In jurisdictions across the world, the pharmaceutical industry has come under the scrutiny of inquiries and legal actions involving the application of Competition Law. This summer has seen an upsurge of antitrust activity. A host of regulatory investigations and lawsuits have been commenced against pharma industry players and (in some cases) fines levied in the EU and US.
Competition Law or ‘antitrust’ is a system of law that aims to protect and regulate competition within the economy. Almost all jurisdictions of the world now have their own version. One aspect of the law relates to anticompetitive agreements and cartels. Under EU Law (Article 101 of the EU Treaty) and UK Competition Law (Chapter I of the Competition Act 1998), it is unlawful for parties to participate in any agreement or arrangement that has the object or effect of preventing, limiting or distorting competition.
It is also unlawful for any undertaking in a dominant market position to engage in unilateral conduct to the detriment of competition within the market. The rules on dominance, set out in Article 102 of the EU Treaty and Chapter II of the Competition Act 1998, are frequently applied to pharmaceutical manufacturers that have become market leaders in their industry segment.
The penalties for infringement are harsh. Regulatory action can result in fines of up to 10% of worldwide, group turnover. Agreements found to be anti-competitive are void and unenforceable before the courts. Any party that is guilty of anticompetitive behaviour may also be sued for loss or damage suffered by victims of that behaviour. In the US, this has spawned numerous lawsuits against pharma companies.
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