Pharmaceutical manufacturers may be restricting competition, showed explanatory proceedings carried out by the President of UOKiK. Due to the European dimension of the companies’ operations, the case was referred to the European Commission

The explanatory proceedings were carried out by the Office of Competition and Consumer Protection in order to make a tentative assessment of whether pharmaceutical manufacturers acted in compliance with antitrust law. The Office also carried out a survey and analysed contracts signed by the largest manufacturers and distributors with their wholesalers. The investigation covered e.g. the following companies: GlaxoSmithKline, Sanofi-Aventis, Servier, Novartis, AstraZeneca, Novo Nordisk, Pfizer, Eli Lilly, Roche and Bayer. The information obtained during the proceedings indicated that competition restricting practices may have been applied on the pharmaceutical market. The nature of the proceedings - especially the geographical scope of the companies’ operations - indicates that the consequences may affect the whole European Union. Therefore, the President of UOKiK decided to hand over the materials collected to the European Commission.

The main problems which UOKiK highlighted to the European Commission are contract clauses limiting the wholesalers’ trading area, imposed by manufacturers, as well as the practice of establishing quota restrictions for particular products.

According to the Office, what is concerning is the fact that the analysed documents contain certain signals indicating that manufacturers limit the wholesalers’ trading area, for example, only to the countries of the European Economic Area and in some cases only to the territory of Poland. The manufacturers reserve themselves the right to impose sanctions, for example, terminate the contract, if a wholesaler sells medicines outside the pre-defined area.

The information collected during the explanatory proceedings also indicate that quota restrictions are becoming an increasingly common practice. Manufacturers establish strict limits and refuse to carry out orders from wholesalers who exceed them. Such restrictions are most frequently used by manufacturers of innovative medicines. Consequently, this may significantly limit the availability of medicinal products which have no substitutes.

What also seems controversial is limiting the possibility of carrying out parallel trade, for example by prohibiting the contracting parties from establishing trade relations with companies from other European Union countries, which was reported by enterprises operating on the market. The survey carried out among pharmaceutical wholesales proves that manufacturers also apply other practices in order to limit parallel trade - they threaten to make the terms of cooperation less favourable or refuse to deliver their products.

According to the Office, the information collected during the proceedings shows that pharmaceutical manufacturers may be violating antitrust law. The area of their operations indicates that the results of the practices may concern the EU pharmaceutical market. Therefore, the materials collected were sent to the European Commission.

The European Commission and the national competition authorities of the European Union member states cooperate closely with each other applying the EC competition rules. For example, as part of the cooperation, the European Commission is informed about proceedings carried out by the NCAs. The Commission also has the power to initiate antitrust proceedings, and if the charges put forward are confirmed, fine the companies involved. The fines cannot exceed 10% of an enterprise’s total turnover obtained in the previous financial year.

UOKiK would also like to inform that on 13 and 14 May the European Competition Day is celebrated in the EU. The meetings, organised since 2000 by each EU Presidency, are a forum for exchanging experiences on antitrust law. This year’s conference, organised in Brno, is a chance to take stock of the five years of the European Competition Network’s functioning and to discuss many other vital competition law issues.

Additional information:
Małgorzata Cieloch, Spokesperson for UOKiK
Pl. Powstańców Warszawy 1, 00-950 Warsaw, Poland
Tel. (+48 22) 827 28 92, 55 60 106, 55 60 430
faks (+48 22) 826 11 86
E-mail: mcieloch@uokik.gov.pl