In a froth: Trademark licensing fails to disguise anti-competitive market sharing arrangement

The CMA has today issued a £1.71m fine against two laundry companies for market sharing.  Micronclean Limited was fined £510,118 and Berendsen Cleanroom Services Limited was liable for £1,197,956. The companies both specialise in laundering clothes worn in ‘cleanrooms’.  These are highly sterile environments, with meticulous rules on the cleanliness of equipment and clothing, which are vital in the manufacture of pharmaceuticals and medical devices.

The two companies had established a joint venture agreement in the 1980s where both traded under the ‘Micronclean’ brand.  However it was only in 2012 that they started the market sharing arrangement, attempting to mask it as a reciprocal trademark licence arrangement.

This arrangement had two problematic elements.  First an artificial line was drawn between London and Anglesey; customers south of that line were reserved for Berendsen, whilst those to the north were allocated to Micronclean.  Second, over and above the territorial restrictions, companies decided to reserve specific customers to themselves and agreed not to compete for them.

Geographic market sharing and customer allocation is illegal (other than where legitimate exclusivity arrangements are concluded as part of a broadly pro-competitive agreement such as technology licensing). In this instance, the CMA did consider whether the arrangement, when taken as part of the wider joint venture agreement, could be justified.  Unfortunately for Micronclean and Berendsen the CMA concluded that it could not.  In particular the CMA found that the companies were competitors and two of the biggest players on the market. This left customers, including the NHS, with few options in choosing service providers. 

The existence of the trade mark agreement did nothing to change that fundamental position. Trade mark licences do not generally fall within the scope of the Technology Transfer Block Exemption.  In any event, the EU Commission’s Guidelines on Technology Transfer, which provides broad guidance on the analytical approach to the competitive effects of IP licensing, make clear that sales restrictions agreed between competitors in a licensing arrangement are likely to be regarded as market sharing, particularly where the licence is a cross licence (or “reciprocal” in the language of the block exemption) – and so it proved here.

This case serves as a reminder that anti-competitive practices which take place under the guise of an IP licence will not avoid scrutiny by the competition authorities.  In this instance the arrangement came to light in the context of two related merger reviews in the industry undertaken by the CMA – also a reminder of the importance of due diligence and early review of competition issues in the context of corporate transactions. As Ann Pope, Senior Director at the CMA added to the press release: “Companies must regularly check their trading arrangements, including long-running joint ventures and collaborative agreements, to make sure they’re not breaking the law.

Third-party platform bans justified for genuinely luxury brands

The Court of Justice of the European Union (‘CJEU’) has today ruled that third-party platform bans may be justified in the selective distribution of luxury goods. The CJEU’s decision in the Coty Germany reference proceedings broadly follows the opinion of Advocate General Wahl which was handed down earlier this year (see here, and further background here). 

The Court makes a number of rulings which will be of interest to brand owners:

  • Selective distribution may be justified for luxury goods to protect the ‘allure and prestige’. This clears up the uncertainty which arose following the Pierre Fabre judgment which seemed to suggest that the preservation of a luxury image could not justify a restriction of competition. The CJEU has confirmed that the judgment in that case should be confined to the particular facts at issue.
  • Third party platform bans may be justified in the selective distribution of luxury goods. The CJEU has ruled that, in the context of selective distribution, a supplier of luxury goods can, in principle, prohibit authorised distributors from using ‘in a discernible manner’ third-party platforms such as Amazon. Any third-party platform ban must have the objective of preserving the luxury image of the goods, be applied uniformly and not in a discriminatory fashion, and be proportionate to the objective pursued.

This ruling certainly gives some more leeway for brand owners of luxury goods, but should not be seen as an absolute green light for third-party platform bans. In particular, such restrictions must be justified by the goods in question (i.e. they must have a genuine ‘aura of luxury’) and must be a proportionate means of preserving the luxury image. This will be for national courts and authorities to interpret, and we can expect a fairly high threshold. The German Competition Authority, the Bundeskartellamt, has already said that it considers the CJEU’s decision to be limited to genuinely prestigious products. That said, the ruling does make clear that third-party platform bans do not amount to a hardcore restriction of competition, and thus it will be open to brand owners to seek to justify their use on a case-by-case basis.  

Commission Communication on SEP Licensing – where has the Roadmap led?

Following around a year of lobbying and intensive debate, the Commission has today (29 November 2017) published its Communication on ‘The EU Approach to Standard Essential Patent Licensing’.  

As we reported back in April when the Commission published its initial ‘Roadmap’ for this area, the Communication is intended to address some of the uncertainties in SEP licensing left unresolved following Huawei v ZTE (see e.g. here), and to drive progress for the EU-wide adoption of 5G.  

And as we predicted a couple of months ago, the intensity of the debate surrounding the key issues in SEP licensing means that the Communication is far from overly prescriptive. 

The Communication will take a little while to digest in full, but for now the headline points are:

  • The current declaration system needs modernising to ensure greater transparency about which SEPs are actually essential and – in an era of great patent liquidity – who owns them. A new EU body may become involved in this.  And if this all seems rather aspirational, to be noted that the Commission is aware of the (not inconsiderable) costs implications, and suggests that changes may only be possible prospectively, e.g. for 5G…
  • There remains significant flexibility in how FRAND values are established, but a couple of preferences emerge from the guidance
    • ‘In principle’, FRAND values should not include any value attributable to the inclusion of the technology in the standard.  This is in line with previous statements in the Commission’s Horizontal Guidelines, and diverges from the approach in Unwired Planet, where both parties accepted that some such value could be taken by the patentee (see para 97).  However, where technology “has little market value outside the standard” (hardly an infrequent situation), other techniques may be needed, such as comparisons between types of contribution.
    • Aggregate royalty rates are important, and should be taken into account.  The Commission proposes that FRAND value should reflect the  “present value added” by the SEP, bearing in mind that this can change over time, and that it should not include value attributable to market success of the product.
  • Non-discrimination between similarly situated licensees remains fundamental, and evidence of non-discrimination forms part of the information that SEP holders should provide to licensees.  
  • Chipset licensing remains possible – but is not mandated.  One of the key areas of dispute in industry was whether the FRAND obligation required SEP holders to license all comers, including component manufacturers, or whether they can decide to license end manufacturers (thus giving a higher potential royalty base) to the exclusion of those higher up the value chain.  The report does not come off the fence on this issue, save to say that business models may vary from sector-to-sector.  Cases such as Apple v. Qualcomm will therefore have to continue to fight this issue out from first principles.
  • Use-based licensing is not mandated – but nor is it wholly out of the question.  This is another area of significant dispute in industry, with a deep split between rights holders and potential licensees (see the Fair Standards Alliance’s response to the Communication here…).  The concept behind use-based licensing is that it allows SEP holders to charge different rates for different uses (e.g. compare a smart car, a smartphone and a smart thermostat).   The Communication does conclude that FRAND is not a one-size-fits-all concept, and may differ from sector-to-sector and over time.  However, it also emphasises the need not to discriminate between similarly–situated parties.  
  • Safeguards against the inappropriate use of injunctions are still needed to prevent both exploitation (using threats to extract unfairly high licence terms) and exclusion.  Companion papers giving guidance on ‘certain aspects’ of the IP Enforcement Directive (here) and on ‘A balanced IP enforcement system’ (here) have also been published.
  • The Communication confirms that non-practising entities should be subject to the same rules (including on transparency and injunctions) as other SEP holders.  As with many of the points in this paper, there is no big surprise here.
And overall?  The Communication will be pored over by industry, and – while not binding in any strict legal sense – will no doubt feature in arguments on both sides of the FRAND debate.  There are certainly some common-sense points in here, as well as some regulatory aspiration.  But if this is a roadmap, it is certainly not the end of the road – and we will continue to watch as the debate unfolds in the UK, Europe and beyond.

Deciding on terms of privacy policies – what are the risks of anti-competitive collusion?

Big data is the talk of the town in competition circles.  But it is perhaps a more mundane concern which could pose greater risks for a larger number of companies.  An article by a couple of regular CLIP Board contributors published earlier this year in Privacy Law International notes the increasing tendency to regard privacy as a parameter of competition, and explores the risks of collusive conduct being identified in relation to the terms of privacy policies. Is there a risk of a future information exchange case around the treatment of data privacy?  Could a concerted practice be found where companies benchmark their privacy policies against each other? Would this be as serious a concern as exchanges relating to future pricing intentions? 

Read on for our views on all of these questions here

Dutch Health Council’s proposal of compulsory licensing as solution to high pharma prices

Shortly before becoming the new home of the EMA, the Netherlands piqued the interest of the pharma industry with a controversial move on drug pricing.  The move consisted of a recommendation by the Dutch Council for Public Health and Society (“RVS”) that the government should use compulsory licences when a medicine is priced too high, or in RVS’s words, does not have a “socially acceptable price”. In this article, we touch upon the significance of such a proposition in the regulatory sphere, as in our regulatory colleagues’ eyes this could result in a violation of the established IP regulatory rights enacted in EU legislation.  However, for now our focus is on the significance of the move from a competition law standpoint.

Readers of this blog will be more used to thinking about price reduction measures and compulsory licensing issues through the lens of competition law.  However, the RVS bases its recommendation in part on Article 8 of the TRIPs Agreement, which allows measures that protect public health or prevent the (anti-competitive) abuse of intellectual property rights resulting in the unreasonable restraint of trade or of international transfer of technology.  Further provisions relevant to compulsory licensing are covered in Article 31 of TRIPs, which provides for certain rights to use the subject matter of a patent without the rights holder’s authorisation, provided rights holders are remunerated for the licence based on the “economic value of the authorisation”. 

In recent years, considerable attention has been given by competition authorities to possible instances of excessive pricing.  To date, those cases (such as Pfizer/Flynn, currently on appeal before the UK’s Competition Appeal Tribunal, or the latest Statements of Objections issued by the Competition and Markets Authority (“CMA”) to Actavis and Concordia) have focussed on prices of legacy generic products. By contrast, the RVS’s proposal is firmly focussed on cost containment measures for new, patent-protected, medicines, but is not limited to potential blockbusters.  

The RVS’s criticism of current prices and consequently its recommendations extend to orphan drugs (medicines for very rare diseases affecting less than five out of 10,000 people in the EU population), which by definition benefit only a very small part of the population. The relatively high cost of R&D and production for orphan drugs, juxtaposed against the narrower reach/ patient pool and thus lower profit margin, has resulted in the EMA providing additional incentives for the development and commercialisation of those products. The Dutch authority’s recommendations therefore appear somewhat contrary to the spirit of the EMA’s policies aiming at encouraging investment by innovators in these areas, but is perhaps motivated by concerns expressed by some around the increasing use of orphan drug status (the concept of ‘orphanizing’, alluded to here). 

There is an absence of any definition of or set of criteria to determine what might constitute ‘high’ or ‘socially unacceptable’ pricing. The RVS proposal is not a new concept and in fact the subject of high or ‘excessive’ pricing in the pharma industry has occupied European stakeholders and has been the subject of investigations on a national and European level over the past few years. In June 2015, in response to a European Parliament  member’s (MEP) suggestion of compulsory licensing as a means to lower drug prices, the Commission stated that this is a matter to be dealt with at national level and that neither the Commission nor the EMA are competent to take such action.

The UK’s approach to compulsory licensing differs significantly from the Dutch proposal. Compulsory licensing is a rare breed in the UK, as it is only a measure to be taken for an abuse of monopoly stemming from patent rights – and it is very often the case that the relevant authorities prefer alternative means. Where new drugs are concerned, the question of cost effectiveness of medical treatments lies primarily in the hands of NICE.  As noted above, the CMA has been particularly active over the past year in pursuing practices which result in elevated prices for generic pharmaceuticals  But rather than automatically holding that very high prices are inherently anticompetitive, the CMA appears to draw a distinction between abusive ‘excessive pricing’, which is artificially and unjustifiably inflated pricing or increased pricing once a gap in competition on the market is identified, and high pricing which properly reflects the cost of development and production of a new drug. 

Our (not excessively priced) two pennies’ worth on this proposal is that imposing a compulsory licensing system for drugs which are not priced in a ‘socially acceptable way’ is, at best, a vague proposition which is likely to alarm and be met with adamant opposition by the industry. With much uncertainty as to what may constitute ‘excessive pricing’ or the ‘appropriate remuneration’ for the rights holder, there will be great scope for dispute. From a regulatory perspective, the fact that this measure might make it possible for governments to bypass rights such as the regulatory data protection (RDP) is a concerning prospect.  More generally, this proposal strikes at the heart of the delicate balance between long-run innovation incentives in a high risk/high reward sector, and short-term costs considerations around access to existing medicines.  The struggle between both sides of this debate looks set to continue.

EU reaches agreement to end unjustified geoblocking

On 20 November the European Parliament, the Council and the Commission reached an agreement to adopt the proposed Geoblocking Regulation, which will come into force nine months after its publication in the EU Official Journal.

The Regulation is a key plank of the Commission’s Digital Single Market Strategy and it is intended to end unjustified geoblocking for consumers wishing to buy products or services online within the EU. 

The Commission’s other measures in relation to the digital single market include its e-commerce sector inquiry (here and here) and its antitrust investigation into absolute territorial restrictions in the distribution arrangements between Sky UK and the six Hollywood film studios (on which we have commented extensively here, here and here).

What about competition law?

An important rationale for the Regulation is that restrictions to cross-border sales by online traders are often unilateral and so do not constitute an “agreement or concerted practice” within the meaning of Article 101 TFEU.  Rather, a restriction on cross-border trade will only be caught by competition law if it is due to an agreement with a supplier, or the online trader is in a dominant position. 

Competition law’s limited ability to take action against unilateral conduct is underlined by the Commission’s closing of its investigation into Apple’s differential pricing policy for downloads, that resulted in UK consumers paying more than consumers in other Member States.  The issue was ultimately resolved by voluntary commitments from Apple in 2008 (here).

What is geoblocking?

Geoblocking is a term given to the practical and technical measures used by online traders to deny access to websites, or online services, to consumers based in Member States other than the website domain.  The Commission considers that these restrictions often result in consumers being charged more for products or services purchased online.

A well-known example of geoblocking is the car rental market: renting a car from a company in the UK can cost up to 53% more than renting from the same company in Poland, but a UK consumer cannot access the Polish site for the cheap deals.

What does the Geoblocking Regulation prohibit?

The Regulation prohibits unilateral commercial behaviour which discriminates on the basis of where a person is from, where they live or where a business is established. 

It does not (currently) apply to copyright protected works, nor does it harmonise prices between different EU Member States, or impose an obligation to sell. It also prohibits agreements containing passive (or unsolicited) sales restrictions which violate the rules.

The specific prohibitions are:

  • Geoblocking: A trader must not block or limit customers' access to websites because of a customer's nationality, residence or place of establishment.
  • Redirecting a customer without permission: A trader must seek permission before redirecting based on nationality or location.  Even if a customer agrees to the redirection the trader must make it easy to return to the website originally searched.
  • Discrimination: On the grounds of nationality/residence/place of establishment is prohibited; for applying example different terms and conditions on such grounds will not be permitted.  This prohibition applies to: 
    • sales of goods when the trader is based in a different Member State to the customer (for example buying a car or a refrigerator);
    • all electronically-supplied services, other than copyright-protected works, (for example internet hosting services); and
    • the sale of services provided in a specific physical location (for example buying a trip to an amusement park in another Member State). 
When is geoblocking justified? 

The Regulation accepts that some forms of geoblocking may be justified, for example in relation to specific national VAT obligations or different legal requirements.

French Pharma – French Competition Authority launches new sector enquiry

The CMA has opened an unprecedented number of new investigations in the pharmaceutical sector in the past month, with 4 new investigations during October 2017 (see the ‘update’ section here).  However, the CMA is not the only national competition authority to be focusing its attention on the pharmaceutical sector, as, on 20 November 2017, the French Autorité de la concurrence announced a new enquiry into the industry. The issues set to be addressed have been recently covered by the French authorities in a 2013 sector enquiry (and see our earlier post here), so it will be interesting to see whether any progress has been made.

The new enquiry will again examine the pharmaceutical distribution chain.  First, it will look at the changing role of intermediaries. The previous enquiry had found that intermediaries such as wholesale distributors and purchasing group networks often struggled to counter the market power of the large manufacturing companies.  A particular source of difficulty arose from the decision of many pharmaceutical companies to start selling direct to the large pharmacy chains. This is particularly challenging to smaller pharmacies who are unable to match the buying power of the chains and then offer their customers competitive prices. The current enquiry will investigate whether the intermediaries are playing a greater role compared to 2013, particularly in regard to sale price dynamics.

This issue was also addressed by the UK authorities in an OFT Medicines Distribution Market Study in 2007. Traditionally, branded medicines for which a price had been agreed under the Pharmaceutical Price Regulation Scheme (PPRS) were supplied to the NHS via intermediaries such as wholesalers. However, some manufacturers were starting to implement ‘Direct to Pharmacy’ (DTP) schemes and the OFT examined the potential impact of these new arrangements. The study found that whilst DTP schemes could bring efficiency benefits, there were also risks of cost increases to the NHS due to the lack of purchasing choice available to pharmacists who frequently have no choice over which medicine to dispense (for an example of this in action see the Pfizer/Flynn excessive pricing case which we covered here). 

Second, the new enquiry notes that France has heavy regulatory restrictions on the sale of non-prescription medicines. The Autorité has previously recommended that such restrictions be gradually removed, and in particular that online sales be permitted. This was in response to the finding that the “intensity of competition between dispensing chemists is relatively low, as demonstrated by major differences in pricing observed for medicinal products that are not reimbursed”. However these recommendations have not yet been implemented, whereas many of France’s European neighbours do allow online sales. The enquiry will therefore examine this topic again, taking into account new developments and ideas such as the creation of pharmacy chains and their flotation, and the relaxation of rules around advertising.

As reflected by the CMA’s recent investigations (see Pfizer/Flynn above, as well as the statements of objections sent to Actavis (in December 2016) and to Concordia (within the past week)), the Autorité will also look at pricing.  In France there are two categories of pharmaceuticals: reimbursable products where the price is set by negotiation between the French Economic Committee for Healthcare Products and the manufacturers, and generic medicines where prices are set by the market (as in the UK, until the recent passing of new legislation).  In 2013 the Autorité had observed that some generic products were subject to inflated prices due to the “existence of considerable ‘disguised’ rebates”.  Since 2013, a scheme has been implemented under which rebates have to be declared to the regulatory authorities. This new enquiry will therefore examine whether this scheme has been successful, and whether the heavy discounts often given by the pharmaceutical companies to the dispensing chemists are passed onto consumers. The enquiry also plans to examine the criteria used in the negotiation of reimbursable medicines, as well as the bargaining power of hospitals when negotiating prices with pharmaceutical companies.

In due course we will report further on how the Autorité views the current state of the French medicines distribution market and whether it leads to any infringement investigations following on from the sector inquiry.

Economical with the truth? When providing misleading information to authorities might be an object infringement

One of the more intriguing Opinions to be given by an Advocate General recently came out in late September (Case C-179/16, F. Hoffmann-La Roche and Others v Autorità Garante della Concorrenza e del Mercato (AGCM), Opinion of Advocate General Saugmandsgaard Øe delivered on 21 September 2017). 

 It is full of interesting observations on market definition in the pharma sector; the distinction between object and effect; how to look at the question of competition between licensors and licensees under the Technology Transfer Regulation; and how to assess whether a restriction of competition exists. We will be writing about these (and more) a bit later, but thought that in the meantime those of you who are particularly interested in Life Sciences might want to take a look at our sister blog On The Pulse. A short article has been posted there which briefly summarises the Advocate General’s views on whether there is a duty on pharma companies under Article 101 not to agree to provide information which is objectively misleading to the regulatory authorities. In this instance the information found to be misleading related to the relative safety of two products, one of which was authorised to treat ophthalmic conditions and one of which was not, but which was being prescribed off-label – so quite unusual circumstances (although perhaps a situation that could be expected to arise more in future, as second, third and fourth medical uses become the norm).

You may remember that a similar legal issue has already been discussed under Article 102 in the AstraZeneca case (see here and here) where dominant companies were found to be subject to a duty to act transparently when dealing with the patent authorities. The extent of the duty was somewhat modified by the CJEU, but the obligation to provide all relevant information, and to clarify information which subsequently turns out to be incorrect, still exists. It will be interesting to see whether the CJEU follows the Advocate General in his approach to identifying a similar duty under Article 101, and whether the Advocate General’s expansive reading of when information may be misleading is approved by the Court.

Pat Treacy

Product hopping: The competition law risks of launching new product formulations

‘Product hopping’, or ‘evergreening’, are expressions used (by competition authorities and industry respectively) to describe strategies employed by pharmaceutical companies to protect sales of a successful drug on the verge of losing patent protection. For example, a pharmaceutical company might introduce a new formulation of the drug before it faces significant competition from a generic alternative.

There is nothing inherently wrong with product hopping. The European Court of Justice has recognised that it is legitimate for pharmaceutical companies to adopt strategies seeking to minimise the erosion of their sales when faced with competition from generic products1. In addition, the development of a new and improved formulation of a drug can be extremely beneficial, both to the patients that might find it more effective, and to society as a whole for the jobs created in researching, manufacturing and marketing the new product.

However, there is a growing line of case law in the US and Europe that illustrate the competition law risks involved with product hopping. In all of these cases, the issue has not been the introduction of a new formulation. Instead, it has been other specific elements of the strategies employed by pharmaceutical companies to encourage consumers to switch to the new formulation that have caught the attention of the courts and regulators, particularly where this has prevented consumers from having a choice between a branded drug and generic version. 

Europe

Cases in Europe offer some clear examples of this. When withdrawing Losec capsules in favour of new Losec tablets, AstraZeneca deregistered its marketing authorisation for Losec capsules in several EU Member States. This prevented generics manufacturers from relying upon the clinical trials conducted for Losec capsules when applying for authorisation for a generic version, making it for more difficult for generics to enter the market. The deregistrations, in the absence of any objective justification, were found to be an abuse of a dominant position2.

In the UK, Reckitt Benckiser replaced its original Gaviscon product with a new version, Gaviscon Advance. This was done after the original patent had expired but before a generic name for the original product had been published, with the result that prescriptions could only be written for the new branded product. In finding that this was an abuse, the UK regulator held that it would have been commercially irrational to withdraw the original product had it not been for the anticipated benefits of delaying generic competition3.

In both cases, the introduction of the new product was not anti-competitive, however, the combination of that and the exploitation of the underlying regulatory framework was found to breach competition law.

USA

In the US, the focus has also been on actions by pharmaceutical companies that remove the consumer’s ability to choose. 

In State of New York v Actavis4, a US Appeal Court drew a distinction between a ‘soft switch’ and a ‘hard switch’. Actavis manufactured a successful twice-daily Alzheimer’s drug, Namenda IR. In 2013, it introduced a once-daily version, Namenda XR. The new drug contained the same active ingredient, memantine. Actavis began an aggressive marketing campaign to switch patients on to Namenda XR, and made use of rebates to offer it at a low price. This was the soft switch. Then, in August 2014, a year before it was due to lose patent protection on Namenda IR, Actavis discontinued it. The Court described this as a hard switch; the discontinuation left Namenda XR as the only option for patients before the entry of a generic version of Namenda IR. The court held that the hard switch crossed the line from persuasion to coercion, and was anti-competitive.

More recently, in early September 2017, the US District Court for the Eastern District of Pennsylvania denied Indivior’s motion to dismiss a claim brought against it by the State of Wisconsin (along with a number of other States) alleging anti-competitive behaviour relating to its marketing and sale of Suboxone5. In finding that Wisconsin had a plausible claim, the court noted that Indivior had near simultaneously introduced a new Suboxone film, removed its Suboxone tablets from the market, and engaged in a marketing campaign to disparage Suboxone tablets. This was done before the entry of generic competitors into the relevant market, leading to a restriction of the ability of consumers to choose between the branded products and a generic alternative.

Interestingly, although the plaintiffs characterise Indivior’s conduct as a hard switch, the generic alternative to Suboxone tablets had been on the market for almost two weeks before the tablets were withdrawn. Arguably, Suboxone tablet prescriptions could simply have been replaced with generic tablets at this point. However, realistically this could only occur for patients who needed to renew their prescriptions in that short period of time. In addition, the plaintiffs claim that even by the time generic tablets received FDA approval in February 2013, 85% of Suboxone prescriptions were already for film instead of tablets. If this case proceeds to trial, the focus may therefore be on the soft switch elements to Indivior’s strategy: the disparagement of tablets leading to the rapid take-up of film. In denying the motion to dismiss, the judge noted that summary judgment record might be different, suggesting that he wasn’t completely convinced by the merits of the plaintiffs’ case.

Will the case law develop further?

It’s possible that in the future we may see competition authorities or courts seeking to penalise conduct that is closer to a soft switch than hard switch. After all, in France in 2016, the Cour de Cassation upheld the €40.6m fine imposed on Sanofi-Aventis by the French Competition Authority in May 20136. Sanofi-Aventis was found to have denigrated generic competitors of its drug Plavix in its communications with doctors and pharmacists; it encouraged them to indicate on Plavix subscriptions that the drug was “non-substitutable”. This was not a hard switch – there was a generic alternative available, but the conduct had a similar effect to a hard switch; it partially foreclosed generic entry to the French clopidogrel market (leading to a softening of competition, as Sanofi lost market share to generics much more slowly than it otherwise would have). 

For now though, it remains the case that pharmaceutical companies can continue to take steps to extend the lifetime of their product ranges, as long as they are careful to ensure that any introduction of a new formulation is not supported by a strategy that limits the ability of generics of the earlier formulation to enter the market. Where companies avoid that potential pitfall, the introduction of new formulations benefits patients: and pharmaceutical companies’ promotion of those positive attributes epitomises legitimate competition on the merits.

______________________________________________
1 AstraZeneca v Commission, Case C-457/10 P, at 129.
2 AstraZeneca v Commission, Case C-457/10 P.
3 Decision of the Office of Fair Trading, predecessor to the Competition and Markets Authority, in Case CE/8931/08, decision of 12 April 2011 at 6.64.
4 State of New York v. Actavis, Case No. 14-4624 (2d Cir. 2015)
5 State of Wisconsin et al. v. Indivior Inc. et al., case number 2:16-cv-05073.

Introducing On the Pulse – the Bristows life sciences microsite

Bristows has recently launched On the Pulse, a microsite offering legal analysis and practical tools that our life sciences readers may find useful.

The site is organised by sector, covering pharmaceuticals, biotech, medical devices, health care and animal health. There is a Brexit section, touching on many aspects from data protection to tax issues, and from scientific funding to the UPC. The Tools menu allows access to a number of standard documents in different areas, including competition/procurement

There are already a number of competition focused posts from our regular contributors, with Aimee Brookes writing about excessive pricing, Matthew Hunt on product hopping and rebates, Noel Watson-Doig on the NHS approach to biosimilar procurement and on standardisation agreements in pharma and Francion Brooks on CMA enforcement in the pharmaceutical sector. We hope our readers find it a useful resource and we will continue to link to any relevant articles from here.