A California blood supplier and its East Coast subsidiary filed a federal antitrust suit late last month against the American Red Cross, claiming the nation's largest blood supplier uses its clout to squelch competitors.
HemaCare Corp., a Sherman Oaks-based blood supplier, and Coral Blood Services, which collects and sells blood products to hospitals in California and 10 other states, allege that the Red Cross' anticompetitive behavior has cost them more than $25 million in lost business.
The Red Cross said it will investigate the charges and respond.
"We believe the American Red Cross has done nothing inappropriate regarding HemaCare's claims to unfair business practices, and we were surprised by this lawsuit," Red Cross spokeswoman Blythe Kubina said in a written statement. "We have been in full compliance with the law, and we will vigorously defend this lawsuit."
In their lawsuit, filed in U.S. District Court in Los Angeles, the plaintiff blood suppliers allege that the Red Cross violated Section 2 of the Sherman Antitrust Act, which prohibits monopolization. The suit also charges tortious interference, unfair trade practices and unfair competition under the California Business and Professional Code.
Specifically, the two allege that in California and other markets, the Red Cross prices some blood products, such as platelets, at below its production cost to drive out competitors while it charges significantly higher prices for the same products in regions where it has no competition.
"We believe that's unfair and illegal," said William Nicely, HemaCare chief executive officer. "The Red Cross is a fine organization. We just want them to play by the rules that are reasonable and fair and compete on a level playing field."
HemaCare and Coral Blood are seeking triple damages and injunctive relief to end the alleged anticompetitive behavior by the Red Cross.
The Red Cross provides more than half the nation's blood with annual sales of more than $1.3 billion.
No trial date has been set.