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?
An undertaking holding a dominant position may only be sanctioned if it engages in abusive conduct within the meaning of article 102 of the TFEU. According to settled case law, the notion of ‘abuse’ refers to the capacity of the dominant firm to influence the structure of the market where, as a result of its very presence on such market, the degree of competition is already weakened, through recourse to methods different from those that govern competition on the merits. Different actions may be considered as abusive. In the pharmaceutical sector more specifically, the Commission found that providing misleading representations with the aim of leading public authorities into error or requesting the deregistration of a marketing authorisation to prevent competition amounted to abusive conduct (ECJ, AstraZeneca v European Commission, 2012, Case C-457/10 P). Recently, the ECJ confirmed that the strategy of a dominant company, manufacturing the originator drug, to conclude settlement agreements with generic companies with a view to delaying the entry of generic drugs on the market may constitute an abuse of a dominant position (ECJ, GSK v CMA, 2020, Case C-307/18). The Commission is also currently investigating Aspen Pharma, which is suspected of having imposed excessive prices.De minimis thresholds
Is there any de minimis threshold for a conduct to be found abusive?
Not applicable.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?
With regard to market definition in abuse of dominance cases, in contrast with mergers, the Commission traditionally tends to define the relevant market at the level of the molecule (ATC5). However, the General Court held in the Servier case that, given the specificity of the pharmaceutical sector, where the drugs consumed by patients are prescribed by healthcare professionals, non-price competitive factors play an important role and should be taken into account, in addition to price competition, when defining the relevant market for a drug (General Court, 12 December 2018, Servier SAS and Other v European Commission, Case T-691/14). More recently, the ECJ also added that the generic versions of an originator medicine must be taken into account for the purposes of defining the relevant market, although the manufacturing process of the generic drug may infringe the patent of the originator company (ECJ, GSK v CMA, 2020, Case C-307/18).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?
As for other sectors, a pharmaceutical company will be found dominant if it has significant market shares, which enables it to act independently from its competitors, customers and ultimately consumers. In practice, establishing a dominant position requires the taking into account of various factors, including, but not limited to, the individual market share of the firm, its relative position compared to its competitors, the existence of barriers to entry, etc (see Communication from the Commission, ‘Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings’, paragraph 12). With respect more particularly to IP rights, their mere possession is generally not sufficient to establish a dominant position. However, in some circumstances, it may lead to such a conclusion when it actually enables an undertaking to prevent effective competition on the market (Cases C-241/91 P and C-242/91 P, Magill, 1995, paragraphs 46 and 47).
Finally, absent strong legal, organisational or contractual links, three conditions need to be met to establish a collective dominant position (Case T-342/99, Airtours plc v European Commission, 2002):
- each member of the oligopoly must know how the other members are behaving to be able to adopt the same policy;
- the members of the oligopoly must be deterred over time from departing from the policy thus adopted; and
- that policy must be able to defy challenge by actual or potential competitors or customers.
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?
It is only in exceptional circumstances that an application for the grant or enforcement of an IP right may be deemed to constitute abusive conduct. This will often be the case if such application is part of an overall anticompetitive strategy. For example, in AstraZeneca (Case C-457/10 P, AstraZeneca, 2002), the ECJ confirmed the Commission’s decision and the General Court ruling considering that the application made by AstraZeneca for a supplementary protection certificate amounted, in the case at hand, to an abuse of dominant position insofar as AstraZeneca had submitted false and misleading information to the patent offices of different member states and judicial authorities to unduly prolong its monopoly on the market and, as a consequence, prevent competition from generic manufacturers.
When would life-cycle management strategies expose a patent owner to antitrust liability?
Life-cycle management strategies may be considered anticompetitive if they fall outside normal competition on the merits. In that respect, one of the actions sanctioned in the AstraZeneca case was the withdrawal of the marketing authorisation for the reference product in some member states to delay the grant of authorisations for the marketing of generic products (Case C-457/10 P, AstraZeneca, 2002, paragraphs 123–124). Other anticompetitive strategies may include predatory pricing, exclusivity or loyalty rebates offered to customers (ie, hospitals, wholesalers or pharmacies) by the originator company when being confronted to generic or biosimilar entry.Communications
Can communications or recommendations aimed at the public, HCPs or health authorities trigger antitrust liability?
The Commission and the European courts have already considered that improper communications, in the form of misleading messages conveyed to the public, healthcare professionals or health authorities, may trigger antitrust liability (eg, the AstraZeneca and Roche/Novartis cases).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?
Yes. In that respect, according to article 82(1), second subparagraph of Regulation (EC) 726/2004, the same applicant can submit more than one application for the same medicinal product for co-marketing reasons in particular. Such behaviour may, however, be considered anticompetitive if its object or effect is to prevent or delay generic or biosimilar entry.Restrictions on off-label use
Can actions taken by a patent owner to limit off-label use trigger antitrust liability?
Yes. In particular, the ECJ ruled, in a preliminary ruling concerning the Roche/Novartis case, that practices aiming at limiting the off-label use of a product, in particular through the communication of allegedly misleading information to healthcare professionals and health authorities, could constitute a restriction of competition by object (ECJ, Roche/Novartis, 2018, C-179/16).Pricing
When does pricing conduct raise antitrust risks? Can high prices be abusive?
There are two kinds of practices relating to pricing that, when implemented by a dominant undertaking, can amount to anticompetitive conduct: on the one hand, strategies involving low prices, either in the form of predatory pricing or loyalty rebates, and on the other hand, excessive pricing.
First, for a dominant firm, predatory pricing consists of setting its prices below its costs to eliminate, discipline or deter market entry by a competitor. It is generally considered that the dominant undertaking will be able to recoup its losses by raising its prices after having eliminated competition. In Akzo (ECJ, 1991, C-62/86), the ECJ held that, in order to determine whether a dominant firm has engaged in a predatory pricing strategy, a two-step test should be conducted:
- first, if prices are set below average variable costs, they are presumed to be predatory, because they have no other economic rationale than to eliminate competitors; and
- second, if prices are set below average total costs but above variable costs, some additional elements proving the predatory intention need to be established in order to qualify an abuse under article 102 of the TFEU.
In addition, anticompetitive conduct may also be found as a result of a rebate policy, if such policy, when implemented by a dominant firm, is found to have a loyalty-inducing effect, thereby amounting to foreclose access to customers by competing firms. To date, the Commission has never sanctioned a predatory pricing or anticompetitive rebates strategy in the pharmaceutical sector. However, cases exist at the national level where competition authorities have been confronted with such issues.
Second, over the past few years, excessive pricing cases have attracted the scrutiny of competition authorities, especially at the national level, but also at the EU level. The Commission notably launched its first investigation against Aspen Pharma in 2017 to determine whether this company abused its market position by imposing excessively high prices for mature oncology drugs. In practice, the excessive and unfair nature of a price is assessed by reference to the standard two-fold test set out in the United Brands case: it consists of determining whether the difference between the costs incurred and the price actually charged is excessive, and, if the answer to this question is yes, whether the price was unfair either in itself or when compared with competing products (Case C-27/76, United Brands v Commission, 1978, paragraph 252).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?
Specific features of the pharmaceutical sector may be put forward to justify conduct that might otherwise be considered as infringing articles 101 or 102 of the TFEU. For example, the ECJ held that a pharmaceutical company holding a dominant position on the market can legitimately, to protect its own commercial interests and ensure the adequate supply of a national market, implement an allocation system and therefore refuse to sell its drugs to wholesalers suspected of being involved in parallel trade, provided that their orders are out of the ordinary (ECJ, Sot Lélos kai v GSK, 2008, C-468/06 to C-478/06).
However, public health or public safety considerations are rarely admitted as an objective justification. For example, the recent ECJ judgment in the Roche/Novartis case concerning the off-label use of Avastin in the ophthalmic field illustrates the fact that compliance with regulatory obligations relating to pharmacovigilance and safety risks does not necessarily exclude the characterisation of an anticompetitive conduct (Case C-179/16, F Hoffmann-La Roche Ltd v AGCM, 2018).
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5 June 2020.