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

Commission opens competition investigation into Google’s online advertising practices

 

 

Commission opens competition investigation into Google’s online advertising practices

The European Commission has launched an antitrust investigation into whether Google has breached the EU competition law prohibitions on restrictive agreements and abuse of a dominant position under Article 101 and 102 TFEU.

The Commission is concerned that Google has favoured its own online display advertising technology services in the 'ad tech' space.  It is investigating whether these practices disadvantage competing advertising technology services providers, advertisers and online publishers.

The Commission will investigate requirements to use certain Google services and Google Ad Manager.  

The Commission is also investigating Google's plans to prohibit the placement of third party cookies on Chrome and replace them with a "Privacy Sandbox".  This will stop making the advertising identifier available to third parties on Android devices when the user ‘opts out’ of personalised advertising.

The Commission will take into account the need to protect privacy, in accordance with the GDPR.  This part of the investigation mirrors a similar inquiry by the UK Competition and Markets Authority (CMA).  The CMA indicated last week that it was minded to close this part of its investigation by allowing the authority to have a role in third party cookies policy.

This EU investigation is high profile and big stakes.  This is the Commission’s fourth antitrust probe into Google relating to technology/IP/IT practices.  It reflects similar themes to the previous Shopping, Android and AdSense investigations.  Google is appealing all these decisions.  The penalties imposed totalled approximately EUR10 billion and required Google to change a host of its business practices.

https://ec.europa.eu/commission/presscorner/detail/en/ip_21_3143

CMA Consultation on UK version of Vertical Restraints Block Exemption

 

CMA Consultation on UK version of Vertical Restraints Block Exemption

The Competition and Markets Authority (CMA) is consulting on the retained EU Vertical Agreements Block Exemption Regulation (European Commission Regulation 330/2010) (VBER).  The CMA invites responses by 22 July 2021.

The CMA proposes to replace the retained VBER, upon expiry on 31 May 2022, with a UK Vertical Agreements Block Exemption Order (UK VABEO).

The UK VABEO will be tailored to the needs of the UK market.

The CMA intends to extend the exemption to cover wholesalers and independent importers who are also active in the downstream market and asks whether the current £44 million turnover threshold for such agreements should be revised.

The CMA considers that the current rules on hardcore restrictions which would prevent the block exemption applying are fit for purpose, except in relation to:

·        Territorial and customer restrictions, where the CMA plans to clarify the boundary between active and passive sales.

·        Indirect measures restricting online sales.  The CMA proposes to remove the prohibition of dual pricing and the requirement for overall equivalence from the list of hardcore restrictions.

·        Parity obligations (most favoured nation clauses or “MFNs”), where the CMA intends to add wide parity obligations to the list of hardcore restrictions.

The CMA considers that resale price maintenance (RPM) should remain a hardcore restriction.

The CMA will review the block exemption after six years to reflect the fast movement of market developments, not least the growth in online sales, Brexit and business cooperation in the wake of COVID-19.

https://www.gov.uk/government/consultations/retained-vertical-agreements-block-exemption-regulation-consultation

Market study in mobile ecosystems

 

Market study in mobile ecosystems

The Competition and Markets Authority has launched a market study into mobile ecosystems in the UK.  The CMA’s focus is on the role of Google and Apple over the supply of operating systems, app stores and web browsers.

The market study will assess potential consumer harm in four areas 1) competition in the supply of mobile devices and operating systems; 2) competition in the distribution of mobile apps; 3) competition in the supply of mobile browsers and browser engines; and 4) the role of Apple and Google in competition between app developers.

The CMA invited comments on the statement of scope, published alongside the study, by 26 July 2021.  

The CMA aims to publish an interim report on whether it will make a market investigation reference by 14 December 2021.  That process itself could take 18 months.

The CMA must publish its final report on the market study by 14 June 2022.

The study is proposed to be wide ranging and some would say it is long overdue.

https://www.gov.uk/government/news/cma-to-scrutinise-apple-and-google-mobile-ecosystems

Commission publishes preliminary report on consumer Internet of Things

 

Commission publishes preliminary report on consumer Internet of Things

 

The European Commission has issued interim findings in its sector inquiry into the Internet of Things (IoT).

The study raises concerns about the relationship between voice assistants as the link between smart devices and intermediaries and a lack of interoperability in the sector.

Unsurprisingly, the study reveals concerns about large amounts of data being consolidated in in the hands of a few vertically-integrated companies; namely Google, Amazon and Apple.

The Commission is consulting on its preliminary findings until 1 September 2021.  It plans to publish its final conclusions in the first half of 2022.

The results will inform the Commission’s regulatory and competition law enforcement strategy and they could frame the design of the controversial Digital Markets Act.

https://ec.europa.eu/commission/presscorner/detail/en/QANDA_21_2908