On July 5, 2007, the French Competition Council announced its decision to accept commitments from four pharmaceutical manufacturers Boehringer Ingelheim France, Laboratoires Merck-Sharp & Dohme-Chibret, Lilly France, and Sanofi-Aventis to increase the flexibility and transparency of their delivery quotas to wholesalers in France. Such commitments were offered within the framework of a Council investigation into the validity of these quota systems with EU competition rules. The Council initiated its investigation following complaints lodged by CSRP, the French pharmaceutical distribution union, and Phoenix Pharma, a German distributor, against the alleged rigidity and lack of transparency of the manufacturers’ quota systems in France.
The Council confirmed its previous position that the implementation by pharmaceutical companies of delivery quotas to wholesalers was not a per se violation of EU competition law, Issue 2 (page 14). The Council recalled that pharmaceutical companies are entitled to select the distribution structure that best served to protect their commercial interests and allow them to fulfill their supply obligation under French legislation. In this context, a system of delivery quotas that was tailored to each wholesalers’ specific needs and performance reflected the wholesalers’ obligation to ensure optimal distribution of medicines in the domestic French market. The Council nevertheless raised concerns over the alleged rigidity and lack of transparency of the delivery quotas system. In particular, it found that the various quotas, which were based on the wholesalers’ past sales records, provided little flexibility in relation to wholesalers’ demand for increased quantities. This prevented wholesalers from adapting to market fluctuations. The Council also found that the system was detrimental to new wholesalers seeking to enter the market.
The four companies mentioned above proposed a series of commitments aimed at increasing the transparency and flexibility of their quota systems. Subject to some adaptations, the Council considered that such commitments satisfactorily address its preliminary competition concerns and closed the proceedings. Despite some variations, the commitments offered by the four manufacturers contained some common features: (i) assessment of quotas on a regular basis by using periodic market share statistics, if these statistics were available; (ii) permitting wholesalers to order beyond their predetermined quotas and to transfer unused quantities from one delivery quarter to the next; (iii) proposing ‘’packages” for new entrants based on pre-determined quantities in order to enable them to start business on satisfactory terms; and (iv) provision of detailed and regular information on the functioning of the quota system.