Anticompetitive unilateral conductAbuse of dominance
In what circumstances is conduct considered to be anticompetitive if carried out by a firm with monopoly or market power?
Under article 2 of the Spanish Competition Act 15/2007 (SCA), any abuse by one or more undertakings of their dominant position in all or part of the national market is prohibited. Dominance is not in itself prohibited, but if an undertaking holds a dominant position, it has a special responsibility to ensure that its conduct does not distort competition. Abusive behaviour consists mainly of exclusionary conduct (predatory pricing, exclusive dealing, refusal to supply or tying) and exploitative abuses (excessive pricing or discrimination between customers). In its 2003 Cofarca decision, the Spanish Competition Authority for Markets and Competition (CNMC) fined a cooperative of pharmacists for abusing its dominant position in a regional market of wholesale distribution of medicines by imposing minimum purchase obligations on its members. In July 2017, the CNMC closed the proceedings initiated against IMS Health for an alleged infringement of article 2 of the SCA and article 102 of the TFEU by means of a commitment decision, whereby IMS undertook to eliminate certain clauses in the contracts with Spanish pharmaceutical wholesalers that allegedly foreclosed competitors (most favoured nation clause; obligation to inform IMS of the intention to supply data to IMS’s competitors; right to terminate the contract if the wholesaler supplied data to IMS’s competitors or directly competed with IMS) and not to increase, above current levels, the reduction in the price paid to wholesalers for the supply of data in case the wholesaler also provided such data to third parties. In July 2017, the CNMC closed the infringement proceedings initiated against Aspen and its Spanish distributor, Deco Pharma, for alleged abusive practices by Aspen (refusal to supply and application of excessive prices) and an alleged agreement between Aspen and Deco Pharma to limit distribution, further to the European Commission’s decision to initiate proceedings against Aspen, which, pursuant to article 11(6) of Regulation (EC) 1/2003, relieved the CNMC of its competence to apply EU competition provisions to the practices at issue.
In February 2019, the CNMC started infringement proceedings against a pharmaceutical company for an alleged abuse of dominant position for hindering the entrance of new competitors to the market for radiopharmaceuticals. In April and May 2019, the CNMC started two separate investigations into alleged abusive exclusionary strategies in the supply of immunosuppressant medicines and inhalers to healthcare services and hospitals. In November 2019, the CNMC started infringement proceedings in relation to an alleged exclusionary abuse in the market of combined hormonal contraceptives.De minimis thresholds
Is there any de minimis threshold for a conduct to be found abusive?
Pursuant to article 5 of the SCA, the prohibition of abuse of a dominant position set forth in article 2 of the SCA does not apply to conduct of minor importance that is not capable of significantly affecting competition. However, there is no specific threshold below which conduct is not deemed abusive.Market definition
Do antitrust authorities approach market definition in the context of unilateral conduct in the same way as in mergers? If not, what are the main differences and what justifies them?
In merger cases, the CNMC has in general defined the relevant market relying on the ATC3 level as the starting point (although on occasions it has relied on other ATC levels, including ATC5). In general terms, when assessing unilateral conduct, the CNMC tends to define markets more narrowly. For instance, in a decision of 13 February 2014, in the context of a possible abuse of a dominant position by Pfizer, the CNMC defined the market based on the fourth ATC level. It remains to be seen how in pending cases the CNMC will take into account the recent Servier judgment, which sets limits on the tendency of competition authorities to define the relevant market narrowly in abuse cases.Establishing dominance
When is a party likely to be considered dominant or jointly dominant? Can a patent owner be dominant simply on account of the patent that it owns?
The market share is the first element analysed when assessing dominance together with other factors, such as the market shares of competitors, historical volatility of such market shares, entry barriers, countervailing buyer power and the level of regulation, a key element in the pharmaceutical sector.
For many years, the Spanish competition authority has held that, in view of the heavy regulatory burdens, and in particular the intervention of prices by the public authorities and the buyer power of the National Health System (NHS), pharmaceutical companies are not in a dominant position even if their market share in a given product market is clearly above 50 per cent. These findings have been made in the context of complaints against manufacturers for refusing to supply extraordinary quantities of pharmaceuticals to wholesalers. More recently, the authority no longer seems to exclude the possibility of dominance. In particular, in the Sedifa–Grufarma case, the CNC stated that the fact that the activity of pharmaceutical companies is regulated and their ability to act may be limited in certain aspects does not impede a possible finding of dominance (which was not established in the case at issue).
In the Pfizer/Xalatan case, the CNMC found that Pfizer held a dominant position because of the exclusivity granted by the patent on the latanoprost active substance. However, a patent holder should be held dominant only if no substitutes of the product in question exist on the relevant product market. In its judgment of 7 December 2015, the Provincial Court of Madrid refused to find dominance based only on ownership of a patent.IP rights
To what extent can an application for the grant or enforcement of a patent or any other IP right (SPC, etc) expose the patent owner to liability for an antitrust violation?
There are no precedents in Spain where an application for a grant of a patent has been considered as an abuse. In the Pfizer/Xalatan decision of 13 February 2014, the CNMC closed the proceedings initiated against Pfizer in relation to the prolongation of Xalatan’s patent, holding that no infringement of article 2 of the SCA or article 102 of the TFEU had been proved. In its reasoning, the CNMC referred to the AstraZeneca judgment (C-457/10), although it did not expressly invoke the differences between Pfizer’s and AstraZeneca’s respective conduct to conclude that Pfizer’s conduct was not abusive. The CNMC also seems to have taken into account the fact that Pfizer did not send communications to Spanish authorities and generic producers concerning the prolongation of its patent, it only initiated judicial proceedings against one generic producer that it then withdrew and generic products were marketed in Spain during the period of the patent’s prolongation. Interestingly, the CNMC’s investigation was prompted by an investigation of the Italian competition authority concerning essentially the same product and similar practices, which, however, terminated with an infringement decision confirmed by the Italian State Council.
Regarding the enforcement of patents by bringing actions for patent infringement, in the 1998 Wellcome case (R 315/98), the Spanish competition authority found that the criminal proceedings for patent infringement initiated by Wellcome against the generic producer Combino Pharm and the company that manufactured generics on behalf of Combino Pharm were aimed at protecting alleged patent rights that Wellcome deemed infringed by these two companies. It found that this practice could not be deemed as an unfair competition act by reason of the publicity given by the press to the proceedings at issue and in any event did not appreciably affect competition contrary to the public interest. In the 2011 Novartis decision, the CNC closed proceedings against Novartis for an alleged abuse of a dominant position by bringing an action for patent infringement against the generic company Actavis, which it subsequently withdrew. The CNC held that Novartis’ legal suit and request for preliminary measures could a priori seem excessive or disproportionate in light of Actavis’ conduct (Actavis had obtained marketing and price authorisation for a generic product), but there were no indications of an abusive exercise of the right to judicial protection, to the extent that Novartis’ withdrawal of the legal suit was not the result of an agreement or settlement between the parties. In November 2019, the CNMC started infringement proceedings in relation to an alleged abuse consisting of the use of legal and judicial actions to hinder the entrance of new competitors to the market for combined hormonal contraceptives.
When would life-cycle management strategies expose a patent owner to antitrust liability?
There are no decisions of the Spanish competition authority on life-cycle management strategies. However, the AstraZeneca judgment (C-457/10) is likely to be followed as a precedent. The Pfizer/Xalatan case also provides the first example of the CNMC’s position towards practices aimed at prolonging patent protection.Communications
Can communications or recommendations aimed at the public, HCPs or health authorities trigger antitrust liability?
Although there are no precedents of the Spanish competition authority, it cannot be excluded that certain communications or recommendations by dominant pharmaceutical companies to the public or HCPs raise antitrust concerns, in line with the precedents of other national competition authorities that held that the implementation of a communication strategy aimed at doctors and pharmacists to denigrate generics constituted an abuse.Authorised generics
Can a patent owner market or license its drug as an authorised generic, or allow a third party to do so, before the expiry of the patent protection on the drug concerned, to gain a head start on the competition?
In principle, there are no incentives for a patent holder to license or market a generic before the expiry of its patent, since this could lead to a reduction in the price of the patented medicine as a result of the application of the reference price system.Restrictions on off-label use
Can actions taken by a patent owner to limit off-label use trigger antitrust liability?
There are no precedents of the Spanish competition authority in relation to actions taken by a patent holder to limit off-label use. However, following the Avastin judgment of the CJEU (C-179/16), an agreement between the patent holder and an undertaking marketing a competing product to disseminate misleading information on adverse reactions resulting from off-label use of one of the competing products, with a view to reducing the competitive pressure exerted on the other product, would be deemed a restriction of competition by object. It cannot be excluded that a similar practice could be deemed abusive if carried out unilaterally by a dominant undertaking.Pricing
When does pricing conduct raise antitrust risks? Can high prices be abusive?
Pricing conduct of dominant pharmaceutical companies is capable of raising antitrust risks, as shown by the current EC investigation in the Aspen case and precedents of other national competition authorities that sanctioned predatory pricing as well as excessive prices. To establish the existence of excessive prices, the Spanish competition authority is likely to use price-cost comparisons, possibly in conjunction with other comparisons (comparison with prices of the product under investigation over time, prices in other member states or prices of other products, when relevant). The CNMC started infringement proceedings against Aspen and its Spanish distributor for alleged excessive prices, although it finally closed the file following the initiation of the EC proceedings in the same matter.Sector-specific issues
To what extent can the specific features of the pharmaceutical sector provide an objective justification for conduct that would otherwise infringe antitrust rules?
For many years, the Spanish competition authority and courts have recognised that the specific features of regulation may exclude the existence of dominance on the part of pharmaceutical companies, although more recently, in the Sedifa–Grufarma case, the CNC did not exclude the possibility of dominance on this basis. However, in the same case, the CNC held that the alleged abusive conduct – refusal to supply to certain wholesalers – should be assessed taking into account the legal and economic context, in particular, the partial liberalisation of the price of medicines following the 2006 Medicines Act, which prompted a restructuring of the pharmaceutical companies’ distribution networks for efficiency reasons. The CNC finally held that even assuming dominance, the conduct at issue was not abusive since it was objectively justified by this restructuring aimed at increasing efficiency. In its decisions of 19 January 2017 and 30 August 2018, the CNMC relied on the state’s intervention on prices of medicines to come to the conclusion that the undertakings’ pricing systems did not infringe article 1 of the SCA.
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7 June 2020