The political agenda pursued by the Commission is clearly demonstrated by a quote of EU Commissioner for Competition, Margrethe Vestager:
“Giving European patients and healthcare systems access to affordable and innovative medicines is one of Europe’s main challenges and objectives. The report […] provides key insights into the valuable work that competition authorities across Europe are doing to ensure that pharmaceutical markets help achieve this goal. It is important that we continue giving a high priority to our work in this area.”
Anti-competitive agreements and abuse of dominance
The Report provides an impressive overview of antitrust cases led by the EU Commission and the national competition authorities of the 28 Member States (“NCAs“) which uncovered several infringements of Article 101 and 102 TFEU:
- In total, EU competition authorities concluded 29 antitrust cases against pharmaceutical companies. In some instances, this resulted in hefty fines, totalling over EUR 1 billion.
- They also investigated well over 100 additional antitrust cases in pharmaceuticals without adopting a fining decision.
Whilst anti-competitive practices such as bid rigging in tenders or market sharing can be found in almost any branch and are of course on the radar of the authorities, sector specific conduct such as “pay-for-delay” has also been frequently targeted.
In this highly complex and dynamic environment, EU competition authorities aim at promoting access to affordable and innovative medicines. Active competition law enforcement is regarded as key towards delivering more choice to patients and cheaper products.
As regards mergers, EU competition authorities raised concerns in 19 out of the 80 mergers in the pharmaceutical sector which were notified to them. As the pharmaceutical sector is particularly driven by innovation, competition authorities vigilantly analyse the effects on R&D departments when assessing the competitive effects of mergers. Because mergers can thwart innovation competition, authorities often intervene when the combined entity lacks incentives to innovate.
Insofar as M&A transactions can potentially reduce competitive pressure, merger control can play a decisive role in preserving price competition – thereby protecting patients and the health insurance system from paying excessive prices for medicines.
Outlook: Pharmaceutical sector remains under scrutiny
According to the Commission’s press release, the antitrust and merger cases cited in the Report show that the pharmaceutical sector continues to require close scrutiny by competition authorities. As competition law enforcement plays an important role to safeguard competition on prices and to stimulate innovation.
In particular the rivalry between originators and generics, also in the area of biological drugs, is one that will continue to be carefully monitored by antitrust authorities. The Commission emphasized that “authorities must remain vigilant and pro-active in investigating potentially anti-competitive situations, including where new practices used by companies or new trends in the industry are concerned, such as the growing relevance of biosimilars.”
Pharmaceutical companies should continue carefully observing EU competition law enforcers’ activities. Having your up-to-date antitrust compliance in place, monitoring current developments and making sure it is followed is key when competition enforcers keep scrutiny high.
Authored by Marc Schweda and Christian Ritz