The Competition and Markets Authority opens two more investigations in the pharmaceutical sector

First published by Admin on December 29, 2017 in the following categories: Investigations and tagged with cma

Announced only days apart, the two Competition and Markets Authority (CMA) investigations will be looking into suspected anti-competitive agreements and conduct in the Pharmaceutical and Pharmaceutical Drugs sectors. The competition watchdog will be checking how companies conduct their business and looking into whether any of their practices are in breach of Chapters I and II of the Competition Act 1998, and Article 101 and 102 of related competition laws.

From October 2017 to April 2018, the CMA will begin its investigations and gather as much relevant information as possible. At this point, they will issue formal and informal requests for information, and if need be, the CMA will also attend state-of-play meetings with the investigated parties.

Once all of the requested information is obtained, the CMA will analyse and review all of the information to see if any of their practices or agreements with their competitors, suppliers and distributors amount to breaches of competition law.

The CMA are essentially looking in to whether any of the following is taking place:

Anti-competitive agreements

Businesses must not have any agreements with their competitors, suppliers or distributors that would distort the relevant market. Common examples include agreeing with competitors to share the market.

For example: if Company A agrees to only sell chairs and Company B agrees to only sells tables, their customers only have one choice per product, meaning both companies don’t have to compete on prices and can charge as much as they want.

This is a clear disadvantage to the consumer who not only has limited choices in the products offered (perhaps Company A only makes one colour and one size of chairs in one material), but perhaps also can’t benefit from competitive prices and may have to pay whatever Company B charges for its tables because Company A doesn’t offer an alternative.

Anti-competitive concerted practices

This is where companies engage in activities that also distort the market, but without a formal agreement. Such behaviour can also influence the market, usually benefiting the companies involved by allowing for artificially-increased profits at the cost of the consumer.

Both practices could also harm any newcomers or smaller players in the market as the playing field may be imbalanced, making it harder for them to compete in the market.

Abuse of dominance in supplying pharmaceutical products

This is not an uncommon phenomenon.

You might recall the time when Martin Shkreli reportedly bought the rights to a life-saving HIV drug and increased its price from $13.50 to $750 overnight.

This is an extreme example but illustrates what people or companies can do when they alone own the rights to something in demand; especially in the pharmaceutical field where companies focus on making limited specific drugs, and because there are some drugs that are only made by one or just a few companies.

Another example may be where one company has figured out a way to make their drug the best or the cheapest and everyone chooses to buy it from them. When these scenarios happen, the company making the most sought-after drug is in a dominant position. This dominant position could be one company with control of the market (a monopoly) or a few big players sharing one market (an oligopoly).