CMA fines Advanz Pharma for excessive and unfair pricing

 

CMA fines Advanz Pharma for excessive and unfair pricing

The CMA has imposed penalties of over £100 million on Advanz Pharma for inflating the price of thyroid tablets.

The CMA finds that Advanz increased the price of thyroid tablet packs from £20 in 2009 to £248 in 2017, an increase of 1,110%.

The CMA says that this fine “sends a clear message” to the pharmaceutical sector that infringements of competition law will not be accepted.

The practices at issue were found to be an abuse of a dominant position contrary to the chapter II prohibition.  In 2007, Advanz developed a ‘price optimisation’ strategy whereby it de-branded certain drugs which faced limited generic competition.  In so doing, it could remove them from the price regulation regime which applied to branded drugs, allowing it pricing freedom.

The CMA finds that as a result of the infringements the NHS lost out.  In the year before the infringements were implemented NHS spending was £600,000, but by 2009 this had increased to over £2.3 million and was £30 million by 2016.

This decision is part of the CMA's ongoing work to tackle against anti-competitive practices in the pharmaceutical sector.

 

https://www.gov.uk/government/news/cma-fines-pharma-firm-over-pricing-of-crucial-thyroid-drug

CMA report in electrical vehicles market study

 

CMA report in electrical vehicles market study

The Competition and Markets Authority (CMA) has published its final report in its market study into the supply of charging for electric vehicles (EVs) in the UK.  The inquiry was launched in December 2020.

The CMA concludes that while some parts of the sector are developing quite well, including venues such as shopping centres, workplaces and private parking, other parts are faring comparatively worse.

This situation could have an impact on the UK’s wider commitment to net zero and the government’s commitments to ban the sale of new petrol and diesel cars, in each case by 2030.

Amongst the CMA’s recommendations are that the government set out a national strategy for rolling out EV charging between now and 2030.

The CMA also recommends that the government attaches conditions to its £950 million Rapid Charging Fund.

Separately, the CMA has also launched a competition investigation into long-term exclusive arrangements between the Electric Highway Company and three motorway service area operators.

The CMA has stated that it will work with government and the devolved administrations with a view to creating an EV sector that people can have trust and confidence in.  Given the importance of EVs, in particular to the achievement of net zero it is likely that this is not the last we have heard about competition in the sector.

https://www.gov.uk/government/news/further-action-needed-on-ev-charging-to-meet-net-zero

 

Consultation on new competition regime for digital markets

 

The Departments for Digital, Culture, Media and Sport (DCMS) and Business, Energy and Industrial Strategy (BEIS) have published a joint consultation on a new competition regime for digital markets and the establishment of the Digital Markets Unit (DMU).

The consultation crystallises the ongoing debate about whether we should establish ex ante economic regulation of ‘digital platforms’, with or without ‘enhanced’ competition law – and what form those regulatory frameworks should take place.  This question is a pressing priority for policymakers and competition authorities globally including in the UK, EU and internationally.

The consultation seeks views on: 1) the criteria and mechanisms that will identify which firms fall within the scope of the new regime; . 2)  a new code of conduct to promote open choices, fair trading and trust and transparency; 3) the powers the DMU will have to make pro-competition interventions that will address the root causes of market power; 4) a distinct merger regime for firms with strategic Market Status (SMS), overseen by the Competition and Markets Authority.  To designate a firm with SMS, the DMU will be required to test and conclude that a firm has substantial and entrenched market power in at least one activity, providing it with a strategic position.  There is no broadly accepted regulatory model.  For example, should all platforms meeting certain criteria be regulated in the same way?  

The deadline for responding to the consultation is 1 October 2021.

 

 

https://www.gov.uk/government/consultations/a-new-pro-competition-regime-for-digital-markets

 

CMA fines for excessive and unfair pricing and market sharing in the supply of hydrocortisone tablets

The Competition and Markets Authority (CMA) has imposed fines totalling over £260 million for competition law violations in relation to the supply of hydrocortisone tablets.

Hydrocortisone is used to treat inflammatory skin conditions as well as Addison’s Disease, a rare adrenal glands disorder.

The CMA found that Auden Mckenzie and Actavis UK (now “Accord UK”) imposed on the NHS “excessive and unfair” prices for hydrocortisone tablets from 2008 to 2018.

The CMA further found that the companies paid generic suppliers to keep their rival products out of the UK market. It appears that this so called “pay for delay” element of the case was a significant factor in the high prices. The CMA states that the NHS was at one point being charged over £80 for a single pack of tablets that had previously cost less than £1.

The decision represents the most significant and authoritative UK competition case to date on excessive pricing (at least until there is a new decision in the Pfizer/Flynn case). This has traditionally been one of the more difficult areas of competition law infringement to establish. The case comes as a warning shot that the CMA will not shy away from bringing a competition case in respect of excess pricing where it believes that consumers (here, the NHS and the taxpayer) are paying over the odds because the market is deprived from new (generic) entry.

https://www.gov.uk/government/news/cma-finds-drug-companies-overcharged-nhs

#pharmacompetition

Commission fines car manufacturers €875 million for restricting competition in emission cleaning

 

Commission fines car manufacturers €875 million for restricting competition in emission cleaning

The European Commission has found that Daimler, BMW and Volkswagen group (Volkswagen, Audi and Porsche) violated EU competition law by colluding on technical development in the area of nitrogen oxide cleaning.

The Commission imposed penalties of €875,189,000.

Daimler avoided a fine which would have amounted to around €727 million..  As the leniency applicant it revealed the existence of the cartel to the Commission.  

The Commission applied a reduction of 10% of the fines of all parties under the 2008 Settlement Notice in view of the acknowledgment of their participation in the cartel.

The Commission found that the parties colluded from June 2009 to October 2014 by indicating to each other that none of them would aim above the minimum standards required by law.  Interestingly the Commission abandoned some of its earlier allegations where it found insufficient evidence to substantiate them.  The Commission did not pursue that part of its case that the collusion also affected petrol cars.

The decision is aligned with the Commission’s Green Deal agenda even if it is not presented as such. However this does not mean that all cooperation on green technical development is a hardcore infringement and the Commission will need to provide guidance so as to distinguish what is flagrantly anti-competitive and what might be pro-competitive on a balancing of the benefits and risks to competition.

https://ec.europa.eu/commission/presscorner/detail/en/ip_21_3581

Subsidy Control Bill published

 

Subsidy Control Bill published

The government has introduced the Subsidy Control Bill to Parliament.

BEIS has also published the government's response to its February 2021 consultation on the proposed design of the new UK regime.

BEIS expects to publish further details on implementation and guidance.  The government expects that the new regime will come into force in 2022, subject to Parliamentary approval.

The Subsidy Control Bill sets out the framework for a UK subsidy control regime that meets the UK's international commitments including those in the UK-EU Trade and Co-operation Agreement.  This reflects the following main features:

·       Public authorities must consider seven subsidy control principles before deciding to award a subsidy/make a subsidy scheme and the subsidy/subsidy scheme must be compatible with those principles.  

·       Exemptions for certain types of subsidy, including those with a value below £350,000, services of public economic interest assistance below £725,000, natural disasters and other exceptional circumstances, and national and global economic emergencies.

·       Certain types of subsidy will be prohibited, or only permitted subject to specified conditions.

·       Transparency requirements relating to the award of subsidies/making a subsidy scheme.

·       A Subsidy Advice Unit (SAU) will be set up within the Competition and Markets Authority (CMA), with the functions of monitoring and oversight, and providing pre-award and post-award advice.

·       The Secretary of State develop a streamlined approach for subsidies at low risk of distorting competition, trade and investment; that promote the government’s strategic objectives; and which the government assesses to be compliant with the principles.  This will be set out in guidance.

·       The Secretary of State will, in secondary legislation, designate some types of subsidy as "subsidies of interest" or "subsidies of particular interest".  

·       Public authorities can ask the SAU to provide advice on subsidies of interest (voluntary referral) and must ask the SAU to provide advice on subsidies of particular interest (mandatory referral).

·       The Secretary of State can “call in” a subsidy or scheme before it is granted or made, requiring it to be referred to the SAU.

·       The CMA SAU also be asked to provide post-award reports on subsidies.

·       The Competition Appeal Tribunal (CAT) will hear appeals by interested parties (or the Secretary of State) against subsidy decisions, using judicial review principles.

·       The CAT will be able to make recovery orders.

 

BEIS press release:  https://www.gov.uk/government/news/new-subsidy-system-to-support-uk-jobs-and-businesses-boost-the-economy-and-strengthen-the-union

Subsidy Control Bill:  https://www.gov.uk/government/collections/subsidy-control-bill