral and Abuse of Dominance

If the hospital or eye-care network is dominant, Article 22 becomes especially important.

The 2025 pharmaceutical guidelines identify exclusive dealing/限定交易 as a possible form of abuse where a dominant undertaking requires a counterparty:

• to purchase or sell only from/to it;
• to use a designated undertaking; or
• not to transact with a specified competitor.

Such restrictions can be imposed directly or indirectly through penalties and incentives.

Applied to ophthalmology, an example would be:

A dominant eye hospital tells independent clinics that they will receive access to its surgeons, diagnostic platform or specialist referral network only if they refer all qualifying patients exclusively to that hospital.

The competition question becomes whether the restriction forecloses competing eye hospitals or clinics without sufficient justification.

8. Six Important Chinese Cases

Case 1 — Ruibang Yonghe v. Johnson & Johnson

Beijing Ruibang Yonghe Science & Trade Co. Ltd. v. Johnson & Johnson Medical (Shanghai) Co. Ltd. & Johnson & Johnson Medical (China) Co. Ltd.

This is one of China's most important vertical-antitrust cases.

Johnson & Johnson imposed minimum resale-price restrictions on a medical-device distributor. When the distributor offered a lower price in a hospital tender, Johnson & Johnson imposed sanctions and eventually stopped supplying it.

The Shanghai High People's Court held that the relevant market was the Chinese medical-suture market, Johnson & Johnson possessed substantial market power, and the RPM arrangement produced exclusionary effects. The court awarded RMB 530,000 in damages.

Relevance to eye clinics

This case is particularly valuable because it concerns medical products and hospital-related competition.

If an ophthalmic equipment supplier or dominant medical network tells clinics:

“You may participate in referrals only if you maintain our prescribed prices,”

the arrangement should receive careful AML scrutiny.

Principle: contractual restrictions in healthcare distribution cannot be insulated from antitrust review merely because they appear in ordinary commercial contracts.

Case 2 — Medtronic Medical Device Price Monopoly Case

In 2016, NDRC fined Medtronic RMB 118.52 million for vertical price restrictions involving medical devices.

Medtronic used distribution agreements, communications and other mechanisms to control:

• resale prices;
• bidding prices; and
• minimum hospital sales prices.

It also imposed restrictions concerning sales territories and competing brands. NDRC considered the restrictions capable of reducing distributor competition and increasing prices paid by patients.

Relevance

An eye-care network could similarly create competition problems if it combines:

exclusive referral + territorial restrictions + price controls.

The combination can be more problematic than any individual restriction considered in isolation.

Case 3 — Yangtze River Pharmaceutical

In the Yangtze River Pharmaceutical case, the company entered into agreements with pharmaceutical wholesalers and retailers fixing resale prices and minimum resale prices.

The conduct was supported by:

• contractual arrangements;
• price-adjustment notices;
• oral instructions;
• monitoring;
• penalties against low-price distributors; and
• third-party monitoring of online prices.

SAMR imposed a RMB 764 million fine, equivalent to 3% of the company's 2018 sales.

Relevance to eye clinics

The case demonstrates that regulators look beyond the wording of a contract.

An eye-hospital network cannot necessarily avoid antitrust liability by saying:

“The agreement does not expressly require exclusivity.”

If the network uses:

• financial incentives;
• penalties;
• monitoring;
• preferential referrals;
• withdrawal of benefits; or
• algorithmic monitoring

to force clinics into a particular competitive arrangement, regulators may examine the substance rather than merely the form.

Case 4 — Calcium Gluconate API Case

SAMR investigated three pharmaceutical distributors concerning the market for calcium-gluconate injection API.

The distributors were found to have substantial control over the relevant market and engaged in conduct involving unfairly high prices and unreasonable transaction conditions. The combined penalty and confiscation reached approximately RMB 325.5 million.

Relevance

The case illustrates the importance of bottleneck market power.

In an eye-care market, a provider might possess a bottleneck resource such as:

• a scarce specialist;
• unique surgical technology;
• a critical diagnostic platform;
• a highly concentrated referral network; or
• access to a particular hospital facility.

If that provider uses its position to impose restrictive conditions on clinics, an abuse-of-dominance analysis may arise.

Case 5 — Allopurinol Tablet Market-Allocation Case

In 2016, NDRC dealt with an antitrust case involving manufacturers and distributors of allopurinol tablets.

The competitors agreed to:

• increase prices;
• divide geographic markets;
• restrict bidding outside allocated areas; and
• maintain agreed pricing.

The arrangement included detailed territorial allocations among the competing producers. NDRC concluded that the conduct constituted agreements fixing/changing prices and dividing the market.

Relevance to eye clinics

This is highly relevant to patient allocation.

Suppose competing ophthalmology clinics agree:

Clinic A receives cataract patients from District 1; Clinic B receives cataract patients from District 2.

If the agreement is genuinely intended to eliminate competition for patients, it may resemble the geographic market allocation condemned in the allopurinol case.

The important distinction is:

legitimate referral specialization ≠ competitor market allocation.

Case 6 — Estazolam Pharmaceutical Monopoly Case

NDRC investigated Huazhong Pharmaceutical, Shandong Xinyi and Changzhou Siyao concerning estazolam.

The companies:

• coordinated concerning the API market;
• engaged in a joint refusal to deal; and
• separately coordinated prices in the finished-drug market.

The conduct restricted access to an important input and contributed to reduced competition and higher prices. NDRC imposed combined penalties exceeding RMB 2.6 million.

Relevance

This case demonstrates how upstream coordination can harm downstream competition.

In ophthalmology, an analogous situation might arise where several clinics collectively refuse to cooperate with:

• an independent diagnostic provider;
• a competing surgery centre;
• a new ophthalmologist; or
• an alternative referral platform.

If the refusal is coordinated among competitors, it could potentially constitute a joint boycott.

9. Additional Important Healthcare Antitrust Example

Grand Pharmaceutical / Wuhan Huihai

SAMR investigated Grand Pharmaceutical and Wuhan Huihai concerning norepinephrine and epinephrine APIs.

The companies agreed that Wuhan Huihai would stop selling the relevant APIs in exchange for compensation. The investigation also found abuse of dominance involving conditions imposed on downstream manufacturers, including requirements concerning resale and geographic/price arrangements.

Significance

This is important for referral arrangements because it demonstrates that Chinese enforcement can examine both agreement-based conduct and subsequent abuse of market power.

A referral arrangement therefore should not be analyzed solely under the monopoly-agreement provisions.

10. How the Six Cases Apply to Eye-Clinic Referral Agreements

11. Dominance Analysis

An eye hospital's large market share alone does not automatically establish dominance.

Authorities may examine:

1. market share;
2. ability to control prices;
3. financial and technological strength;
4. barriers to entry;
5. dependence of clinics;
6. availability of alternative hospitals;
7. switching costs;
8. access to specialist doctors;
9. control over referral networks;
10. control over diagnostic infrastructure;
11. patient loyalty; and
12. regulatory barriers.

The 2025 pharmaceutical guidelines specifically recognize factors such as control over supply chains and the countervailing bargaining power of transaction counterparties when assessing dominance.

These concepts are particularly useful for specialized healthcare markets.

12. Effect of Patient Choice

Patient autonomy is extremely important.

A referral arrangement is less problematic when:

• the patient receives several options;
• the doctor explains alternatives;
• the patient is free to select another provider;
• no financial penalty applies for choosing a competitor; and
• the clinic does not manipulate medical information to force the referral.

Conversely, a contractual arrangement that artificially prevents patients from accessing competing providers may produce stronger competition concerns.

13. Multi-Homing

Modern eye-care patients may use several providers:

• general ophthalmologist;
• retinal specialist;
• cataract surgeon;
• diagnostic centre;
• optical retailer;
• telemedicine platform.

If a dominant hospital requires affiliated clinics to refer patients exclusively to it, the arrangement can prevent multi-homing.

This matters because competing eye hospitals may otherwise depend upon referrals from independent clinics to obtain sufficient patient volume.

14. Digital Referral Platforms

The issue becomes even more significant where referrals occur through a digital platform.

For example:

An ophthalmology platform controls patient booking, referral data and appointment ranking, while also owning several eye clinics.

It might rank its own clinics first and competing clinics lower.

China's platform-economy antitrust framework recognizes that platform rules, data, algorithms and coordination mechanisms can facilitate anti-competitive conduct.

Therefore, a digital eye-referral network should consider:

• self-preferencing;
• discriminatory ranking;
• exclusive access;
• data advantages;
• switching barriers;
• algorithmic steering; and
• use of competitor-sensitive information.

15. Legitimate Business Justifications

An eye clinic may have legitimate reasons for referral restrictions.

For example:

Continuity of care

A patient undergoing complex retinal treatment may appropriately remain within one specialist network.

Quality assurance

A clinic may require referrals to providers meeting defined medical standards.

Emergency treatment

Emergency arrangements may legitimately direct patients to facilities capable of immediate treatment.

Integrated healthcare

A hospital group may coordinate specialists to provide integrated treatment.

Cost reduction

A referral network may generate efficiencies by avoiding duplicate testing.

However, the justification should be genuine, proportionate and competition-neutral.

A general statement such as:

“Exclusive referrals improve efficiency”

would not necessarily be sufficient.

16. When the Arrangement Becomes High Risk

The risk becomes particularly high when the following factors occur together:

Dominant provider

↓

Exclusive referral obligation

↓

Financial incentives/penalties

↓

Monitoring of referrals

↓

Restriction on competing clinics

↓

Large patient foreclosure

↓

Higher barriers to entry

This combination could provide a strong basis for competition-law scrutiny.

17. Compliance Measures for Eye Clinics

Eye-care businesses should consider the following safeguards:

1. Avoid competitor market allocation

Do not agree with competing clinics to divide patients or geographic territories.

2. Avoid compulsory exclusivity

Use non-exclusive referral arrangements wherever commercially and medically possible.

3. Document medical justification

Maintain records explaining why particular referral pathways are clinically necessary.

4. Avoid referral commissions that distort clinical decisions

Any remuneration should be carefully structured and legally reviewed.

5. Preserve patient choice

Patients should not be improperly prevented from selecting alternative providers.

6. Avoid retaliation

Do not terminate cooperation merely because a clinic refers some patients to competitors.

7. Audit dominant-provider arrangements

Large hospital networks should periodically examine whether referral conditions foreclose competitors.

8. Protect commercially sensitive information

Referral platforms should avoid facilitating exchange of competitors' sensitive pricing, patient-flow or strategic information.

18. Competition-Law Risk Matrix

19. Application of the Case Law

The combined lessons of the cases can be expressed as follows:

Ruibang v. Johnson & Johnson

Medical-sector vertical restrictions can be scrutinized under competition law, particularly where market power and anti-competitive effects exist.

Medtronic

Medical-device companies cannot freely impose restrictive distribution and pricing mechanisms merely through contractual arrangements.

Yangtze River Pharmaceutical

Monitoring, incentives, penalties and indirect mechanisms may demonstrate implementation of a restrictive arrangement rather than merely an innocuous contractual provision.

Allopurinol

Competitors cannot coordinate prices and divide geographic markets without creating serious horizontal-antitrust exposure.

Estazolam

Collective refusal to deal can eliminate downstream competitors and attract antitrust enforcement.

Calcium Gluconate API

Control over an essential or highly concentrated healthcare input can create significant dominance concerns where market power is exploited.

20. Conclusion

Eye-clinic referral agreements in China are not inherently prohibited. The competition-law assessment depends principally on the structure, purpose, market power and competitive effects of the arrangement.

The greatest risks arise where:

competing eye clinics divide patients or territories, or a dominant hospital/eye-care platform imposes exclusive referrals that substantially foreclose competing providers.

The Chinese cases involving Johnson & Johnson, Medtronic, Yangtze River Pharmaceutical, allopurinol, estazolam and calcium-gluconate APIs demonstrate that Chinese enforcement authorities and courts are prepared to scrutinize restrictive arrangements in healthcare markets.

The 2025 Pharmaceutical Antitrust Guidelines make the contemporary approach particularly significant: Chinese enforcement now expressly considers exclusive dealing, market definition, vertical restrictions, market power, supply-chain control and downstream competitive effects.