Olswang competition law bulletin - UK life science focus

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

The UK Competition and Markets Authority ("CMA") has been increasingly active in the life science sector in recent times. Here we provide an overview of new investigations and recent case developments.

New case relating to anticompetitive agreements

On 12 April 2016 the CMA opened a new investigation into potentially anticompetitive agreements in the pharmaceutical sector (see here). The investigation will look at whether the agreements infringe Chapter I of the UK Competition Act 1998 and/or Article 101 of the Treaty on the Functioning of the European Union. No further details on the case have yet been made public. A decision on whether to proceed with the investigation is expected in August 2016 once the CMA's initial information gathering exercise has been completed.

Two new abuse of dominance cases

Also on 12 April 2016, the CMA announced that it had opened a new investigation under Chapter II CA98 and Article 102 TFEU into a suspected breach of competition law related to anti-competitive practices in the medical equipment sector. This followed an announcement just one month previously that the CMA had opened a similar investigation into Allergan's alleged market power in relation to its hydrocortisone tablets. The CMA is currently conducting its initial investigations and estimates that it will take a decision on whether or not to proceed with these investigations in October and August 2016 respectively. The case pages can be accessed herehere and .

Pfizer fined for failure to provide information in excessive pricing investigation

Last September we reportedsent a statement of objections that the CMA had to Pfizer and Flynn Pharma, accusing the companies of having abused their market power by charging excessive and unfair prices in the UK for a drug used to treat epilepsy, Epanutin. The investigation covers the prices the Pfizer charged to Flynn Pharma as well as the prices that Flynn Pharma in turn charged to its customers since 2012 when Pfizer sold the distribution rights for the drug to Flynn Pharma.

On 12 April 2016 the CMA published a notice of a penalty imposed on Pfizer under section 40A of the Competition Act 1998. The penalty notice sets out that in January 2016 the CMA held an oral hearing, at which representations were made by Pfizer on the substitutability of the relevant capsules and tablets. Following the hearing, the CMA issued a section 26 notice requiring Pfizer to provide further information on these statements, with a 15 day deadline of 26 February 2016. The penalty notice sets out that Pfizer requested an extension to this deadline, which was granted by the CMA with the exception of two questions relating to these oral hearing representations. The CMA considered it reasonable to assume Pfizer was already in possession of underlying data used for pre-prepared presentation material.

The penalty notice sets out that Pfizer indicated it would be unlikely to meet the deadline in relation to these questions, and that it was unable in further correspondence to explain why it required additional time to verify its pre-prepared presentation. Pfizer ultimately provided the information on 2 March 2016, indicating that its statement in the oral hearing was based on an internal business estimate and that there was no additional information.

The CMA noted that it considers whether to impose penalties for failing to provide information on a case by case basis, but, having regard to its statutory duties and guidance on administrative penalties, it was appropriate and proportionate to impose a £10,000 penalty on Pfizer in this case. The penalty was imposed on 31 March 2016.

Discounting investigation - update

In December 2015, we reported (see hereCMA's website) that the CMA had opened a new investigation in the pharmaceutical sector, focussing on whether an unnamed company has abused a dominant market position through discounting of its pharmaceutical products. According to the , a decision on whether to continue with the investigation will be made this month.

Appeals lodged in paroxetine case

On 11 and 12 April, appeals were registered with the Competition Appeal Tribunal ("CATGSKsee our separate article here") against the CMA's decision fining various pharmaceutical companies for entering restrictive agreements with GlaxoSmithKline plc (""). The agreements settled patent disputes in relation to GSK's blockbuster anti-depressant, paroxetine, under which generic manufacturers agreed to cease efforts to enter the UK paroxetine market. For more discussion on the CMA's decision, .

Appeals have been lodged by Generics UK, GSK, Xellia Pharmaceuticals ApS and Alpharma LLC, Activis UK Limited, and Merck KGAA. The appeals claim the CMA made errors in finding the appellants breached UK and EU competition law, and errors in the imposition and calculation of fines.

The CAT has given parties with sufficient interest three weeks from the 18th April 2016 to request permission to intervene. Case management conferences were held on 13 May 2016.