On March 21, 2007, the Italian Competition Authority accepted and made obligatory Merck’s commitment to grant free licenses to allow the manufacture and sale in Italy of the active ingredient finasteride and related generic drugs two years before Merck’s exclusive rights were due to expire. Finasteride is one of the most important drugs for the treatment of hypertrophy of the prostate and is also marketed as a hair loss product.

This decision brings to a close proceedings brought by the Authority in relation to Merck’s alleged abuse of its dominant position in the production and sale of certain active pharmaceutical ingredients. The investigation started in February 2005 when the Authority began looking into Merck’s refusal to give certain companies licenses to produce ingredients of its medicines so that they could sell them in countries which were not patent protected.

The Authority stated that Merck’s commitment to grant free licenses of finasteride in Italy would foster competition in the market and involve reductions in retail prices and costs for EU national health systems. During the investigation period, the Authority also adopted interim measures requiring Merck to grant licenses for the manufacture of the active ingredient imipenem cilastatina, which is used for the treatment of serious hospital infections.

The Authority stated that the action against Merck should be seen in the wider context of its attempt to encourage companies to adopt commitments aimed at improving market conditions, competition and consumer choice, in particular by promoting more widespread use of generic products