A Dose of Competition: EU Antitrust Law in the Pharmaceuticals Sector

Abstract

In the pharmaceuticals sector there is an inherent tension between intellectual property rights and antitrust. This paper examines this tension over the past 10 years since modernisation of EU competition law. It looks at three types of problems: (i) restrictions on parallel imports; (ii) abuse of administrative procedure; and (iii) pay for delay cases. This overview shows that the European Commission is now especially active in areas (ii) and (iii) and generally relies on a more formalistic approach of finding restrictions by object instead of using economic arguments to demonstrate restrictions by effect. The by object approach is supported by the EU Courts. Also, the molecule (active ingredient) is often regarded as the relevant product market, facilitating a finding of dominance. Some national competition authorities have followed in the footsteps of the Commission but on the whole they are less active, for instance on pay for delay. This may be because the EU Courts have yet to rule on this type of case. For pharmaceutical companies the net result is that they cannot assume their intellectual property rights will stand in the way of a finding of antitrust infringement and their behaviour will be scrutinised closely.

Keywords: EU, competition law, antitrust, pharmaceuticals, dominance, parallel imports, judicial review, modernisation

JEL Classification: K21, L12, L13, L41, L65