A foul as an abuse of market power?  

One of the 10 commandments that not only Christians will know is: Thou shalt not bear false witness against thy neighbour. All Most of us have already learned this basic rule of human behaviour in kindergarten regardless of whether and to which faith they belong(ed). Last week, the European Commission opened a formal investigation into whether a possible disparagement is also an abuse of market power.

What is the case about?

Basically, the case touches upon the key questions of two rivals always playing fair. But back to the beginning: The case takes place on the European market for intravenous iron treatment. Iron infusion is a procedure in which iron is delivered to a patient’s body intravenously, meaning into a vein through a needle (and not by consuming raw meat) at a hospital or hemodialysis center. Reportedly, there are only two producers of iron fusions: Pharmacosmos and Vifor Pharma. The latter is currently acquired by CSL Limited.

Following a complaint filed with the European Commission by Pharmacosmos, the European Commission is investigating whether Vifor Pharma abused its potential dominant position on the market for intravenous iron treatment by spreading misleading information regarding the safety of Pharmacosmos’ competing product, in particular by targeting health care professionals. Executive Vice President and Competition Commissioner Margarete Vestager summarises the case as follows: “The dissemination of misleading information regarding the safety of Pharmacosmos’ iron deficiency treatment, Monofer, may have delayed its uptake. This would ultimately harm patients by stifling competition from an innovative medicine.

Is this the first investigation by the European Commission dealing with misleading information?

Actually, no. A little over a year ago, the Commission opened an investigation against the pharmaceutical company Teva. The subject of the proceedings is whether Teva has illegally delayed the market entry and uptake of medicines that compete with its blockbuster multiple sclerosis drug Copaxone. Reportedly, the patent for one of the main ingredients for Copaxone expired in 2015.

Teva is alleged to have subsequently attempted to prevent the market entry of competitors by “strategically filing and withdrawing divisional patents, repeatedly delaying entry of its generic competitor who was obliged to file a new legal challenge each time”. Furthermore, and this sounds very similar to the Vifor Pharma case, Teva may have pursued a communication campaign to unduly hinder the use of competing products.

According to the European Commission, there are indications that “Teva’s campaign, primarily directed at healthcare institutions and professionals, may have targeted competing products to create a false perception of health risks associated with their use, even following the approval of these medicines by competent public health authorities”.

Are there conclusions to draw from other past cases?

As the European Commission itself states in its press release regarding Teva, the case was “the Commission’s first formal investigation into potential abuses relating to the misuse of patent procedures and exclusionary disparagement of competing products in the pharmaceutical industry”. However, and I am not claiming to cover them all, there are some cases from the past that definitely have parallels to Vifor Pharma and Teva, in particular to the patent filing and withdrawal part of the Teva investigation.

In BBI/Boosey &Hawkes (IV/32.279), the European Commission dealt with certain practices of Boosey & Hawkes:  

  • Back at the time (we are talking about 1987), B&H was the only British manufacturer of brass wind instruments. A major retailer and a small instrument repair company were about to change this and founded a company to produce instruments for brass bands.
  • B&H was not amused and allegedly (i) pursued unjustified litigation against the new competitor for breach of copyright which B&H eventually had to abandon but which imposed a heavy financial burden on the new competitor and delayed their launch of the new instrument range; (ii) managed for some time to effectively cut off the new competitor’s source of components in Germany by bringing an unjustified legal action against a supplier; and (iii) refused all further supplies of instruments and spare parts to the retailer and the instrument repair company.
  • However, in its decision the European Commission only focused on the refusal to supply aspect when establishing an abuse of a dominant position and ordering limited interim measures against B&H.

In ITT Promedia (T-111/96), Promedia complained to the European Commission that Belgacom, the dominant supplier of voice telephone services in Belgium at the time, was abusing its position by engaging in litigation against Promedia:

  • The European Commission rejected the complaint, holding that litigation by a dominant firm could be abusive only if two cumulative criteria were met, which was not the case here: (i) the litigation could not be reasonably considered to establish the rights of the dominant company and could therefore only serve to harass the opposite party; and (ii) it was part of a plan whose goal was to eliminate competition.
  • When Promedia appealed the decision, the General Court did not explicitly confirm these criteria, but held “as access to the courts is a fundamental right and a general principle ensuring the rule of law, it is only in wholly exceptional circumstances that the fact that legal proceedings are brought is capable of constituting an abuse of a dominant position within the meaning of Article 102 TFEU”.

In AstraZeneca v. Commission (C-457/10), the ECJ confirmed that it can be an abuse of a dominant position when the dominant undertaking undertakes steps with regard to regulatory procedures in order to exclude competitors:

  • AstraZeneca had, inter alia, supplied misleading information to national patent offices in order to obtain longer Supplementary Protection Certificates.
  • However, the ECJ also held that not each objectively wrong representation made by an dominant undertaking constitutes an abuse of market power and therefore the assessment of whether representations made to public authorities for the purposes of improperly obtaining exclusive rights are misleading must be made in concreto and may vary according to the specific circumstances of each case.

What will the European Commission focus on in its current cases?

Of course, this is not always easy to judge from the outside. One question will be whether Vifor Pharma and Teva have a dominant position on their respective markets. In the context of the question of whether a dominant position – should it exist – has been abused, one focus will certainly be on whether Vifor Pharma and Teva have actually disseminated misleading information.

It will be crucial where the line is drawn between misleading information and advertising for one’s own product. With regard to the patent filing and withdrawal part of the Teva investigation, the criteria set out in the ITT Promedia and AstraZeneca cases might play a larger role (and there is a ton of literature with regard to when do patent filings violate competition law). In any event, the Commission currently appears to prioritize cases in which attempts are made to restrict competition for certain pharmaceuticals. 

[Photo by John Torcasio on Unsplash]