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?
Conducts carried out by a firm with monopoly or market power will be considered anticompetitive if they ‘have as [their] object or effect’:
- the limitation, restraint or, in any way, harm to open competition or free enterprise;
- control over a relevant market for a certain good or service;
- an increase in profits on a discretionary basis; or
- engagement in market abuse.
Is there any de minimis threshold for a conduct to be found abusive?
No, there is no de minimis threshold for a conduct to be found 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 theory, yes (see question 14), but in practice the agency tends to be less restrictive when defining a relevant market in behavioural 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 Competition Law provides that a dominant position is presumed when ‘a company or group of companies’ controls 20 per cent of a relevant market. Article 36 further provides that CADE may change the 20 per cent threshold ‘for specific sectors of the economy’, but the agency has not formally done so to date. Such an assumption provides some guidance to private parties as it would be unlikely for CADE to find a violation in the absence of market power.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?
The application for the grant or enforcement of a patent will not, by itself, expose the patent owner to antitrust liability. However, a patent owner may be found liable if it uses its patent right in an abusive manner, resulting in at least one of the effects listed in article 36 of the Competition Law (see question 20).
In 2007, Pró Genéricos filed a complaint against Eli Lilly do Brasil and Eli Lilly and Company for allegedly abusing their rights regarding Gemzar, a drug to treat cancer, to prevent generics entry. Among other alleged practices, Eli Lilly filed six different claims before the judicial courts to enforce its rights and required one additional five-year period of exclusive marketing rights given the discovery of a new use for the drug. An injunction ensured an additional protection for eight months, and for three months the pharmaceutical company Sandoz was not allowed to offer the competing drug Gemcit in the market.
In June 2015, CADE’s tribunal found that Eli Lilly abused its rights by presenting misleading information to courts, with ‘serious harm to public health and economy’. According to the agency, the drug maker did not clearly explain before courts that the request for a patent was never granted, an omission that was considered to be strategic and malicious, enabling the company to exclude competitors from the market. According to the Reporting Commissioner, ‘the company behaved in an anticompetitive manner by presenting multiple claims before several courts, omitting information to obtain artificially the monopoly in the sale of the medicine, besides unduly obtaining an exclusive right to sell the drug.’
CADE imposed a fine of 36.6 million reais. When calculating the fine, CADE doubled the expected fine in view of recidivism considering Eli Lilly’s sanction in the alleged cartel against generic drugs (Administrative Process No. 08012.011508/2007-91).
When would life-cycle management strategies expose a patent owner to antitrust liability?
Life-cycle management will not, by itself, expose the patent owner to antitrust liability. However, a patent owner may be found liable if this management comprises the use of the patent right in an abusive manner, resulting in at least one of the effects established in article 36 of the Competition Law (see question 20).
In 2008, Pró Genéricos, a local generic manufacturers association, filed a complaint against Abbott for allegedly abusing its power through patent violation claims against Cristália Produtos Químicos e Farmacêuticos regarding anaesthetics and the launch of a new antiviral drug that was not considered to be an improvement over the original drug (Administrative Inquiry No. 08012.011615/2008-08). In January 2019, the investigation was dismissed owing to lack of evidence.
Furthermore, in 2011, Pró Genéricos filed a complaint against AstraZeneca for allegedly abusing its rights as a consequence of patent violation claims against Germed/Brazil’s FDA regarding a number of blockbuster drugs, namely Crestor (cholesterol drug), Nexium (acid reflux relief drug) and Seroquel (drug for schizophrenia, bipolar disorder and major depressive disorder). AstraZeneca was accused of engaging in ring-fencing practices regarding its IP holdings to deter generic entry, as well as sham litigation practices before courts (Administrative Inquiry No. 08012.001693/2011-91). The investigation is pending.Communications
Can communications or recommendations aimed at the public, HCPs or health authorities trigger antitrust liability?
Statements with the intent to influence costumers or healthcare professionals are not per se antitrust infringements. Those actions will only be found anticompetitive if they result in one of the effects listed under article 36 of the Competition Law (see question 20).
We are not aware of a case related to this conduct being adjudicated by CADE. However, we understand, for example, that recommendations made by pharmaceutical companies that harm the credibility of an entrant competitor and its products, without having grounds on solid arguments, may constitute the creation of a barrier to entry and amount to an antitrust infringement.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?
No. Generic drugs may only be registered with ANVISA when the patent expires or is totally withdrawn by the patent holders. Individual licensing agreements or a decision by the owner of the patent to manufacture a generic drug is not sufficient to obtain the regulatory approval.Restrictions on off-label use
Can actions taken by a patent owner to limit off-label use trigger antitrust liability?
Yes. CADE has already adjudicated actions of patent holder companies to prevent off-label drugs entry, through strategic use of intellectual property in several judicial and administrative claims.
In 2015, CADE’s tribunal found that Eli Lilly do Brasil and Eli Lilly and Company abused its rights to prevent generics entry by presenting misleading information to courts in six different claims, with ‘serious harm to public health and economy’. According to the Reporting Commissioner of the case at CADE, ‘the company behaved in an anticompetitive manner by presenting multiple claims before several courts, omitting information to artificially obtain the monopoly in the sale of the medicine, besides unduly obtaining an exclusive right to sell the drug.’ CADE imposed a fine of 36.6 million reais.Pricing
When does pricing conduct raise antitrust risks? Can high prices be abusive?
Conducts such as coordination of prices between competitors, abusive increase of prices compared with the increase of costs, price of sale intentionally below of cost price and resale price-fixing may be considered anticompetitive if they result in one of the effects established in article 36 of the Competition Law (see question 20).
There is no record of a fine imposed by CADE to a pharmaceutical company owing to high prices practice. Even though CADE can theoretically rule on this matter, our understanding is that this control is done by the regulatory body, since Law No. 10,742/2003 establishes the sanctions for companies that disrespect CMED’s price regulation.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?
CADE has historically been not open to extra-economic reasons as an acceptable justification for anticompetitive practices.