Antitrust: Commission opens proceedings against Johnson & Johnson and Novartis
Brussels, 21 October 2011 - The European Commission has opened an antitrust investigation, on its own initiative, to assess whether contractual arrangements between US-based pharmaceutical company Johnson & Johnson and the generic branches of the Swiss-based company Novartis may have had the object or effect of hindering the entry on to the market of generic versions of Fentanyl in The Netherlands. Fentanyl is a strong pain killer for chronic pain. The opening of proceedings does not prejudge the outcome of the investigation but means that the Commission will deal with the case as a matter of priority.
If the contractual arrangements had indeed had the object or effect of hindering the entry on to the market of generic versions of Fentanyl, this would potentially represent a breach of EU antitrust rules, specifically Article 101 of the Treaty on the Functioning of the EU (TFEU) which bans practices that restrict competition.
The Commission pays particularly close attention to business practices in the pharmaceutical sector as a previous sector inquiry (see IP/09/1098 and MEMO/09/321) has shown that so-called "originator" drug companies may be paying to delay the entry on to the market of generic medicines.
"I regard this sector as a priority in terms of enforcement of competition rules given its importance for consumers and for governments' finances," said Joaquín Almunia, Vice President of the Commission in charge of competition policy. "Pharmaceutical companies are already rewarded for their innovation efforts by the patents they are granted. Paying a competitor to stay out of the market is a restriction of competition that the Commission will not tolerate."
The duration of antitrust investigations depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defence.
Background on competition investigation in the pharma sector
In 2008-2009 the Commission carried out a broad competition inquiry into the pharmaceutical sector with a particular focus on practices to delay the market entry of generic medicines, which can cause significant consumer harm. Such practices could, for example, take the form of agreements between originator and generic companies.
Following the pharmaceutical sector inquiry, the Commission continues to regularly monitor potentially problematic patent settlements (see IP/11/840 and IP/10/887). It also opened antitrust investigations against Servier (see MEMO/09/322 and IP/10/1009), Lundbeck (see IP/10/8) and Cephalon (see IP/11/511) for possible violations of EU competition rules, including practices involving generic companies.
Background on antitrust investigations
Article 101 of the TFEU prohibits agreements and concerted practices which may affect trade and prevent or restrict competition. The implementation of this provision is defined in the Antitrust Regulation (Council Regulation No 1/2003) which can be applied by the Commission and by the national competition authorities of EU Member States.
Article 11(6) of the Antitrust Regulation provides that the initiation of proceedings by the Commission relieves the competition authorities of the Member States of their competence to also apply Articles 101 and 102 (ban on abuse of a dominant market position) to the practices concerned. Article 16(1) provides that national courts must avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings that it has initiated.
The Commission has informed the parties and the competition authorities of the Member States that it has opened proceedings in this case.