Anticompetitive agreements

Assessment framework

What is the general framework for assessing whether an agreement or concerted practice can be considered anticompetitive?

Article 101 of the TFEU prohibits agreements, decisions by associations of undertakings, and concerted practices that have the object or effect of preventing, restricting, or distorting competition within the internal market. This particularly includes agreements that directly or indirectly lead to price-fixing, market/customer sharing, limiting of production, innovation or investment, or imposing unfair commercial conditions on trading partners. Agreements or concerted practices can be exempted if they fulfil the conditions of article 101(3) of the TFEU, in other words, if they:

  • improve production/distribution of goods/services or technical/economic progress;
  • do not go beyond what is necessary for such improvement;
  • do not eliminate competition on a substantial part of the market; and
  • grant a fair share of the benefits to consumers.
Technology licensing agreements

To what extent are technology licensing agreements considered anticompetitive?

Technology transfer (TT) agreements are generally considered as pro-competitive under EU law. The framework for analysis is set forth in Regulation No. 316/2014 on the application of article 101(3) of the TFEU to categories of TT agreements (TTBER) and its corresponding guidelines. The TTBER provides a safe harbour for TT agreements provided that:

  • the market shares of the parties do not exceed 20 per cent (combined) when the agreement is concluded between competing undertakings, or 30 per cent (on their respective markets) when the parties do not compete; and
  • the agreement does not include any hardcore restriction (ie, price restrictions, market or customer allocation, restriction on the licensee’s ability to exploit its own technology, etc.)

R&D agreements and specialisation agreements are covered by specific exemptions under, respectively, Regulation No. 1217/2010 and Regulation No. 1218/2010.

Co-promotion and co-marketing agreements

To what extent are co-promotion and co-marketing agreements considered anticompetitive?

Co-promotion (promotion of the same drug under the same brand by two different pharmaceutical companies) and co-marketing (promotion and sale of the same drug sold under two different brands by two different pharmaceutical companies) agreements fall within the wider category of commercialisation agreements. These types of agreements are very common in the pharmaceutical sector and generally considered as pro-competitive. For instance, the Commission found that an agreement between Pfizer and EISAI according to which Pfizer would discontinue its pipeline product and handle the production and marketing of EISAI’s own medicine, Aricept, could be exempted under article 101(3) of the TFEU (COMP/36.932, Pfizer/ESAI, 2000). However, co-promotion and co-marketing agreements may entail certain restrictions of competition, for example if they allow an anticompetitive exchange of commercially sensitive information between actual or potential competitors or if they are entered into with the disguised aim to delay market entry of a competing drug. Regarding the latter case, the Commission sanctioned a co-promotion agreement between Janssen-Cilag and Sandoz as in fact amounting to pay-for-delay (AT.39685, Janssen-Cilag/Sandoz, 2013). Sandoz had agreed not to launch a generic of Fentanyl on the market in exchange for a fee, covering a series of promotional activities; the Commission found that that the fee was not justified by the activities and largely exceeded the profits Sandoz could expect by entering the market. As a consequence, the Commission considered that the agreement restricted competition and fined the companies €16 million.

Other agreements

What other forms of agreement with a competitor are likely to be an issue? How can these issues be resolved?

Any agreement or concerted practice with an actual or potential competitor involving an exchange of commercially sensitive information is likely to be found anticompetitive, as it will artificially increase transparency in the market and facilitate collusion. According to the Commission guidelines on horizontal cooperation agreements, an information is considered as commercially sensitive when it is strategic (prices, customers, R&D programmes, etc.), individualised, actual, not-public and covers a sufficiently large part of the market. To mitigate the risk, undertakings should ensure that a minimum amount of information is exchanged, and that the exchange of information is justified by a legitimate commercial reason.

Issues with vertical agreements

Which aspects of vertical agreements are most likely to raise antitrust concerns?

Vertical agreements are less likely to raise competition concerns. Regulation No. 330/2010 on the application of article 101(3) of the TFEU to categories of vertical agreements (VBER) provides for a safe harbour, as long as:

  • the parties are not competing undertaking and their respective market shares do not exceed 30 per cent;
  • the agreement does not include hardcore restrictions (resale price maintenance, market sharing, restriction on passive sales, etc).

When an agreement falls outside the safe harbour provided for by the VBER, it must be assessed according to the Commission’s guidelines on vertical restraints.

In the pharmaceutical sector, provisions aiming to prevent parallel trade, in particular, differentiated price systems or restrictions on sales, should be assessed carefully. The ECJ notably confirmed that restrictions to parallel trade infringe competition, although they may be exempted under article 101(3) of the TFEU if they produce sufficient efficiencies to outweigh the restriction (C-501/06 P, GSK, 2009).

Patent dispute settlements

To what extent can the settlement of a patent dispute expose the parties concerned to liability for an antitrust violation?

Following its 2009 sector inquiry, the Commission identified some patent settlements as potentially anticompetitive; namely, the agreements concluded between potential competitors, limiting market entry of a generic and including a value transfer, (ie, pay-for-delay agreements). For instance, in the Lundbeck case, the Commission found that agreements between the originator and generic manufacturers of Citalopram, under which the generic manufacturers received money in exchange for staying out of the market, restricted competition by object (AT.39226, Citalopram, 2013). The assessment of the Commission was confirmed by the General Court (T-472/13, Lundbeck, 2016) and the case is currently pending before the ECJ. Similary, in Servier, the Commission fined Servier and several generic manufacturers for having entered into illegal pay-for-delay agreements. The General Court, however, partially annulled the Commission’s decision, notably with respect to one agreement between Servier and Krka where: (i) there was a genuine patent dispute; and (ii) the Commission did not demonstrate that the licence granted to Krka was not concluded at arm’s length (T-684/14, Krka, 2018).

Joint communications and lobbying

To what extent can joint communications or lobbying actions be anticompetitive?

The prohibition laid down in article 101(1) of the TFEU also applies to associations of undertakings such as trade associations. For instance, the Commission fined the French Order of Pharmacists for imposing minimum resale prices on its members (AT.39510, Ordre national des pharmaciens, 2010). Intermediaries (brokers, trade association, lobbies, etc) can be sanctioned if they facilitate the setting up of a cartel, for instance by organising meetings or contributing to the dissemination of information, even if they are not themselves active on the relevant market (C-194/14 P, AC-Treuhand, 2015).

Public communications

To what extent may public communications constitute an infringement?

Public communication is normally not considered as anticompetitive but pharmaceutical companies must, however, be careful. In particular, communication of misleading information to health authorities, healthcare professionals and the public in general, in a context of scientific uncertainty, has recently been qualified by the ECJ as a restriction of competition by object (Case C-17916, Roche-Novartis, 2018).

Exchange of information

Are anticompetitive exchanges of information more likely to occur in the pharmaceutical sector given the increased transparency imposed by measures such as disclosure of relationships with HCPs, clinical trials, etc?

The increased transparency requirements imposed on the pharmaceutical industry could lead to increased risks of collusion and information exchanges. However, transparency rules usually provide for exceptions in the case of commercially sensitive information and compliance with transparency rules should not be considered as an infringement of article 101 of the TFEU. For example, Regulation No. 536/2014 on clinical trials (application scheduled for 2020), which provides for reinforced transparency obligations with regard to clinical trial data via their publication on an EU database, allows limitations to disclosure to protect commercially confidential information. Similarly, the EFPIA Disclosure Code, which requires all EFPIA members to disclose transfer of value to healthcare professionals and healthcare organisations, allows aggregate disclosure when individual disclosure is not legally permitted. In practice, the Commission has never prosecuted a competition infringement related to disclosure obligations to HCPs and the general public.