Olswang EU Competition Law Bulletin - Life Sciences Focus

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

In this bulletin we provide an update on recent EU competition law activity in the life sciences sector. This includes an outline of recent European Commission merger control activity, an overview of the appeal by Servier and others of the Commission's decision to impose fines of €427.7m for anticompetitive practices and news of an investigation by the Spanish competition authority into alleged price fixing of blood sugar strips. We also report on the UK Competition and Market Authority's new Private Healthcare Market Investigation Order 2014.

Merger Control News

Acquisition of Novartis's Animal Health business by Eli Lilly ( M.7277 Eli Lilly/Novartis Animal Health)

The acquisition by US pharmaceutical company, Eli Lilly, was granted unconditional clearance by the Commission on 3 October 2014. Eli Lilly's business activities overlap with the acquired business in respect of certain animal health products in a number of EU Member States. The Commission's review focussed in particular on the markets for parasiticides and antimicrobials for both companion and production animals across thirteen member states. The Commission concluded that the transaction would not raise competition concerns as the merged entity would continue to face competition from several existing competitors as well as expected new entrants to the market.

Acquisition of Biomet Inc by Zimmer Holdings ( M.7265 Zimmer/Biomet)

Zimmer Holdings' proposed acquisition of Biomet will face an in depth Phase II investigation by the Commission. The Commission's initial investigation indicated that the merger would remove a leading competitor for orthopaedic implants and ancillary products from a number of markets across the EU and may lead to less innovation and choice in addition to higher prices.

The Commission's Phase II investigation will focus on questions such as closeness of competition between the two parties, the role of procurement processes and barriers to entry and expansion in the sector. The deadline for the Commission's decision has been extended by 15 days to 11 March 2015.

Other

• Merck KGaA's proposed acquisition of Sigma Aldrich will require EU and US merger control approval. Potential overlaps exist on the market for equipment used to grow cells in laboratories and the market for the sale of gene-silencing products.
• Becton Dickinson will also require EU and US merger control approval for its acquisition of CareFusion. Both companies are active in the supply of IV sets for intravenous drug delivery and biopsy needles.
• The Commission has a deadline of 16 October to issue its decision on AbbVie's acquisition of UK drugmaker Shire.

Anticompetitive practices

Appeal of Commission's Perindopril decision by Servier and others

Les Laboratoires Servier and five generic drug manufacturers (Niche/Unichem, Mylan, Krka, Teva and Lupin) have appealed against the July 2014 Commission decision which found them to have breached EU competition law by entering into a series of agreements to delay market entry of cheaper versions of the cardiovascular drug Perindopril. The fines imposed in this case totalled €427.7m. The Commission's first decision against such "pay-for-delay" agreements, which saw Danish company Lundbeck fined alongside a number of generics in June 2013 (see our update here), is also under appeal.

Servier is also facing damages claims brought by several UK health authorities who are seeking compensation for the amount they consider to have overpaid for Perindopril supplies during the period when generic entry was precluded by the anticompetitive practices (drug prices tend to drop by an average of 90% once generic entry occurs).

Spanish competition authority investigates collusion in the market for blood sugar test strips

Following dawn raids which took place in July 2014, the Spanish Competition and Markets Authority has announced that it has opened a formal investigation into Abbott Laboratories, Johnson & Johnson, Roche Diagnostics, Bayer Hispania and Fenin in relation to alleged information exchange and price fixing arrangements on the market for blood sugar test strips.

UK CMA introduces measures to increase competition in private healthcare

On 1 October 2014, the UK Competition and Markets Authority made the Private Healthcare Investigation Order 2014 which aims to address adverse effects on competition identified in the CMA's final report on its investigation of the private healthcare market. The Order will allow the CMA to review future arrangements between NHS Trusts and private hospitals to operate private patient units. This measure comes into force immediately. Other measures introduced by the Order will come into force in April 2015 and include prohibition of certain clinician incentives and requirements for increased transparency on performance.