Australia: Competition / antitrust, the constant constraint on pharmaceuticals, healthcare and life sciences - where the action has been in 2018 and what lies ahead

Last Updated: 6 February 2019
Article by Belinda Harvey


The principles underpinning competition / antitrust laws are global and as such, the competition implications of transactions, commercial dealings and even unilateral decisions, in addition to the effect of representations made to consumers, are far reaching. The Pharmaceutical, Healthcare and Life Sciences (PHL) sector is one of a number that is a priority for the Australian competition regulator – the Australian Competition and Consumer Commission (ACCC).

We take a look at the investigations, actions and outcomes of competition / antitrust law in Australia in 2018 and provide some insights into the points of exposure for the industries in the PHL sector in 2019.

Industry structure a point of exposure

The nature of products, often being subject to patent, exposes an originator (in particular) to additional scrutiny in its business dealings. Under a regulatory regime that calls into question every decision made, and the effect of that decision on competition, in circumstances where a company holds market power, competition compliance must be at the forefront of an originator or patent holder's strategy.

Outside the scope of originator products, market power can be held across any one or more markets in the PHL sector. A market share of greater than 30 percent calls into question the extent of constraint that a business is subject to. Knowing the markets in which you operate, who your competitors are, and their positions in the market is more than just good business, it is a pre-requisite for identifying competition law risk and ensuring ongoing compliance.

Beyond the ambit of market power are further prohibitions, which consider the purpose of engaging in certain conduct or its effect on competition. The latest prohibition in the competition regulator's armoury is concerted practices.1 Information and data shared, without reciprocity, may be in contravention of the Competition and Consumer Act 2010 (Cth) (CCA) - where the reason for disclosing competitively sensitive information, or the effect of such disclosure is anti-competitive. In an industry where data is provided through the conduit that is healthcare professionals, retail outlets, wholesalers and third party analysts, participants in PHL markets should consider the subject matter and granularity of data disclosed, the reason for disclosure and consideration of whether the information will have an anti-competitive effect.

Representations, in particular to consumers, are always an area of risk. Ensuring the accuracy of product descriptions, relying on product studies to promote benefits, and putting this to a consumer in a way that does not mislead, deceive or falsely present any aspect of the product is a continuing challenge.

In the face of these major points of exposure, in addition to scrutiny over unfair contract terms in both consumer and small business transactions, the industry currently is and will remain a priority for the ACCC in the coming year.

Merger and acquisition landscape

Mergers and acquisitions in Australia are not subject to a mandatory notification regime. However, the ACCC continues to be an active regulator and notification to the ACCC, where the merger parties will hold greater than 20 percent market share in any relevant market, is recommended.

Two transactions were reviewed under the informal clearance process in 20182 public assessment process: (i) Arrow Pharmaceuticals Pty Ltd3 merger with Apotex Pharmaceuticals Pty Ltd ; and (ii) Bayer AG acquisition of Monsanto Corporation4.

In the Arrow/Apotex merger, consolidation at the generic level of the market did not raise serious concerns for the ACCC, notwithstanding that the combined entities would supply around half of all generic prescriptions pharmaceuticals to pharmacies in Australia. The effective constraint was a number of smaller competitors, that the ACCC considered have the ability to grow and expand their portfolio of generic products.

The Bayer/Monsanto consolidation was a global transaction with an assessment of the competitive effects being undertaken by global regulators. The European Competition Commission sought remedies to address competition concerns, which the ACCC was of the view also alleviated the competition concerns surrounding weed management systems for canola and the supply of vegetable seeds. Beyond global concerns that also affected Australia, the ACCC also considered the effect of the consolidation on cotton seed treatments, before concluding that the foreclosure risk would be unlikely to result in a substantial lessening of competition.

These mergers highlight that both local and international mergers will be caught by Australian law. Where the Australian clearance regime is not compulsory, it is important to be mindful of the local effects on competition. Notwithstanding the non-mandatory notification regime, it is still a breach of the law to acquire shares or assets where the effect is likely to be a substantial lessening of competition. In this way, the starting point for notifying a transaction in Australia should never be that it is not required. Consideration must be given to the effect of the merger and the implications, especially for global transactions, where the ACCC may unilaterally seek to review a transaction and potentially disrupt the completion timeline, comfort from the regulator is worth seeking.

Enforcement action taken by the ACCC

The ACCC is an active regulator and its focus on PHL is well known. As an industry of stated priority, in addition to the ACCC's continuing focus on ensuring that large companies are held accountable for their actions, there will undoubtedly be a number of actions each year in this sector.

ACCC v Pfizer

2018 saw the long fought case between the ACCC and Pfizer come to a close. Pfizer's actions were called into question by the ACCC when the cholesterol drug, known as Atorvastatin, came off patent in 2012, with allegations of Pfizer misusing its market power and engaging in exclusive dealing in contravention of the CCA.

The ACCC's case did not succeed as the Federal Court and Full Federal Court were not convinced that Pfizer had the requisite anti-competitive purpose required for a misuse of market power. Pfizer was also able to defend what it did to secure market share for Lipitor and its own generic product as an astute commercial strategy, rather than one that had a substantial anti-competitive purpose. The ACCC sought leave to appeal the Full Federal Court's decision to the High Court, but leave was not granted. The final curtain close on this case is that Pfizer's commercial strategy was sound and its course of action was not in contravention of the CCA.

ACCC v Medibank

In 2014, Medibank brought its contracts with some diagnostic service providers to an end. Those contracts had provided for payments to be made in excess of the government's Medical Benefits Schedule fee, and restricted providers from charging an out of pocket cost. For Medibank members who subsequently received in-hospital diagnostic services from those providers, Medibank only paid the minimum medical benefit set by the government, and the provider was free to charge an out of pocket cost to the member if it chose. The ACCC alleged Medibank made false, misleading or deceptive representations and engaged in unconscionable conduct in relation to its failure to notify Medibank's members of its decision to limit benefits for these services, despite representing in its communication and marketing materials that it would.

Medibank argued that at no point did it represent to members that it would cover all costs associated with in-hospital diagnostic services, which was agreed by the Federal Court. In relation to the unconscionable conduct allegations, the Court found that Medibank's business judgement could not amount to unconscionable conduct. The ACCC was unsuccessful in appealing the decision and on 20 December 2018, the Full Federal Court dismissed the proceedings.

ACCC enforcement against GAIA

In June 2018, GAIA Skin Naturals paid $37,800 in penalties for alleged false or misleading representations after the ACCC issued three infringement notices. GAIA described its Natural Baby Bath & Body Wash, Baby Shampoo and Baby Moisturiser as “Pure ★ Natural ★ Organic”. However, these products contain two synthetic chemical preservatives.

This enforcement outcome with GAIA forms part of broader work by the ACCC relating to organic representations. The ACCC has been taking action on the use of organic claims across a range of businesses and products.5

Guidance on the application of the law

What constitutes 'Australian Made' for complementary healthcare products

The ACCC intervened in proceedings between Nature's Care's and the Australian Made Campaign Limited with respect to its use of the 'Made in Australia' kangaroo logo for certain of its products.6

Australia's country of origin labelling framework requires that products that are manufactured in Australia using imported ingredients must be at least 'substantially transformed' in Australia to have the benefit of the Australian Consumer Law's 'made in' safe harbour defence. The safe harbour serves as an automatic defence from court action on the basis that the country of origin claim is false, misleading or deceptive. In March 2018, the ACCC published a guide on how the country of origin labelling laws applied to complementary healthcare products – this is the ACCC's interpretation of the new laws which were passed on 1 July 2016 and became mandatory on 1 July 2018.

The Court determined, in line with the ACCC's position, that the product was not 'Made in Australia', as it was not considered a 'substantial transformation' of the imported ingredients. This is the first determination under the new law to provide manufacturers and sponsors of complementary healthcare products with guidance on how the law will be applied.7

Changes and proposed changes to the law


Legislation was passed in August 2018 that increased the penalties for a breach of the ACL. Penalties have been raised from $1.1 million for companies to the greater of $10 million, three times the value of the benefit received, or where the benefit cannot be calculated, 10 per cent of annual turnover in the preceding 12 months. Penalties against individuals under the ACL will also increase from $220,000 to $500,000 per breach.

Removal of the IP exception

The CCA currently includes an exception for certain prohibitions on anti-competitive conduct for intellectual property owners with respect to the licensing or assignment of specified IP rights, including patents, registered designs, copyright or eligible circuit layout rights. Conditions imposed on the licence or assignment of a right are exempt "to the extent that the condition relates to" the IP rights in question.9 In this way, IP owners have been in a position to impose restrictions on the use of their IP that may ultimately be anti-competitive.

Parliament is due to consider these amendments when it returns in February 2019. Once the amendments to the legislation have passed, the law will come into effect 6 months from the date of royal assent. In preparation, companies should be considering any market restrictive conditions in existing IP licensing/assignment arrangements now to ensure that they are in a position to comply with all anti-competitive conduct provisions in the near future.

Unfair contracts

Treasury released a discussion paper in November 2018 seeking feedback from stakeholders on the impact of the extension of the unfair contract terms protections to small business that were introduced in 2016 and whether the objective set for the original reform has been met.8 It is also seeking views about whether any changes are required to improve the current framework. If, following consideration of the review findings, the Government considers that legislative amendments are required, it will seek agreement from states and territories to make those amendments before introducing relevant bills to the Australian Parliament.

The ACCC is pushing for unfair contract terms to be a breach of the law, rather than a court declaring the offending term void. By making unfair contract terms illegal, the ACCC would be able to seek pecuniary penalties and issue infringement notices.10

Where to in 2019

  • Increase in investigations from the ACCC's $35m boost in funding
  • Likely 'health check' of the private insurance industry
  • Focus on big data and a consumer's access to its data
  • IP owners exposed with the removal of exceptions
  • Unfair contracts prohibitions easily enforced by the ACCC
  • Business health check to mitigate enforcement risk

The ACCC will remain an active regulator in 2019. With a recent $35 million boost in funding to support an increase in investigators in the cartels and anti-competitive conduct branches, the ACCC expects that these resources will allow it to take at least two more cases each year.11 Beyond this, the ACCC will continue to be active in using its infringement notice powers to issue fines for conduct it is of the view is misleading, deceptive or false and take court action for alleged contraventions of the ACL.

The number of market studies and inquiries undertaken by the ACCC increased in 2018 and will continue into 2019. Its annual report into the private health insurance industry, continues to call for regulatory change in the sector and off the back of the Aged Care Royal Commission, we predict that the ACCC will undertake a "health check" of the industry from a competition compliance perspective.

Big data and a consumer's access to its data is a focus of the ACCC, and with many businesses in the PHL sector holders of big data, it will not be immune from consideration on how that data is used or a consumer's ability to access it into the future. The push for increased access to data, while maintaining privacy, will be considered through a competition and consumer lens.

With a number of legislative changes imminent, the industry can be assured that the ACCC will be watching how "big business" conduct themselves. Where the penalties for breaches of the ACL now match those of the competition provisions, the armoury of the ACCC has been increased and it is in the position to use it.

The ACCC will be watching carefully the actions of IP owners upon the removal of the long standing exceptions to the CCA. Existing assignment and licencing agreements should be considered carefully to determine whether they are anti-competitive.

The nature of the PHL sector's engagement with consumers and small businesses is often on a standard form basis. The unfair contracts prohibitions are more easily enforced by the ACCC and an investigation is often initiated off the back of a consumer complaint. Careful consideration should be given to the terms of any standard form contract to ensure compliance.

Consolidation in the sector will continue. The ACCC will monitor mergers and acquisitions, and commence its own investigations where it believes it is warranted or as a result of market concerns. Where global consolidation will have an effect on the Australian market, notwithstanding the non-mandatory nature of the notification regime, considering the effect on Australia is key to a smooth road to completion.

As we move into 2019, day-to-day business engagement with licence holders, assignees, small businesses and consumers should be given a health check – the competitive environment can shift in the time since an agreement was entered into – creating a point of exposure. In industries already subject to significant amounts of regulatory compliance, competition and antitrust risk should be diagnosed early to mitigate any enforcement risk.


1 This is in addition to cartel conduct, exclusive dealing and other anti-competitive agreements.
2 The ACCC undertakes a confidential pre-assessment at the commencement of its process, and during this time mergers and acquisitions may be given a "green light" where there are no significant competition issues that require testing publically.
8 The exemption does not apply to a misuse of market power or resale price maintenance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions