Pharmaceutical regulatory lawRegulatory framework
What is the applicable regulatory framework for the authorisation, pricing and marketing of pharmaceutical products, including generic drugs?
The national applicable legislation for pharmaceuticals includes the Medicines Act (395/1987) and the Medicines Decree (693/1987). The national legislation is also supplemented by the regulations and guidance issued by the Finnish Medicines Agency, Fimea. Pharma Industry Finland (PIF), an organisation of the innovative pharmaceutical industry, has also issued its Code of Ethics, the PIF Code, containing detailed provisions regarding marketing of medicines, which are binding for members of the organisation. The PIF Code has been revised on 29 April 2022. Overall, marketing of pharmaceuticals to consumers, if permitted, must also meet the requirements of the Finnish Consumer Protection Act (38/1978) and the Government Decree on unfair practices in marketing and customer relations (601/2008).Regulatory authorities
Which authorities are entrusted with enforcing these rules?
The main bodies responsible for enforcing the legislation are Fimea, the Pharmaceuticals Pricing Board, the National Supervisory Authority for Welfare and Health, and the National Institute for Health and Welfare. These are all subordinated to the Ministry of Social Affairs and Health. In addition, the Supervisory Commission for the Marketing of Medicinal Products enforces the PIF Code.Pricing
Are drug prices subject to regulatory control?
Drug prices as such are not subject to regulatory control, but the admission of a drug to the reimbursement system that applies to pharmacy trade requires that the wholesale price of the drug is considered reasonable. The Pharmaceuticals Pricing Board of the Ministry of Social Affairs and Health conducts the assessment on whether the price suggested by a pharmaceutical company is considered reasonable. If the wholesale price suggested by the marketing authorisation holder is not considered reasonable in light of the criteria set forth by the Health Insurance Act (1224/2004), the reimbursement application will be rejected, but the price itself does not need to be altered. In hospital trade, drug prices are mostly determined in the public procurement process through competitive bidding.Distribution
Is the distribution of pharmaceutical products subject to a specific framework or legislation? Do the rules differ depending on the distribution channel?
The Medicines Act includes detailed provisions regarding the distribution of pharmaceuticals. All distribution activities of pharmaceutical products are subject to a wholesale licence in Finland granted by Fimea. To be eligible for a licence, the applicant must, for example, be situated in Finland and have proper facilities and equipment for storing medicinal products and ensuring the operations and the personnel required for the operations. Pharmaceuticals may be sold or otherwise supplied by the wholesaler to a medicinal product manufacturer, another medicinal product wholesaler, a pharmacy, subsidiary pharmacy, the Military Pharmacy, a hospital pharmacy or dispensary, or to a veterinary surgeon for the purposes of veterinary medication. Fimea has also issued Regulation 5/2013 on good distribution practices. Under the Medicines Act, the operation of a pharmacy business requires a pharmacy licence issued by Fimea. The granting of a licence is subject to, inter alia, a means test based on the population of the area in which the pharmacy is located. For example, the Finnish Administrative Supreme Court has considered the legal issue of a pharmacy licence issued by Fimea in its recent decision in March 2022 (KHO:2022:39). The granting of a licence for a new pharmacy has been facilitated slightly as of 1 April 2022.Intersection with competition law
Which aspects of the regulatory framework are most directly relevant to the application of competition law to the pharmaceutical sector?
The mandatory prerequisites for obtaining and maintaining relevant licences under the Medicines Act, as well as compliance with Fimea’s regulations and instructions, set out the framework for distributing and marketing pharmaceutical products in Finland. Further, the national rules on pricing and reimbursement of pharmaceutical products limit possibilities of price adjustments and discounts. For example, under the Medicines Act, the holder of the relevant marketing authorisation is responsible for notifying prices to public price lists, and no individual discounts from distributors to pharmacies are allowed; the price of a pharmaceutical product must be the same for every pharmacy in Finland and in accordance with the notified price.
Competition legislation and regulationLegislation and enforcement authorities
What are the main competition law provisions and which authorities are responsible for enforcing them?
Competition legislation in Finland is, in essence, set out in the Competition Act (948/2011).
The Ministry of Employment and the Economy has further issued regulations concerning the application of the merger control rules included in the Competition Act. The Finnish Competition and Consumer Authority (FCCA) has issued guidelines on topics such as merger control, possibilities to seek immunity or reductions in fines and the prioritisation of the FCCA’s tasks.
The Competition Act is a general law that applies to all sectors of the economy. Only limited exceptions apply, which are within the fields of labour agreements and agriculture.
In addition to the national Competition Act, articles 101 and 102 of the Treaty on the Functioning of the European Union apply if a competition restraint may affect trade between member states.
The FCCA is the authority responsible for enforcing the Competition Act. It may prohibit the implementation of a restraint on competition, order the termination of unlawful conduct or decide on binding commitments to parties involved in a suspected infringement. The Market Court is a special court, hearing, among other things, competition law cases. The Market Court may, on proposal or request by the FCCA, impose penalty payments on those in breach of the competition rules or prohibit a concentration. The decisions of the Market Court are appealable to the Supreme Administrative Court.Public enforcement and remedies
What actions can competition authorities take to tackle anticompetitive conduct or agreements in the pharmaceutical sector and what remedies can they impose?
The FCCA may issue a decision ordering the parties to cease and desist an infringement or order a company to deliver its products to another undertaking under the same conditions that it delivers to other companies. The FCCA may also impose commitments by the parties to an alleged infringement as binding and, on that basis, close the case file without further measures.
The FCCA may also impose various remedies for anticompetitive conduct or agreements. The FCCA has sole jurisdiction to propose fines (an administrative penalty payment) to be imposed by the Market Court on undertakings or associations of undertakings party to an infringement. The amount of the fine shall not exceed 10 per cent of the turnover of the party to the infringement.
The FCCA has investigated several suspected infringements in the pharmaceutical sector, but these investigations have ended with the FCCA closing the case without further measures. In cases relating to other industries, the FCCA has proposed fines of up to €70 million to be imposed on an individual company for an infringement relating to the abuse of a dominant position and up to €68 million concerning horizontal cooperation, both of which have been accepted by the Supreme Administrative Court.Private enforcement and remedies
Can remedies be sought through private enforcement by a party that claims to have suffered harm from anticompetitive conduct or agreements implemented by pharmaceutical companies? What form would such remedies typically take and how can they be obtained?
Private parties can claim for damages in the Finnish general civil courts based on a competition law infringement. The Act on Antitrust Damages Actions (1077/2016) includes specific provisions under which damages resulting from an infringement of competition law can be claimed.
To our knowledge, private enforcement has not been used to claim damages based on an infringement of competition law in the pharmaceutical sector in Finland. However, recently it has become very typical for damages to be claimed by injured parties if the FCCA (and subsequently the courts) found a company to have been party to an infringement of competition law. The Finnish civil courts have ordered competition law-related damages in several cases (also relating to the abuse of a dominant position).Sector inquiries
Can the antitrust authority conduct sector-wide inquiries? If so, have such inquiries ever been conducted into the pharmaceutical sector and, if so, what was the main outcome?
The FCCA may conduct sector-wide inquiries and publish reports and studies related to the market conditions in specific sectors.
In 2012, the FCCA published a comprehensive study on competition in the Finnish pharmaceutical industry, titled ‘From the provision of pharmaceutical products to pharmaceutical markets – Value chain and regulation’. In the study, the FCCA assessed the need to reform the legislation concerning the pharmaceutical industry and the wholesale of medicines. On the basis of this analysis, the FCCA proposed several amendments to the legislation that were aimed at improving the efficiency and productivity of the provision of pharmaceutical products in Finland. However, the proposed amendments were mainly directed at the Finnish pharmacy system and the retail sector of pharmaceutical products. The FCCA recommended, for example, that the means testing in establishing new pharmacies, as well as other restrictions regarding the number of pharmacies, should be abolished. In 2018, the FCCA made similar suggestions regarding the pharmacy sector and pharmacies in particular.
In 2020, the FCCA published an extensive study on the pharmacy market. The study proposed a number of measures to reduce the costs of medicines for consumers and society, and to improve access to medicines. First, the FCCA proposed that the pharmacy handling fee for determining the prices of medicines be reduced. Secondly, to make the establishment of pharmacies easier, the FCCA proposed that instead of basing the pharmacy licence on the means testing by authorities, the licence could be obtained by meeting certain minimum criteria meant to ensure the safe distribution of medicines as well as amendments to the regulation regarding the location of pharmacies. Additionally, online-only pharmacies should be allowed. Thirdly, the FCCA proposed the deregulation of rules concerning the ownership of pharmacies as pharmaceutical expertise could be secured with other, less limiting restrictions. Ultimately, the FCCA proposed that a price cap be set for over-the-counter medicines instead of a fixed price and that price competition in prescription medicines would be allowed with the pharmacy handling fee. Additionally, the sale of selected over-the-counter medicines should be allowed at locations other than pharmacies when considered safe. At the time of writing, it is unclear which of the propositions will be addressed, if any.Health authority involvement
To what extent do health authorities or regulatory bodies play a role in the application of competition law to the pharmaceutical sector? How do these authorities interact with the relevant competition authority?
Health authorities or regulatory bodies do not play any particular role in the application of competition rules to the pharmaceutical sector, and there are no particular statutes in law concerning such interaction between the FCCA and health authorities or regulatory bodies.
The FCCA may consult such health authorities when, for example, analysing market conditions and in the course of sector-wide inquiries, and such health authorities can, similarly to all other parties, lodge complaints to the FCCA concerning suspected infringements of competition. Health authorities do not have any particular standing in private antitrust litigation.NGO involvement
To what extent do non-government groups play a role in the application of competition law to the pharmaceutical sector?
Non-governmental groups do not play any particular role in the application of competition rules to the pharmaceutical sector, and there are no particular statues in law concerning such interaction between the FCCA and non-governmental groups. The FCCA may consult such non-governmental groups when, for example, analysing market conditions and in the course of sector-wide inquiries, and such groups can, similarly to all other parties, lodge complaints to the FCCA concerning suspected infringements of competition. Non-governmental groups do not have any particular standing in private antitrust litigation.
To the extent a non-governmental group can be considered to be an undertaking or association of undertakings, the conduct of such a group may also infringe competition rules, and the non-governmental group can be targeted by an investigation of the FCCA. The FCCA has investigated practices of trade associations in various fields of industry from time to time.
Review of mergersThresholds and triggers
What are the relevant thresholds for the review of mergers in the pharmaceutical sector?
A merger must be notified to the Finnish Competition and Consumer Authority (FCCA) if the combined worldwide turnover of the parties to the merger exceeds €350 million and the turnover of at least two of the parties resulting from Finland exceeds €20 million for both.
There are no sector-specific thresholds for the review of mergers. Thus, mergers in the pharmaceutical sector are subject to review by the FCCA when the above-mentioned thresholds are met.
Is the acquisition of one or more patents or licences subject to merger notification? If so, when would that be the case?
The FCCA has neither considered an acquisition comprising solely a patent or a patent licence under merger control rules to date nor provided detailed guidance on this issue in its merger control guidelines. However, reference can be made to the European Commission’s consolidated jurisdictional notice, which considers that an acquisition confined solely to patents can be considered a notifiable transaction if the assets transferred constitute a business with a market turnover. The transfer of a patent licence without additional assets, however, can only fulfil this criterion if the licence is exclusive at least in a certain territory and the transfer of the licence will transfer the turnover-generating activity.Market definition
How are the product and geographic markets typically defined in the pharmaceutical sector?
In the cases notified to the FCCA, the product and geographic markets were defined by the notifying party on the basis of the definitions that follow the European Commission’s practice. In the Idec Pharmaceuticals Corporation/Biogen Inc decision, the notifying party referred to the Commission’s decisions where it applied the anatomical therapeutic chemical (ATC) classification as a basis for product market definition. The ATC classification consists of four different levels, and in this case, the analysis was conducted on the third level, which allows medicines to be grouped according to their therapeutic indications. As regards the geographic dimension of the market, the notifying party submitted that it was national because of the differences in the legislation between the countries at the time of notification (ie, 2003).
In the Kesko Oyj/Oriola Oyj/JV decision of June 2017, some of the relevant product markets concerned the pharmaceutical sector, namely the retail sale of medicines, the wholesale of medicines and the procurement of medicines for wholesale. The notifying parties submitted that the geographic dimension of the markets was national (or even local as regards the retail sale of medicines).
In the Orifarm Generics Holding A/S/Takeda Pharmaceuticals International AG decision of October 2020, the notifying party submitted that the relevant market should be assessed under the ATC classification and the geographic dimension of the separate product markets was suggested to be national. However, the market definition was left open because the acquisition was not considered to substantially impede competition in the Finnish market.Sector-specific considerations
Are the sector-specific features of the pharmaceutical industry taken into account when mergers between two pharmaceutical companies are being reviewed?
In recent years, no pharmaceutical industry mergers or acquisitions have been notified to the FCCA. Since the introduction of merger control in Finland in 1998, the following cases concerning the pharmaceutical industry have been notified to the FCCA:
- Orifarm Generics Holding A/S/Takeda Pharmaceuticals International AG, Decision No. KKV/1101/14.00.10/2020, 21 October 2020;
- Kesko Oyj/Oriola Oyj/JV, Decision No. KKV/491/14.00.10/2017, 26 June 2017;
- Idec Pharmaceuticals Corporation/Biogen Inc, Decision No. 555/81/2003, 4 August 2003;
- Nycomed Pharma AS/Oy Leiras Finland Ab, Decision No. 1106/81/2002, 23 December 2002;
- Orion-yhtymä Oyj/Kronans Droghandel Ab, Decision No. 7/81/2002, 22 May 2002;
- Leiras Oy – Produits Chimiques Auxiliaires de Synthèse SA/Leiras Fine Chemicals Oy, Decision No. 650/81/2001, 1 August 2001; and
- Nordic Capital III Limited/Nycomed Amersham Norge AS, Decision No. 472/81/99, 24 June 1999.
The merger control decisions adopted by the FCCA in these cases are rather straightforward and do not provide extensive discussion on the FCCA’s analyses in the matters. It is, however, noteworthy that the FCCA has drawn attention to certain sector-specific issues, such as the potential impact of the Finnish pharmaceutical single-channel wholesale distribution system in the competitive assessment of a merger.Addressing competition concerns
Can merging parties put forward arguments based on the strengthening of the local or regional research and development activities or efficiency-based arguments to address antitrust concerns?
Merging parties may put forward efficiency-based arguments in the notification to the FCCA. The merging parties must provide all the relevant information necessary to substantiate their efficiency benefits and to demonstrate that they cannot be achieved without the merger.
In general, the FCCA will take into account efficiencies resulting from the merger, provided that these efficiencies materialise on the Finnish market and are passed on to Finnish consumers and customers. The weight given to efficiency claims depends on how substantial the efficiencies are, how likely they are to be achieved, and whether they promote competition for the benefit of customers and consumers. Efficiencies generated by a merger may be production-related efficiencies, such as savings in production, supply or distribution costs or dynamic efficiencies, such as improved products.
In the assessment of the efficiency-based arguments, the strengthening of local or regional R&D activities does not play any particular role. The promotion of technical or economic progress is taken into account irrespective of the territory where it is generated (ie, the strengthening of local or regional R&D does not have any particular preference over a similar increase in R&D efforts on a national basis or outside Finland).Horizontal mergers
Under which circumstances will a horizontal merger of companies currently active in the same product and geographical markets be considered problematic?
The FCCA may propose to the Market Court the prohibition of a transaction that may significantly impede effective competition in Finland or a substantial part of it, in particular if the transaction creates or reinforces a dominant position. The FCCA, therefore, assesses notified mergers and acquisitions under a similar framework as the European Commission. If the parties are currently active in the same product and geographical market, the FCCA will investigate whether the transaction may lead to the combined entity (or one or more competitors) having the ability and incentive to raise prices (eg, directly or by foreclosing competitors from the market).
In past years, the FCCA has proposed to the Market Court that two transactions be prohibited. In February 2020, the Market Court prohibited a merger for the first time and blocked a merger between two competing companies that are broadline distributors offering a wide variety of products to food service customers (Kesko Oyj/Heinon Tukku Oy). Later in 2020, the FCCA submitted a merger prohibition proposal regarding the merger between two healthcare service providers (Mehiläinen Yhtiöt Oy and Pihlajalinna Oyj) that provide healthcare services acquired by individuals, insurance companies and employers. However, in December 2020, the Market Court gave a decision to discontinue the court proceedings as the parties announced that Mehiläinen Yhtiöt Oy will not execute the tender offer made for Pihlajalinna Oyj’s shares.Product overlap
When is an overlap with respect to products that are being developed likely to be problematic? How is potential competition assessed?
A merger of pharmaceutical companies that both have similar products under a late stage of development could potentially lead to competition concerns if the companies could successfully bring the products to market if the transaction does not take place. The FCCA could argue that absent the transaction, the two companies would launch products in competition with each other, whereas the combined entity would not create such competition on the market. For example, in Idec Pharmaceuticals Corporation/Biogen Inc, the FCCA drew attention to the fact that the products under development (in Phases II and III) by the target would not be competing products to those supplied by the acquirer.Remedies
Which remedies will typically be required to resolve any issues that have been identified?
The FCCA (and ultimately the courts) may accept, as condition for clearance to a notified merger or acquisition, both structural and behavioural remedies. Generally, divestiture remedies may be more effective in resolving competition concerns. Remedies could also include assigning or licensing acquired patents to third parties.
Anticompetitive agreementsAssessment framework
What is the general framework for assessing whether an agreement or concerted practice can be considered anticompetitive?
Under the Competition Act, the general framework in assessing whether an agreement or practice can be considered anticompetitive comprises the following:
- a prohibition on agreements by undertakings, decisions by associations of undertakings or concerted practices that have as their object or effect the significant prevention, restriction or distortion of competition (section 5 of the Competition Act). This statute is similar to article 101(1) of the Treaty on the Functioning of the European Union (TFEU) except that for the prohibition to apply, the restriction need not affect trade between member states; and
- an exemption to the prohibition set out above (section 6 of the Competition Act). This ‘efficiency defence’ exemption is similar to that of article 101(3) of the TFEU. For the exception to apply, the restriction of competition must fulfil the following four cumulative criteria:
- the restriction contributes to improving the production or distribution of goods or promotes technical or economic progress;
- it allows consumers a fair share of the resulting benefit;
- it does not impose restrictions on the parties that are unnecessary to achieve the benefits; and
- it does not afford the undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
To what extent are technology licensing agreements considered anticompetitive?
Finnish competition legislation does not provide particular guidance concerning the assessment of technology licensing agreements. The guidance in the European Commission’s Technology Transfer Block Exemption Regulation (316/2014) and related guidelines provides further insight into the assessment of technology licensing agreements.Co-promotion and co-marketing agreements
To what extent are co-promotion and co-marketing agreements considered anticompetitive?
Co-promotion and co-marketing agreements have not yet been investigated in detail by the Finnish Competition and Consumer Authority (FCCA). However, the same principles that the European Commission has followed in the assessment of such agreements could be expected to be the starting point of the FCCA’s analysis.Other agreements
What other forms of agreement with a competitor are likely to be an issue? How can these issues be resolved?
The prohibition of agreements restrictive of competition in the Competition Act is a general provision and can apply to all kinds of conduct that have as their object or effect the restriction of competition; in particular, competitors should always carefully assess any cooperation agreements that include restrictive terms or could otherwise be seen to have a restrictive purpose or effect.
Depending on the arrangement, confidentiality provisions may be sufficient to mitigate competition concerns (eg, appropriately limiting the amount of information exchanged between two pharmaceutical companies that engage in joint R&D). However, in many kinds of cooperation between competitors, confidentiality agreements alone may not be sufficient to resolve competition concerns.Issues with vertical agreements
Which aspects of vertical agreements are most likely to raise antitrust concerns?
Similar to the revised European Commission’s Vertical Block Exemption Regulation (2022/720), which entered into force on 1 June 2022, the main aspects of vertical agreements that raise concern are provisions relating to the resale pricing of products by a distributor and territorial, or customer restrictions imposed on a distributor. The Market Court took a stand on resale price maintenance on 11 August 2022 and imposed a penalty payment of €1.75 million to a distributor of building materials for resale price maintenance in online stores. This was the first time for over a decade that the Market Court imposed fines for such conduct and at the time of writing the decision is still subject to appeal. However, a distinctive feature of the Finnish pharmaceutical sector is the extensive regulation concerning the pricing of pharmaceutical products. An assessment of, for example, restrictions in resale pricing by a distributor, should take into consideration the complex regulatory framework, which affects the possibilities of pricing products at the various levels of distribution.
As another distinct feature, currently only two major wholesalers exist in Finland, and manufacturers typically distribute their products only through one of them (the single-channel distribution system). The FCCA has investigated the single-channel distribution system on several occasions and has closed each of its reviews without further measures, most recently in 2012. In a recent merger clearance decision (Kesko Oyj/Oriola Oyj/JV), some of the market players raised concerns relating to the single-channel distribution system and the possible future development of the retail sale of medicines owing to Oriola’s vertical integration. The FCCA did not see the vertical integration as a threat to competition owing to the uncertainty relating to possible deregulation of the retail sale of medicines.Patent dispute settlements
To what extent can the settlement of a patent dispute expose the parties concerned to liability for an antitrust violation?
The FCCA has not issued any decisions concerning patent settlement agreements. However, the guidance provided in the European Commission’s technology transfer guidelines and the cases investigated by the European Commission and the General Court’s judgment in Lundbeck (T-472/13) would likely be a starting point in the FCCA’s assessment of the competitive effects of a patent settlement agreement entered into by companies in the pharmaceutical sector.Joint communications and lobbying
To what extent can joint communications or lobbying actions be anticompetitive?
The FCCA has not issued any decisions concerning joint communications or lobbying actions in the pharmaceutical sector. The Market Court took a stand on lobbying actions in December 2017 as a result of the FCCA’s fine proposal, where it suggested penalty payments for several bus companies: Finnish Bus and Coach Association and travel-services provider Oy Matkahuolto Ab.
According to the Market Court, lobbying actions, negotiations and discussions relating to the ongoing legislative reform were part of a normal trade association’s lobbying actions (Market Court, Decision No. MAO :781/17, 14 December 2017, confirmed by Supreme Administrative Court, Decision No. KHO:2019:98, 20 August 2019). However, if the parties discuss, agree or decide on anticompetitive measures (eg, collective actions against a market player, possible effects of the legislative reform on the business or future market behaviour in the changed circumstances) alongside the lobbying actions, these would be considered as infringements.Public communications
To what extent may public communications constitute an infringement?
The FCCA has not issued any decisions concerning public communications in the pharmaceutical sector. In general, public communications of intended future price increases or other future behaviour could constitute an infringement if such communications would lead to coordination between competing companies. The FCCA has, for example, advised Finnish banks not to indicate their future loan margins of mortgages (which are a significant part of the price of the mortgage for customers) in press releases as this could constitute an infringement by means of price signalling.
The Finnish case law on public communications as an infringement relates to trade associations and their price recommendations for their member companies. The Supreme Administrative Court has issued three decisions where they found that the trade association’s public communications on prices and price increases constituted an infringement (Regional Driving School Association, Decision No. 2019/377, 15 December 2020; Finnish Bakery Federation, Leipuriliitto ry, Decision No. 3713/2019, 20 August 2019; and Finnish Hairdressers’ Association, Hiusyrittäjät ry, Decision No. 1993/2013, 14 June 2013). In addition, EU case law on public communications (eg, Commission Decision AT.39850 Container Shipping) would likely be taken into account in the FCCA’s assessment.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 fulfilment of transparency requirements set forth in mandatory legislation is not likely to give direct rise to anticompetitive information exchange caught by the Competition Act, neither should anticompetitive information exchange be considered more likely in the pharmaceutical sector in Finland, as the general guidance provided by the European Commission regarding information exchange is well known by the Finnish pharmaceutical companies, and they strictly follow applicable competition rules.
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?
Under section 7 of the Competition Act, the following conduct in particular may be considered anticompetitive by a dominant company:
- directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
- limiting production, markets or technical development to the prejudice of consumers;
- applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; and
- making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations that, by their nature or according to commercial use, have no connection with the subject of such contracts.
This statute is similar to article 102 of the Treaty on the Functioning of the European Union (TFEU). The list of conduct above is not exhaustive and, in principle, all kinds of conduct with an exclusionary, exploitative or distortionary effect on the market could fall within the prohibition on the abuse of a dominant position.De minimis thresholds
Is there any de minimis threshold for a conduct to be found abusive?
Finnish competition legislation does not include any particular de minimis threshold for a conduct to be found abusive in the pharmaceutical sector or any other industries. However, under the Competition Act, the Finnish Competition and Consumer Authority (FCCA) is entitled to prioritise the cases it investigates, and can close a case without further measures if it is, for instance, unlikely that the conduct in question would have a significant impact on the conditions of sound and effective competition. EU case law (eg, C‑413/14 P Intel and previous judgments) would likely be taken into account in assessing the coverage of the abusive conduct.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 principle, the approach to market definition by the antitrust authorities is the same in the context of unilateral conduct and mergers. However, similar to the European Commission, in most merger cases the FCCA has left the market definition open and assessed the potential competition effects based on the notifying parties’ view. With regard to unilateral conduct cases, the FCCA pays more attention to the market definition and conducts a thorough assessment on the markets owing to the nature of the dominance 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?
Finnish competition legislation does not include any particular thresholds for the assessment of dominance in the pharmaceutical sector. However, in general a market share of 40 per cent in a properly defined relevant market, combined with other factors, may lead to a presumption of dominance, and a market share of 50 per cent may, as such, lead to the presumption of dominance.
To date, the FCCA has not found any company in the pharmaceutical industry to hold a dominant market position.
It should not be sufficient to find dominance solely on the basis of ownership of an intellectual property right, such as a patent. However, depending on market circumstances, the ownership of a patent may be a relevant factor in establishing dominance.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 FCCA has not issued any decisions where it would have considered that an application for the grant of a patent would have been an antitrust violation or a part of such a violation. However, the Court of Justice of the European Union’s (CJEU) judgment in AstraZeneca v Commission (C-457/10 P) would likely be seen as a relevant precedent in assessing conduct relating to applications for intellectual property protection.
The FCCA has not issued any decision where it would have considered the enforcement of a patent to constitute an antitrust violation or a part of such violation. The FCCA would likely consider the CJEU’s precedent and the European Commission’s practice as relevant should a case relating to the enforcement of patents come under investigation.
When would life-cycle management strategies expose a patent owner to antitrust liability?
The FCCA has not issued any decisions concerning life-cycle management strategies of pharmaceutical companies. Nonetheless, pharmaceutical companies should be careful in assessing whether life-cycle management strategies include any anticompetitive means to exclude competitors from the market. While pharmaceutical companies may legitimately seek intellectual property protection for their innovations to the fullest extent permitted by law, measures to artificially extend protection beyond the purpose of the intellectual property protection might, in particular circumstances, expose the patent owner to liability for an antitrust violation.Communications
Can communications or recommendations aimed at the public, HCPs or health authorities trigger antitrust liability?
The FCCA has not issued any decisions where it would have considered that communications or recommendations aimed at the public, HCPs or health authorities would have been an antitrust violation or a part of such a violation. If communications or recommendation aimed at the public or healthcare professionals took place during an ongoing tender process, or they included recommendations other than those aiming at better quality and professionalism of the tender processes, it is likely that the FCCA would assess the possible anticompetitive effects of the communications or recommendations carefully. However, contacting public authorities to indirectly influence the competitive circumstances relating to ongoing legislative reform has been considered normal lobbying action and thus acceptable (eg, Supreme Administrative Court, Decision No. KHO:2019:98, 20 August 2019).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?
Authorised generics, as such, have not been seen to raise issues under Finnish competition law. However, pharmaceutical companies must always assess whether their conduct could constitute an abuse of a dominant position or whether an agreement concerning generics could have as its object or effect the restriction of competition.Restrictions on off-label use
Can actions taken by a patent owner to limit off-label use trigger antitrust liability?
The FCCA has not issued any decisions where it would have considered that actions taken by a patent holder to limit off-label use would have been an antitrust violation. However, the CJEU’s judgments in Roche and Novartis v Commission (C-176/16 P, Avastin/Lucentis) and Novartis Farma (C-29/17) would likely be seen as relevant precedents in assessing the possible anticompetitive effects of actions to limit off-label use of medicines.Pricing
When does pricing conduct raise antitrust risks? Can high prices be abusive?
Pricing conduct raises antitrust risks when the pricing is predatory, discriminatory or excessive, or where unfair price increases without cost justification take place. In practice, all pricing conduct with an exclusionary, exploitative or distortionary effect on the market could constitute an abuse of dominant position. These are assessed in line with the application of article 102 of the TFEU.
The FCCA has not issued any decisions where it would have considered high prices in the pharmaceutical sector, although high prices in general have been assessed several times in other industries. However, these cases are rather old and the assessment has been somewhat formal. It is likely that the FCCA will concentrate more on economic effects in its future assessments on high prices. The FCCA has in its recent investigations conducted extensive economic analysis to assess whether actions of the company under investigation have been abusive (eg, the FCCA’s investigation regarding the OP Financial Group bonus system, No 1015/KKV14.00.00/2015, 11 February 2019). In addition, the FCCA would likely take the recent case law on excessive pricing (eg, the European Commission's commitment decision (AT.40394 – Aspen) concerning Aspen Pharma’s excessive pricing and the Italian decision on Aspen Pharma’s unfair price increases) into consideration in assessing high prices in the pharmaceutical sector.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?
The pharmaceutical sector does not enjoy any particular exemption from the application of Finnish competition law. However, Finnish legislation concerning the pharmaceutical sector should be taken into consideration when assessing whether a particular type of conduct is contrary to competition law. This may be relevant, in particular concerning the distribution of pharmaceutical products in Finland in view of the existing legislation on, for example, pricing and availability.
Updates and trendsRecent developments
Are there in your jurisdiction any emerging trends or hot topics regarding antitrust regulation and enforcement in the pharmaceutical sector?
The Finnish Competition and Consumer Authority (FCCA) has previously suggested changes to the pharmacy sector and consequently, the Act amending the Medicines Act (1258/2021) entered into force on 1 April 2022. The amendment has effects on, for instance, the pricing of over-the-counter (OTC) medicines. Along with the amendment, OTC medicines have a maximum and minimum price according to the medicinal products price list set out by government decree (713/2013), however, between the maximum and minimum price, a pharmacy is able to set the price to the wanted level. The maximum price is the retail price according to the medicinal products price list set out by government decree. The lowest price is the nationwide wholesale price of the medicine. The price must be the same in the pharmacy’s and its subsidiaries’ brick-and-mortar stores and online service. However, the amendment does not bring changes to the supervision of the marketing of medicines. In the future, offers, quantity discounts and charitable donations, among other things, are still prohibited.
In addition, the amendment has effects on the establishment of pharmacies, announcing and applying for a pharmacy licence and online services and pick-up counters of pharmacies. For instance, the Finnish Medicines Agency’s (Fimea) possibilities to determine on the establishment of new pharmacies are expanded. Pharmacies and subsidiaries can be established more easily in connection with social and health care units, such as hospitals. The purpose is to ensure uninterrupted pharmaceutical services for all patients also after they are discharged from health care units.
The Finnish Medicines Agency (Fimea) has suggested certain changes to the wholesale register of medicines. The goal of the renewal process is to build a register that meets the various needs for the use of wholesale information on medicines. In the first phase of the renewal process, the plan would be to build a register corresponding to the previous wholesale register by utilising modern technologies. Fimea will provide more information on the renewal process later on this autumn.
Moreover, the Ministry of Economic Affairs and Employment has issued a draft government proposal for new merger control thresholds in Finland on 16 June 2022. According to the draft government proposal, a merger would need to be notified to the FCCA, if the combined Finnish turnover of the parties involved exceeds €100 million, and at least two parties involved has a Finnish turnover exceeding €10 million for both. At the time of writing, it is anticipated that the government proposal would be submitted to the Finnish Parliament during autumn 2022 and the amendments are expected to enter into force at the beginning of 2023.Coronavirus
What emergency legislation, relief programmes and other initiatives specific to your practice area has your state implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?
The European Commission has outlined the impacts of covid-19 on the application of competition legislation. Among other things, the Commission has issued a statement on the application of antitrust rules during the pandemic and a comfort letter to Medicines for Europe, an association of pharmaceutical manufacturers, and companies voluntarily cooperating to address the risk of shortages of critical hospital medicines for the treatment of covid-19 patients. On 23 March 2020, the FCCA issued a press release stating that it would comply with the Commission’s statements.
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