Background
Facts
Comment

The Competition Protection Agency is resuming increased levels of activity. It recently initiated formal proceedings against GlaxoSmithKline (GSK), ARC Nepremicnine doo and GAPS doo, on the basis of a distribution agreement relating to pharmaceutical products.(1)

Background

As the distribution agreement could interfere with trade within Slovenia as well as with trade between EU member states, the agency will assess the potential infringement based on both Article 6 of the Prevention of Restriction of Competition Act and Article 101 of the Treaty of the Functioning of the European Union.

In the absence of local secondary legislation and guidelines on the implementation of Article 6 of the Prevention of Restriction of Competition Act, the agency will likely rely on the EU Exemption for Vertical Supply and Distribution Agreements Regulation (330/2010)(2) and the adjacent Guidelines on Vertical Restraints,(3) as both include provisions and guidance for assessing agreements which could restrict sales on a territorial or customer-group basis.

Facts

In its July 29 2015 decision to initiate formal proceedings, the agency found reasonable grounds to believe that the distribution agreement restricts competition by object, as it restricts the territory into which and the customers to which ARC and GAPS may sell GSK's products. The specific agreement regulates distribution of GSK's oral care products and prohibits both companies from either actively or passively selling products within the Slovenian and EU market without supervision by and prior authorisation from GSK.

Along with this decision, the agency requested from the public any information relating to:

  • restrictions of active and passive sales;
  • actions, criticisms, communications and reactions in case of breach of the prohibition on active and passive sales, or in case of parallel imports;
  • correspondence, guidance, actions, threats, agreements and questions relating to other distributors that tried to sell products within Slovenia, or to distributors that engaged in parallel imports; and
  • correspondence, guidance, actions, agreements, threats and questions relating to buyers of GSK, ARC and GAPS products in Slovenia that sought to buy products from another distribution source or by means of parallel import.

Comment

The procedural rules of the Prevention of Restriction of Competition Act provide that the agency must put forward all of its allegations in a statement of objections. However, the rules do not prescribe the timeframe within which this should be done.

This is not the first proceeding that the agency has conducted in the pharmaceutical market. In September 2010 a proceeding against five distributors of pharmaceuticals that were active on the Slovenian market was initiated, resulting in a decision that four of the undertakings had breached Article 6 of the Prevention of Restriction of Competition Act and Article 101 the Treaty of the Functioning of the European Union. In this respect, a separate misdemeanour proceeding must now take place, which may result in the imposition of a fine of up to 10% of the implicated undertakings' annual turnover in the preceding business year.

Although there is no official prioritisation of industries when it comes to scrutiny of the market, it seems that pharmaceutical companies are among those that most often find themselves under the spotlight of the agency.

For further information on this topic please contact Eva Škufca at Schoenherr by telephone (+386 1 200 09 80) or email (e.skufca@schoenherr.eu). The Schoenherr website can be accessed at www.schoenherr.eu.

Endnotes

(1) The agency specifies that the addressees of the decision operate under several corporate entities, namely:

  • GlaxoSmithKline plc;
  • GLAXOSMITHKLINE HOLDINGS LTD;
  • GLAXOSMITHKLINE FINANCE PLC;
  • SETFIRST LIMITED;
  • GLAXOSMITHKLINE KFT;
  • WELLCOME LIMITED;
  • GLAXOSMITHKLINE doo;
  • ARC NEPREMICNINE doo;
  • ARC-KRANJ doo; and
  • GAPS doo.

(2) April 20 2010.

(3) European Commission, "Guidelines on Vertical Restraints" (2010/C 130/01), available at www.eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:130:0001:0046:EN:PDF.

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