European Union: The European Commission Publishes Its Report Highlighting Active Competition Enforcement In The Pharma Sector

On 26 January 2024, the European Commission (the "Commission") published its report (the "Report"), providing a comprehensive overview of the antitrust and merger control enforcement carried out in the pharmaceutical sector by the Commission and the national competition authorities ("NCAs"). The Report covers the period between 2018 and 2022.

The Report highlights that the Commission and the NCAs were highly active during this period, together adopting 26 decisions in addressing anti-competitive practices, with another 30 ongoing investigations. These decisions together totalled fines amounting to over €780 million as well as legally binding commitments targeted at remedying the competition concerns. The Report indicates that throughout the investigations, a wide range of anti-competitive practices in the pharmaceutical market were discovered, consisting of pay-for delay agreements, excessive pricing and abusive litigation aimed at prolonging patent exclusivity.

The Commission and the NCAs have also been active on the merger control front, with the Commission alone having reviewed over 30 merger cases, raising competition concerns in five cases. The Report highlights that the Commission is closely monitoring the pharmaceutical market to identify any mergers which may raise anti-competitive concerns. It is also worth mentioning that the Report explicitly makes reference to the reappraised approach adopted by the Commission in the application of Article 22, which allows the Commission to review concentrations, even though they do not have a Community dimension as defined under the EU Merger Regulation¹. The Report highlights that the Commission is minded to exercise this power in mergers in the pharmaceutical sector, where such deals merit review and may harm competition.

Besides the enforcement work carried out in antitrust and merger control, the Commission and National Competition Authorities are also actively engaged in market monitoring with the purpose of unearthing obstacles that may hinder the proper functioning of competition and seeking whether they should act to remedy the same.

The Report serves to showcase that the proper functioning of the pharmaceutical market remains a top priority of the European Commission and the NCAs, with the ultimate goal of ensuring that medicine and healthcare remain affordable for consumers and innovation in this sector is safeguarded. It should also serve as a reminder to market participants such that their distribution agreements are aligned with the EU's antitrust rules, and any proposed M&A activity that they intend to pursue, does not give rise to competition concerns. Non-compliance may result in hefty penalties, private damages claims and reputational harm.

Footnote

1. Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings.

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