Anticompetitive agreementsAssessment framework
What is the general framework for assessing whether an agreement or concerted practice can be considered anticompetitive?
The general framework for the assessment would be the transposition into Romanian law of article 101(1) of the Treaty on the Functioning of the European Union (TFEU) - more specifically, article 5 (1) of the Competition Law.
In essence, an agreement, express or tacit may be considered anticompetitive to the extent that its object or effect is to restrict, prevent or distort competition on the Romanian market (or a part of it), in particular those aimed at:
- fixing, directly or indirectly, the selling or purchase prices, as well as any other terms of trading;
- limiting or controlling production, trading, technological development or investments;
- allocating distribution markets or input sources;
- imposing unequal terms for equivalent services to trading partners, thus causing a competitive disadvantage to some of them;
- conditioning the conclusion of contracts by imposing upon partners the acceptance of certain clauses stipulating additional services that, either by their nature or by commercial usage, do not relate to the scope of such contracts;
- participating, in a concerted manner, with rigged bids in auctions or any other forms of competitive tendering; and
- eliminating competitors from the market, limiting or preventing access to the market and the free exercise of competition by other undertakings, as well as agreements not to purchase from or sell to certain parties without reasonable justification.
To what extent are technology licensing agreements considered anticompetitive?
While the case law of the Competition Council is rather poor in dealing with cases of technology licensing agreements, in accordance with general principles, the authority would primarily examine the terms and conditions of the technology licence agreement so as to determine whether they may be considered anticompetitive, either by object or effect; for example, if they would enable the parties to reduce or exclude competition from the market and thus create artificial market entry barriers.
If the agreement comprises certain anticompetitive restrictions but the parties believe they could make an efficiency claim deriving, for example, from the benefits to final consumers, the Council will perform an assessment of the efficiencies versus the restrictions, as per article 5(2) of Competition Law (the transposition of article 101(3) TFEU).
Article 5(2) creates a framework for individual exemption, to the extent the licence agreement is found to meet the following four cumulative conditions:
- it must contribute to improving the production or distribution of goods or contribute to promoting technical or economic progress;
- consumers must receive a fair share of the resulting benefits;
- the restrictions must be indispensable to the attainment of these objectives; and
- the agreement must not afford the parties the possibility of eliminating competition in respect of a substantial part of the products in question.
To what extent are co-promotion and co-marketing agreements considered anticompetitive?
Co-promotion and co-marketing agreements, if they are not concluded between competitors, would not normally raise any competition law concerns.
However, if such agreements are concluded between competitors, they may be considered anticompetitive to the extent they comprise restrictions of competition (eg, a territory allocation of customers) or are likely to generate an anticompetitive effect on the market, by preventing or limiting competition or creating market entry barriers.Other agreements
What other forms of agreement with a competitor are likely to be an issue? How can these issues be resolved?
Any type of agreement between competitors is susceptible to raising antitrust concerns and should be carefully reviewed from a competition law perspective so as to identify any restrictions of competition that may amount to antitrust infringements, including joint venture agreements, research and development agreements, and joint commercialisation agreements.
In the pharmaceutical sector, the Competition Council dealt with a couple of bid-rigging cases, the most relevant one being the insulin investigation closed in 2008, when the authority fined a producer and three of its wholesalers on account of participation in a market-sharing arrangement, including bid-rigging practices.
Once an agreement with a competitor has been concluded and the agreement comprises antitrust restrictions likely to amount to an infringement of competition law, the remedies would be relevant only for the future and thus not fully efficient (eg, the immediate termination of the agreement or exclusion of anticompetitive restrictions). However, this would not exclude the antitrust risk for the period when the agreement was in force.
Confidentiality provisions would not be of any use, as they would not prevent the parties from making use of whistle-blower leniency provisions. Also, in the event of a dawn raid, the Competition Council would be allowed to review and seize the agreements, despite any confidentiality clauses, those not being enforceable towards the Council in the case of an investigation.Issues with vertical agreements
Which aspects of vertical agreements are most likely to raise antitrust concerns?
Normally, the vertical restrictions most likely to give rise to antitrust concerns in the pharmaceutical sector would be as follows:
- resale price maintenance, agreed between the supplier and the wholesaler, which would be prohibited irrespective of the market share of the parties involved and thus could not be block exempted; and
- export bans. For example, the Council sanctioned Bayer and Baxter as well as their distributors on account of the export ban clauses found in their agreements with distributors. The companies in question tried to defend (unsuccessfully) by arguing that the clauses in question were agreed long before Romania’s accession to the EU, and the parties argued that they were never enforced in practice and did not produce any anticompetitive effects on the market.
To what extent can the settlement of a patent dispute expose the parties concerned to liability for an antitrust violation?
Since most pharmaceutical companies that are active on the Romanian market belong to multinational groups of companies and have obtained their patents at EU level, it would be less likely for a patent dispute settlement to take place in Romania.
However, if the Competition Council was to analyse such cases, it would likely look at it mainly from a potential abuse of dominance perspective. This is likely to arise if the generic company enters into a settlement with the innovative company, having as object or effect the delaying of generic entry past the date of patent expiry, in exchange for the payment of a consideration to the generic company.
In the case law of the Competition Council there is one precedent, in 2010, when the authority examined a complaint filed by a generic company (Actavis) in connection with the allegedly abusive conduct of an innovative company (Novartis), but the complaint was dismissed as lacking grounds for the finding of dominance.
In essence, the alleged abuse of the innovative company consisted of filing an action to request the annulment of marketing authorisations of the generic company, on account of patent infringement and later on proposing to enter into a settlement agreement. The settlement proposed by the innovative company implied that the generic company, among other conditions, would agree not to submit for price approval until 90 days prior to the expiry of the patent. The generic company refused the settlement and filed a complaint with the Competition Council, claiming an abuse of dominance.
In its decision on this matter (Decision No. 3/2010), the Competition Council considered that an agreement between the innovative company and the generic one, whereby the generic company undertakes not to file for price approval until 90 days prior to the patents’ expiry date, would not be capable of delaying generic entry and thus there would be no sufficient grounds for an abuse of dominance to be found.
The main considerations retained by the authority in support of its decision were the following:
- 90 days is the maximum legal term for the MOH to issue a price approval;
- the approval of producer prices for generic products does not confer the right to commercialise the generic product as long as the corresponding innovative product is still under patent protection; and
- even if the generic company is not allowed to commercialise the product, the price decision obtained by the generic company before the patent expiry date may trigger the decrease of the innovative product’s reimbursement price.
To what extent can joint communications or lobbying actions be anticompetitive?
In a highly regulated sector such as the pharmaceutical one, it is often required for the pharmaceutical companies to engage in joint communications, especially regarding the very frequent legislative changes that impact their activity in Romania in a very significant manner. This is usually done though trade associations, such as ARPIM and APMGR, which should have a clear set of rules in place regarding the meetings and interactions between competing companies.
The principles to be followed by such trade associations are the usual ones and include, for example, ensuring that adequate measures are in place to prevent the disclosure of competitively sensitive information between members, disseminating information only in aggregate form and only if historic, with no coordination of commercial behaviour, etc.
In 2013, the Competition Council issued a guide describing best practice recommendations on petitioning activities, which sets out the general principles.Public communications
To what extent may public communications constitute an infringement?
Public communications may constitute an infringement to the extent that it could amount to an exchange of sensitive information that would be likely to enable the coordination of competitive behaviour between the competitors on the market (exchange of information on discount policies).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?
Exchanges of sensitive information should not necessarily be more likely, despite the transparency obligations deriving from the regulatory framework (in any case, the information required under transparency obligations is normally in aggregate form and historic).
For clarity, payments under clinical trials are not made public in Romania, as per the current approach of the competent authority to the legal framework.