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OFT investigates pharma sector patent settlement agreements

Paul Gershlick — Fri, 25 Nov 2011 09:45:30 +0000

The Office of Fair Trading has announced that it is investigating patent litigation agreements relating to paroxetine. Paroxetine is a medicine used in the treatment of disorders such as depression and anxiety disorder. This follows an enquiry by the European Commission into the pharmaceutical sector in relation to patent settlements. There has been a concern that those agreements may be used to delay the entry of generics onto the market. The investigations relate to possible breaches of EU competition law – both in terms of Article 101 of the Treaty on the Function of the European Union (agreements between parties which have as their object or effect the distortion of trade between EU Member States) and Article 102 of the Treaty (abuse of a dominant position within the EU).

OFT points to successful impact of first abuse of dominance fines under Competition Act in Napp Pharmaceuticals case

Paul Gershlick — Sun, 26 Jun 2011 18:03:38 +0000

The Competition Act 1998 came into force in 2000. Under it, the Office of Fair Trading can impose large fines and declare void arrangements that are either agreements between undertakings whose object or effect is the distortion of competition (the Chapter I Prohibition) or are abuse of a dominant position (the Chapter II Prohibition). In the OFT’s first abuse of dominance case, in 2001 it fined Napp Pharmaceuticals £3.2m (later reduced to £2.2m on appeal) for doing two things. One was for having charged excessively low prices for its sustained release morphine tablets in the hospital sector, thereby keeping out competition through its predatory pricing. The other was for having charged excessively high prices in the community sector. It had faced little competition in the large and profitable community sector due to its actions in the hospital sector. The hospital sector was the gateway to realising community sector sales. Napp’s prices to the community sector had been 10 times higher than in the hospital sector. In that sector, it had had a gross margin of 80% until 10 years ago.

Now, the OFT has published a report evaluating the impact of its 2001 decision. It has concluded that, as a result of its intervention, the prices in the hospital sector have risen so that other people can compete, Napp’s market share has dropped significantly, and prices in the community sector have come down (and by far more than the OFT had required in its decision). This has therefore been a significant success for boosting fair competition.

Heathrow abused dominant parking position – Purple Parking Limited and Meteor Parking Limited v Heathrow Airport Limited, High Court

Simon Weinberg — Fri, 06 May 2011 14:50:21 +0000

Purple Parking (PP) and Meteor Parking (MP) brought a claim against Heathrow Airport (HA) alleging that HA had breached the Chapter II Prohibition of the Competition Act 1998 by limiting access to the Heathrow airport forecourts for parking companies who provided valet parking services.

Previously PP, MP and HA had all offered valet parking services in the airport forecourt. However, HA, which owns the airport, changed the arrangement so that HA was the only operator in the forecourt – other parking companies had been relocated to the airport car parks with an additional charge. It was accepted by all parties that HA had a dominant position at the airport due to its controlling position over the access to the airport’s facilities. The High Court therefore had to decide whether HA’s actions amounted to an abuse of that dominance.

The High Court ruled that HA had breached the Competition Act as its actions placed PP and MP at a competitive disadvantage due to the fact that:

HA was left as the only valet parking supplier on the airport forecourts;
presence on the forecourt was extremely advantageous to an operator due to the benefits it offered to customers over a car park based service;
the car park operators would not be offering a similar product to HA so competition with HA on the forecourt was impossible; and
there would effectively be a monopoly on the forecourts leading to risks and detriment for the consumer.

So next time you’re flying from Heathrow, it’s something to watch out for in case you think you’re being taken for a ride.

OFT issues largest ever fine for abuse of dominance – to Reckitt Benckiser for de-listing out-of-patent Gaviscon product from NHS prescription channel before generic product appeared

Paul Gershlick — Thu, 05 May 2011 08:08:19 +0000

The Office of Fair Trading has issued its largest fine for an abuse of a dominant position, contrary to the Chapter II Prohibition of the Competition Act and Article 102 of the Treaty on the Functioning of the European Union. Reckitt Beckiser agreed to pay a fine of £10.2m after it had withdrawn and de-listed the Gaviscon Original Liquid from the NHS prescription channel just after the product had gone out of patent but before the publication of a generic name for it. What this meant was that doctors searching for the Gaviscon product to issue a prescription would be unable to find a generic alternative name but would instead be directed to another Gaviscon product that was still in patent for another few years, the Gaviscon Advance Liquid. This refusal to supply meant that pharmacies were denied the opportunity to dispense cheaper competitive products to patients and they had to continue dispensing Reckitt Beckiser’s products.

Google investigated over allegations of abuse of dominant position in search engine market

Mark Weston — Thu, 02 Dec 2010 10:03:39 +0000

Google is being investigated by the European Commission over allegations that it abused its dominant position in the search engine market, contrary to European Union competition law. The fact that there is an investigation does not mean that Google has done anything wrong, but the Commission will now look into things more closely. The complaints came from rival search engines Foundem and ejustice.fr as well as price comparison site Ciao. They allege that the search engine giant lowered the ranking of competing sites in Google’s unpaid and paid for search results, as well as artificially boosting Google’s own position in its results. There are further allegations that Google unfairly requires exclusively obligations and prevents them from placing certain types of competing ads on their websites.

Ofcom decides no abuse of dominant position by BT

Simon Weinberg — Wed, 17 Nov 2010 13:12:27 +0000

Ofcom has published its decision in relation to the investigation of BT and its pricing for residential broadband between June 2002 and December 2004. The investigation stemmed from an initial complaint by Freeserve in 2002 in relation to alleged anti-competitive behaviour by BT regarding its pricing practices. In the decision, Ofcom ruled that there was not enough information to support the accusation that BT was guilty of an abuse of market dominance in the alleged period.

For the full text of Ofcom’s decision see http://stakeholders.ofcom.org.uk/binaries/enforcement/competition-bulletins/closed-cases/all-closed-cases/cw_613/decision.pdf

Directors watch out: OFT vows to get tough with directors who should have known their companies were breaking competition laws

Paul Gershlick — Wed, 21 Jul 2010 15:05:30 +0000

The Office of Fair Trading has vowed to get tough with directors who should have know that their companies were breaking competition laws. The OFT wants to use powers under the Company Directors Disqualification Act to disqualify directors for up to 15 years if they should have known that their companies were doing wrong. It said it was just as concerned with directors who were passive onlookers as directors who were personally involved in the infringement. It hopes the use of these powers will act as a powerful deterrent to businesses engaged in anti-competitive activity, whether big or small, by hitting directors with personal implications. Just as with companies, directors can escape problems or receive lenient treatment by co-operating with investigations.

England football shirt trade war hits fever pitch as Asda sells shirts at half their RRP after sourcing from grey market

Paul Gershlick — Tue, 01 Jun 2010 17:24:48 +0000

Asda is taking on the dominant might of Umbro after the supermarket bought official England shirts from the European Union grey market for re-sale in the UK – at half of Umbro’s recommended retail price. Umbro makes the official England football shirts, and as excitement mounts over the World Cup, fans are having to fork out £49.99 per shirt in the shops. Umbro only sells to certain retail outlets. After Asda’s attempts to buy the shirts from Umbro were thwarted, it sent distributors around Germany, France and Spain to buy them in those cheaper markets and sell them in the UK for just £25 each. This process is known as ‘parallel importing’ and involves purchases on the ‘grey market’. Asda has managed to source about 50,000 shirts and there is every likelihood that many customers will be disappointed by fast-selling sales if the stocks run out. Asda has written to Vince Cable, the new Business Secretary, to ask him to take action against what it sees as consumer rip-offs.

Asda has been able to legitimately buy goods from the EU for sale elsewhere in the EU, but as Tesco found out when it lost its battle to stock Levi jeans in 2002 it is an unlawful use of trade marks to buy goods from outside the EU for sale in the EU unless the brand owner has agreed to this.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘Umbro could be in trouble if they are found to be abusing a dominant position in the market by refusing to supply customers and this keeps the price artificially high for consumers. However, it may be that Asda has sold the shirts at low or negative profit in order to prove a point and make a case, and that Umbro is merely making a reasonable level of profit.’