EUROPEAN COMMISSION (DG COMP) FINES CARTEL IN THE PHARMA SECTOR

Autor: Suderow Fernandez Abogadas SLP

Introduction:

The European Commission announced last 19 October the €13,4 million fine imposed on pharma companies in an antitrust cartel settlement. The fine has been imposed under article 101 TFEU and article 53 of the EEA Agreement. The case number for this price-fixing restrictive business practice is AT.40636.

The investigation began after one of the participating companies revealed the cartel under the leniency programme, after which the rest of the companies admitted their involvement and cooperated with the authorities for the settlement of the case.

This is the first fine ever imposed by the European Commission in the pharmaceutical sector and 42th settlement closed by the Commission.

 

Affected products:

It relates to an important active ingredient: Hyoscine butylbromide. Scientific terminology aside, this is better known as scopolamine or Buscopan, name under which it is usually sold. It is a medicine indicated for the relief of abdominal pain and discomfort, mainly for the relief of menstrual cramps. The market product concerned is labelled as SNBB (N-Butylbromide Scopolamine/ Hyoscine) by the Commission. The drug comes in different formats: pill, suppository, and injectable solution. Furthermore, the European market for scopolamine takes over 50% of the global market share.

 

Spain

In the case of Spain, SNBB can be found in the drug sold under the name of Buscapina (as Buscopan had a misleading translation in Spanish: “I’m looking for bread”). Also, two Spanish Laboratories, Aurovitas and kalceks, also manufacture this medication. According to the Online Drug Information Centre (CIMA) of the Spanish Drug Agency (AEMPS), prior medical prescription is only needed in the case of doses exceeding 10 mg (except injectables).

Companies

The cartel was formed by six companies, most of them based in Germany. Nonetheless, the case website of the Commission mentions other companies. As there is no public version available yet, the involvement of these companies in the cartel is uncertain: whether they have been investigated as collaborators or if they are mentioned as injured parties. The reason why it must still be confidential is that there is another company, Indian headquartered company Alchem, that is still under investigation that decided not to settle, so that the proceedings against such company will continue under the standard procedure. Until a decision is taken on this last company, it is unlikely to have full access to the Commission Resolution. Nonetheless, the Commission states in its website that whenever confidentiality issues have been resolved, more information will be available.

The sanctioned conduct refers to illicit agreements coordinating and fixing minimum sales prices of SNBB to customers. These practices took place between November 2005 and September 2019 in a single and continuous infringement in the EEA (though the scope of Member States affected is not mentioned). The duration of each company’s participation in different. Moreover, even if the cartel lasted for 14 years, the leniency applicant was only involved for 1 year, and it was past three years after its exit when in 2019, the company resorted to the Competition Authority and applied for leniency, thus triggering the whole investigation. The successive leniency applications came after the dawn raids. The Commission dates the end of the cartel when the dawn raids were conducted. However, in practical terms, markets suffer its effects for far longer, as prices do not go back to competitive conditions overnight. This is true for the artificially high prices of the sanctioned companies, but also for the prices of its competitors, as other undertakings might have taken advantage of the of the so-called umbrella pricing effect.

The Commission has cooperated and coordinated certain investigative activities with the Swiss and Australian competition authorities. As usual, the fines have been calculated according to the Commission’s 2006 Guidelines on fines (and consequently, considering the value of the SNBB sales relating to the infringement, its nature and scope).

All fines have been reduced, either under the rules of the 2006 Leniency Notice, under the 2008 Settlement Notice (based on Antitrust Regulation 1/2003), or both.

Specifically, the fines imposed upon the parties involved are displayed in the table below:

In addittion, the full name of the companies involved, along with some relevant information are the following:

  • Boehringer Ingelheim GmbH (DEU). ______Located at: Binger Strasse 173 55216 Ingelheim am Rhein (DEU).
  • Boehringer Ingelheim Pharma GmbH & Co. KG (DEU)
  • H Boehringer Sohn AG & Co. KG (DEU)___________________Combined Group turnover (CGT): €4.63 Bn.

 

  • Transo-Pharm Handels-GmbH (DEU) Located at: Bültbek 5 22962 Siek (DEU).
  • Transo-Pharm Holding-AG (DEU)______________________________No group financial data available.

 

  • Linnea SA (CHE) Located at: Via Cantonale 123, 6595 Riazzino (CHE)__Turnover: €30 M._-Turnover: €30 M.
  • Alkaloids of Australia Pty. Limited (AUS)
  • Alkaloids Corporation (IND)________________________CGT: €78 Bn. (Top scopolamine manufacturer)
  • Ipsen, S.A. (FRA)____________________________________________________Turnover: €28 Bn.
  • C-squared Pharma S.á.r.l. (LUX)__________________________________________Turnover: €85 M.
  • Schwabe Extracta GmbH & Co. KG (DEU)_______________________________Turnover: €9 Bn. (2016)

 

Written by: Alejandro Martínez Luna