United Surgical Sues CooperVision for Allegedly Undercutting Market

Alleging violations of antitrust laws, United Surgical Corp. said Monday that it has filed a $10-million lawsuit against CooperVision Inc., accusing that company of undercutting the market for ophthalmic surgical equipment.

In its suit, filed Thursday in Los Angeles federal court, the Irvine-based company accused CooperVision, based in Palo Alto, of selling its wares at “unreasonably low prices” to stifle competition.

The suit also alleges that CooperVision wrecked an initial public offering that United Surgical had hoped would raise $3.5 million.

Gene Elsbree, a spokesman for CooperVision, declined to comment on the suit Monday, saying company officials had not yet seen it.

According to the suit, CooperVision violated the Sherman Anti-trust Act by selling its equipment--used to remove cataracts--at “less than the normal market value” and even by giving equipment away to surgeons who would agree to buy artificial human lenses from CooperVision.

Because of the alleged restraint of trade, United Surgical has been able to capture “only about 6% of the market for ophthalmic surgical equipment,” the suit states.

Lawrence Haimovitch, an analyst with the San Francisco office of Swergold, Chefitz & Sinsabaugh Inc., said Monday that the market for such equipment is worth about $25 million a year, of which CooperVision controls an estimated 80% share.

“CooperVision is a very aggressive company that fights like mad to keep its market share,” Haimovitch said. “And this is a market that they want to continue to dominate.”

CooperVision also is accused in the suit of “maliciously interfering” with an initial public offering that 3-year-old United Surgical had proposed for January with a goal of raising $3.5 million for stepped-up marketing efforts.

“The offering has been shelved,” Terry Herbeck, United Surgical’s president, said in an interview Monday.

“We believe that it had to do with CooperVision and its interference with the offering. We have evidence to support that.”

Herbeck said CooperVision officials obtained a copy of a preliminary prospectus for the offering and wrote disparaging comments about United Surgical company in it. Copies of the annotated prospectus, he said, then were circulated among United Surgical’s customers.

CooperVision reported net earnings of $9 million on $460 million in revenues for the 12 months that ended Oct. 31. In contrast, United Surgical expects to post net earnings of $250,000 on about $3.2 million in revenues for its fiscal year that ends today, Herbeck said.