Philips under scrutiny in France as authorities launch a criminal probe into their sleep apnea device recall
In a significant development, Paris prosecutors have launched a criminal investigation into Dutch multinational health technology company, Philips. The investigation was formally initiated on June 12, following a preliminary inquiry by the Central Office for the Fight against Environmental and Public Health Damage (OCLAESP).
The investigation centres around the recall of Philips' sleep apnea devices, which affected approximately 15 million machines worldwide in 2021. The recall was prompted by concerns about degrading polyurethane foam that could potentially cause health problems, including headaches, respiratory irritation, and potential cancer risks.
Prior to the formal opening of the investigation, French authorities had initiated an investigation against Philips in 2021 due to allegations related to product defects and consumer safety concerns. However, procedural delays and the time needed to gather sufficient evidence delayed the official opening of the investigation until June 2021.
The ongoing proceedings against Philips focus on the company's activities related to the 2021 recall. Possible charges include aggravated fraud and failure to report safety incidents. If found guilty, corporations can face fines of up to 3.75 million euros, while individuals could face imprisonment for up to seven years and fines of 750,000 euros.
The news of this criminal probe has had a significant impact on Philips' share price. Following reports of the investigation, Philips shares fell nearly 5% and were down 1% by 1400 GMT.
In France, about 350,000 machines were recalled, and the Paris Public Health division has received 104 individual complaints. It is worth noting that the court proceedings do not make allegations about the quality and safety of products currently marketed in France by Philips.
In 2022, Philips agreed to pay $1.1 billion (937.5 million euros) to settle related litigation in the United States. This settlement underscores the seriousness of the issues at hand and the potential financial implications for the company.
The investigation in France is the latest in a series of challenges for Philips, underscoring the importance of product safety and transparency in the health technology industry. As the investigation continues, Philips will be under close scrutiny, and the outcome could have significant implications for the company and the industry as a whole.
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