The Roche-Novartis case | Is competition law widening its frontiers?
Published on 29th Mar 2018
As technology and business models develop, we are increasingly seeing regulators grapple with the question of what legal tool should be used to tackle market distortions. Competition law's ultimate goal of protecting consumers – and the fact that regulators often have both consumer and competition powers – seem to be prompting competition decisions that blur the lines with consumer law.
Most recently, on 23 January 2018, the CJEU responded to the questions raised by an Italian court in relation to the sanction imposed on Roche and Novartis by the Italian Competition Authority (AGMC) for disseminating misleading information about a pharmaceutical product in order to shift demand to another product. The CJEU considered that such conduct could be understood as an infraction by object of article 101 of the TFEU.
One of the novelties of this case is that we normally associate misleading information with infringements related to consumer protection, rather than competition law. It is also interesting that the CJEU labeled this an infringement by object. By their nature, the category of infringements by object are those considered so harmful to competition that their anticompetitive effects do not need to be proven (for example, price fixing; exchanges of sensitive information; limiting output/sales; setting minimum resale prices; limiting exports). Giving this infringement the 'object' label therefore means that the provision of misleading information may be illegal without any actual impact on competition.
The Italian case and its context
Hoffman-La Roche granted a license to Novartis to market the medicinal (ophthalmological) product Lucentis, which shared its clinical development with the medicinal (oncological) product Avastin. Avastin was marketed in Italy prior to Lucentis and was less expensive. For this reason, Italian doctors began to prescribe the off-label use of Avastin for the treatment of ophthalmological diseases, since both products derived from the same active substance.
Under this framework and because the sales of Lucentis (by Novartis) were experiencing losses in Italy, both undertakings agreed to produce and disseminate misleading information about the perception of the risks associated with the off-label use of Avastin in ophthalmology, in order to increase the demand in favor of Lucentis (which was ten times more expensive).
The agreement targeted both doctors and the European and Italian medicines agencies. Following an analysis of the legal context of the case, the CJEU's understanding was that the objective of the information disseminated was not to fulfil pharmacovigilance or regulatory obligations; but rather was intended to manipulate the perception of the medicines agencies and Italian doctors regarding the off-label use of Avastin, to shift the demand to Lucentis.
Other national precedents
Both in Spain and in France there have been recent cases in which the use of misleading information was sanctioned for being collusive and abusive infringements of competition law.
- Spain: In 2012, in case S/0256/10 Inspecciones Periódicas de Gas, two trade associations were sanctioned by the Spanish competition authority for sending misleading information to the local administrations that had asked what the official price of mandatory gas inspections should be in their jurisdictions. The sanction was based on Article 1 of the Spanish Competition Act (equivalent to Article 101 of the TFEU).The Spanish competition authority concluded that the use of misleading information was a key factor in the infringement. The defendants took advantage of a change in legislation to mislead local administrations into setting the legislative price above the true market level.
- France: In 2013, in case n° 13-D-11 Sanofi-Aventis, the pharmaceutical company Sanofi-Aventis was sanctioned by the French competition authority (a decision which was subsequently confirmed by the French courts) for the dissemination of misleading information about the characteristics of a medicine related to the treatment of cardiovascular diseases (clopidogrel).
Sanofi-Aventis made use of the brand-name recognition of their patented blockbuster Plavix (clopidogrel) to give legitimacy to the dissemination of misleading information about patent-related differences in relation to the generic alternatives. This dissemination was aimed at frightening doctors so that they did not prescribe generics and persuading pharmacists not to substitute Plavix. This conduct was sanctioned as an abuse of a dominant position. Losses to the French health system were estimated at €30m.
Confirmation of a growing trend
In the Italian case, the CJEU referred to the fact that, under European regulations on medicinal products, all information intended for the public and the competent authorities must be presented objectively and without misleading information by the owner of the marketing authorisation.
In addition to the analysis of the legal context, and as a point of connection with the other two cases, the CJEU took into account the broader context of the conduct, and considered that the disclosure of such misleading information may cause doctors not to prescribe the use of Avastin for the treatment of eye diseases. Finally, the CJEU confirmed the view of the AGMC that an agreement between competitors in this sense could be considered as a 'by object' infraction (not needing proof of its harmful effects in the market).
The Spanish and the Italian cases have in common the fact that the undertakings took advantage of the legal context to convey the misleading information to the relevant authorities to attain their anticompetitive goals. In contrast, in the French case, the undertaking disseminated the misleading information directly to the market players that could shift the demand towards the generic products.
Ultimately, what all of the cases have in common is that the competition authorities are taking into consideration the use of misleading information to assess whether or not undertakings committed infractions of competition law.
Comment: who said you can't teach an old dog new tricks?
In spite of the fact that competition rules are "old", from the cases analyzed we have reached two conclusions:
- We may be facing the broadening of the "by object box", which, pursuant to the judgment of the CJEU, could now include agreements to disseminate misleading information (depending on the context of the conduct); and
Competition authorities may be able to keep up with the pace of undertakings and the sophistication of their conduct by including "new" behaviors in their repertoire of "tricks".