Anticompetitive agreementsAssessment framework
What is the general framework for assessing whether an agreement or concerted practice can be considered anticompetitive?
According to article L420-1 of the CC, which is similar to article 101 of the Treaty on the Functioning of the European Union (TFEU), prohibited anticompetitive agreements are those aiming at or likely to have the effect of preventing, restricting or distorting competition in a market, regardless of any intermediation of a company in the group established outside France. For instance, they would:
- limit access to the market or the free exercise of competition by other undertakings;
- prevent price-fixing;
- limit or control production, opportunities, investments or technical progress; or
- share out the markets or sources of supply.
To what extent are technology licensing agreements considered anticompetitive?
Such agreements are assessed in accordance with the rules laid down in EC Regulation No. 316/2014 on technology transfer as well as in the guidelines on the application of article 101 of the TFEU to technology transfer agreements 2014/C 89/03.
Licensing agreements would consequently not be deemed anticompetitive, subject to the conditions that the parties’ market shares meet the thresholds and that they do not contain hard-core restrictions as per the Regulation.Co-promotion and co-marketing agreements
To what extent are co-promotion and co-marketing agreements considered anticompetitive?
French legislation does not contain specific provisions applicable to co-promotion and co-marketing agreements. Thus, the FCA’s review of such agreements follows European legislation and practice.
The European Commission defined co-promotion and co-marketing agreements in its Final Report on the pharmaceutical sector inquiry (8 July 2009) as being the following:
- co-promotion agreements: (joint) commercialisation of a specific medicinal product by both parties under one single trademark; and
- co-marketing agreements: commercialisation of a specific medicinal product by both parties under different trademarks.
In practice, the assessment of such contracts under competition law is often problematic as the relationships they create between the parties may fall under the scope of various regulations and guidelines (vertical and horizontal agreements, R&D, transfer of technology agreements).
The content and nature of the relationships created between the parties have to be carefully scrutinised to determine under which set of competition rules a particular agreement may fall into and, consequently, assess its validity under competition law, in particular if they imply exchanges of information between the parties.Other agreements
What other forms of agreement with a competitor are likely to be an issue? How can these issues be resolved?
Agreements focusing on R&D create a collaborative relationship between two companies in which they contribute to the overall discovery process by using the parties’ combined expertise to deliver outcomes and often contain a transfer of technology.
Other agreements (such as consignment stock agreements, agreements focusing on the transfering of an MA or the underlying documentation) could also contain direct or indirect restrictions such as price-fixing or territorial restrictions.
In spite of confidentiality provisions protecting information exchanged between parties, such agreements should not contain provisions obstructing the application of competition rules so that they may not be upheld in the case of antitrust infringements.Issues with vertical agreements
Which aspects of vertical agreements are most likely to raise antitrust concerns?
The FCA uses the principles set out in EC Regulation No. 330/2010 of 20 April 2010 to apply French competition law to vertical agreements, if the relevant market share does not exceed the 30 per cent threshold. The negative effects on the market of vertical agreements may entail the following:
- foreclosure of other suppliers or other buyers by raising barriers to entry;
- price-fixing (see Decision No. 07-D-35, Sirona Dental Systems);
- reduction of interbrand competition; and
- limitations to the freedom of consumers to purchase goods or services in a member state.
By applying such principles in the pharmaceutical sector, the FCA recognises under certain circumstances, in particular when having small market shares, that approval of its wholesalers by a pharmaceutical firm shall not be prohibited (Decision No. 03-D-53, Biotherm).
With respect to online sales, the ECJ stated in the Pierre Fabre case (Case C-439/09, Pierre Fabre Dermo-Cosmétique SAS) that prohibition to sell on the internet constitutes a per se restriction to competition when the clause is not legitimated by the product properties.
However, it is recognised that a manufacturer, such as Caudalie, which has a justified lawful distribution network, is entitled to prohibit the sale of its products on non-authorised, non-licensed websites (Caudalie case: see French Supreme Court, Decision No. 16-15067, 13 September 2017 and Paris Court of Appeal Decision No. 17/20787, 13 July 2018; see also ECJ 6 December 2017, C-230/16, Coty).Patent dispute settlements
To what extent can the settlement of a patent dispute expose the parties concerned to liability for an antitrust violation?
There is no French case law concerning the settlement of a patent dispute in the pharmaceutical sector in relation to an antitrust violation.
The EC’s final report on the sector inquiry suggested that, under certain circumstances, settlement agreements between originator and generic companies could be deemed to be anticompetitive. Following this statement, the EC sent several statements of objection to pharmaceutical firms and fined Lundbeck (€93.8 million), Johnson & Johnson (€10.8 million) and Novartis (€5.5 million), as well as Servier (€331 million).
The General Court confirmed the fine in the Lundbeck case but reduced by 30 per cent the fine first imposed by the EC on Servier.
For the first time, on 8 September 2016, the General Court ruled on the pay-for-delay practice in the Lundbeck case (citalopram). In this case, the agreements went further than other settlements of patent disputes as the originator company not only paid significant lump sums to generic companies, but also purchased their stocks for the sole purpose of destroying them, and guaranteed profits through a distribution agreement. Hence, Lundbeck kept the generic producers out of the market for the duration of the agreements without promising any guarantee of market entry thereafter.
In line with the Commission, the General Court acknowledged the restriction by object and confirmed the existence of potential competition between generic and originator companies, although the intellectual property rights on the patent had not expired.
For the second time, the General Court ruled on pay-for-delay settlements in the Servier case (perindopril), where the pharmaceutical firm implemented a strategy to exclude competitors and delay generic entry through a technology acquisition and a series of patent settlements.
On 12 December 2018, the General Court declared that the EC’s analysis was invalid particularly as regards the abuse of dominant position as the relevant market should not have been restricted to the sole perindopril molecule, taking into account the sector specificities. In addition, the Court acknowledged a restriction by object for most of the agreements concluded between Servier and several generic companies.
For the first time on 30 January 2020, in the Generics (UK) case (paroxetine), the ECJ has ruled on pay-for-delay agreements and held that they may be infringements of competition by their very object. First, the ECJ confirmed that the parties to the agreement should at least be in a relation of potential competition: namely, there must be an intention and inherent ability on the part of the generic company to access the market, notwithstanding the validity of patent rights in themselves. Second, the ECJ recalled that the restriction of competition by object in pay-for-delay cases must be assessed in the light of two main elements: the sufficient transfer of value and any pro-competitive object.
Furthermore, if the agreement were to be characterised as restrictive by effect, the ECJ ruled that the determinative factor is how the market will probably operate and be structured in the absence of the patent settlement agreement (the counterfactual). The ECJ finally confirmed that a dominant firm’s strategy to enter into a set of settlements to temporarily deprive generic medicines of effective access to the market can constitute an abuse of a dominant position, specifying that the relevant product market must take into account the generic versions of the medicine whose manufacturing process is still under patent.
This last judgment gives an idea of how the ECJ will handle pending appeals in the Lundbeck and Servier cases.Joint communications and lobbying
To what extent can joint communications or lobbying actions be anticompetitive?
The assessment of lobbying actions or joint communications follows European legislation and practice.
As article 101 of the TFEU prohibits concerted practices, the exchange of information may be the basis of an anticompetitive agreement whether by object or effect.
Although some behaviours are commonly identified as having an anticompetitive object (eg, exchange of information between competitors on future intentions), the assessment of the anticompetitive object of the agreement may, in most cases, depend on the nature, the economic and legal context and require a case-by-case analysis.
In the absence of such an object, it is necessary to analyse the actual or the potential effects. Relying on an analysis grid inspired by the EC, the FCA will assess the structure of the market on which the exchange takes place (ie, the degree of concentration of the market, the number of participants, their combined market share or the existence of barriers to market entry). The FCA specifies that other characteristics of the market may be used for the analysis (ie, the existence of structural links between companies and the supervision of companies in applying the policy). The FCA will also assess the characteristics of the exchange of information (ie, the nature of the data and the modalities of the exchange). Several criteria are to be combined: data of the same nature may be sensitive or not sensitive depending on the degree of their maturity, aggregation, accuracy and on the basis of the information available on this market.
In the area of cleaning and hygiene products marketed in supermarkets, the FCA sanctioned two agreements between manufacturers aiming at coordinating their commercial policy with retailers (Decision No. 14-D-19, 18 December 2014).Public communications
To what extent may public communications constitute an infringement?
Certain public communications constituting acts of denigration may constitute an abuse of a dominant position contrary to articles L420-2 of the CC and article 102 of the TFEU.
In a decision of 14 May 2013, the FCA sanctioned Sanofi-Aventis up to €40.6 million for abuse of dominant position characterised by systematic communication aiming at denigrating its competitors towards HCPs via public speech and commercial arguments addressed to pharmacists and doctors questioning the substitutability of its medicinal product.
Practices of denigration made by Schering-Plow were also found as constituting an abuse of dominant position, the object or effect being to foreclose a competitor from the market (Decision No. 07-MC-06).
More recently, in a decision of 20 December 2017, the FCA imposed a fine of €25 million on Janssen-Cilag and its company Johnson & Johnson for developing similar denigrating strategies. Aside from its interventions during the generics’ MA process before the ANSM, Janssen-Cilag launched a major campaign falsely disparaging the generic versions of Durogesic among office- and hospital-based HCPs, using misleading language to create doubt in their minds concerning the effectiveness and safety of these generic medicinal products.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?
The pharmaceutical sector in France is already very transparent. Most pharmaceutical firms are members of the Group for the Development and Study of Statistics (GERS), an independent body to which they supply their sales data for every medicine marketed in France. Firms may buy the compiled sales data, including information from all the other firms, from the GERS. As a result, any given firm can be in a position to have a clear picture of the sales of all its competitors on the French market.
It is also true that in France, as in other EU member states, additional measures intended to impose transparency at all levels of the pharmaceutical sector have been adopted in the past few years.
As in several other countries, and especially in the aftermath of the Mediator scandal, the French Public Health Code (PHC) has been amended to provide for more transparency in the relationships between the industry and the HCPs. Transparency and disclosure of contractual relationships, including the date of signature, the precise subject matter, the amount of the agreement, and the direct and final beneficiaries on a ‘single site’ published by the French government, are mandatory for pharmaceutical firms (article L1453-1 of the PHC). Deliberate failure to comply with this publication is punishable by a fine of up to €75,000.
In addition, the Sapin II Law (of 9 December 2016) introduced a new system for the prevention and repression of corruption involving heavy management constraints for companies, subject to new criminal sanctions.
From a competition point of view, such transparency reduces the uncertainty and renders the competitors’ behaviour easier to predict.
However, it cannot be overlooked that, at some point, certain firms would nevertheless be tempted to go further in terms of exchange of information.
Law stated dateCorrect on
Give the date on which the above content is accurate.
27 April 2020.