{"id":312,"date":"2016-12-24T10:00:40","date_gmt":"2016-12-24T10:00:40","guid":{"rendered":"https:\/\/www.competitionlawyers.co.uk\/blog\/?p=312"},"modified":"2016-12-21T16:31:48","modified_gmt":"2016-12-21T16:31:48","slug":"offering-discounts-breach-competition-laws-pharmaceutical-industry","status":"publish","type":"post","link":"https:\/\/www.competitionlawyers.co.uk\/blog\/offering-discounts-breach-competition-laws-pharmaceutical-industry","title":{"rendered":"Offering discounts can amount to breach of competition laws in the Pharmaceutical industry"},"content":{"rendered":"

The Competition and Markets Authority (CMA) opened an investigation in December 2015 for a suspected breach of EU and U.K. competition laws in the pharmaceutical industry.<\/p>\n

The CMA are looking at whether an unnamed pharmaceutical company has abused a dominant market position by offering discounts on products, which may have breached Chapter II of the Competition Act (CA), and Article 102 Treaty on the Functioning of the European Union (TFEU).
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\nThe CMA hasn’t published any further details on its investigation – i.e. the product or the company concerned – however, they’ve set a deadline for March 2017 to implement the next phase of the investigation in light of evidence received to date.<\/p>\n

When discounts are seen as anti-competitive<\/u><\/p>\n

By offering discounts on a product, the company has potentially tried to remove competition. This isn’t the first time that discounts have raised issues of anti-competitive practice – in 2012, the European Court of Justice (ECJ) handed a final judgment to say that discounts or rebates are considered as anti-competitive; especially in a case where the company is already in a dominant market position.<\/p>\n

The European Commission received a complaint from Prokent AG that Tomra Systems abused a dominant position by prohibiting Prokent from entering the market for reverse vending machines (RVMs). On top of this, Tomra made sure that all RVM customers stayed loyal by offering them discounts and rebates.<\/p>\n

In a competitive world there wouldn’t be much of an issue, as most retailers, like Costa Coffee for example, offer such loyalty schemes to ensure repeat custom. However, it can be problematic and deemed anti-competitive where the company already has a dominant market position, and this was the case here as Tomra’s existence in the marketplace weakened the competition in the RVM market.<\/p>\n

CA and TFEU<\/h3>\n

The CA and TFEU were created to promote the maintenance of competition within the EU. This was to ensure that companies weren’t creating monopolies and agreements that would hinder free choice and low prices for consumers and competitors alike.<\/p>\n

Chapter II of the CA prohibits companies from conduct that amounts to an abuse of a dominant position, which may have a negative effect on trade and the market in the U.K. Whether the pharmaceutical company has breached competition laws may depend on things like whether they have 40% market share. If they have less than 40%, it probably won’t be considered as an abuse of a dominant position. However, if this case is anything like the Tomra case, the pharmaceutical company will have breached competition laws.<\/p>\n

Chapter II prohibition<\/h3>\n

The Chapter II ‘prohibition’ gives specific examples of what may amount to an abuse of dominant position:<\/p>\n

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