Smith & Nephew, the British manufacturer of artificial hips and knees, is being investigated by regulators in the United States for possible violations of a law intended to prevent the bribery of foreign officials.

The Securities and Exchange Commission (SEC) has told Smith & Nephew and at least four rival makers of medical devices that they are being investigated over the sale of their products outside the US under the Foreign Corrupt Practices Act.

The “informal inquiry” is thought to centre on allegations of payments made to doctors in European countries - excluding Britain - in return for them prescribing the use of certain products in patients undergoing orthopaedic or spinal surgery.

The other manufacturers being scrutinised include Zimmer, the world’s largest orthopaedic device company, Biomet, Medtronic and Stryker.

Smith & Nephew, one of the leading players in the fiercely competitive $9.5 billion (£4.7 billion) global market for artificial hips, knees and joints, said that it was cooperating but was confident that it had not acted unlawfully. An SEC spokesman declined to comment.

News of the inquiry came after a $311 million settlement by the industry last month that resolved allegations of similar practices in the US. Under the terms of a deal announced on September 27, in which the Justice Department agreed to drop an investigation, Smith & Nephew consented to pay nearly $29 million and Zimmer agreed to pay $170 million. DePuy, an arm of Johnson & Johnson, agreed to pay $85 million. The industry also agreed to adopt a common code of conduct in America, the world’s largest market for specialist orthopaedic implants.

The orthopaedics market is expanding rapidly, driven by the demands of ageing baby-boomers. The London-based Smith & Nephew, a FTSE 100 company that is worth about £5.5 billion, employs 8,800 people in 33 countries and has annual sales of about $2.8 billion, News of the investigation came as a survey indicated that surging demand for information from aggressive American regulators was making life increasingly difficult and expensive for British businesses.

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