The Italian Competition Authority closes a monitoring procedure into Aspen compliance with a previous infringement decision


By the decision made on 13 June 2018 in the Case A408B Aspen- Prezzi farmaci antitumorali, the Italian Competition Authority (ICA) closed a monitoring pursuant to Article 15 of the Italian Competition Law no 287/1990 against the producer of generic drugs Aspen. By its previous decision of 29 September 2016, the ICA had found Aspen liable to have breached Article 102 TFEU by applying excessive prices for the Cosmos drugs used for the treatment of cancer during the 2013-2014 period. The ICA infringement decision was then upheld on appeal by the Regional AdministrativeCourt of Latium, whose judgment is current under appeal before the Council of State.
Following the infringement decision, in February 2017 the Italian Drug Authority (AIFA) started the procedure for the revision of the prices for the Cosmos drugs in accordance with the findings of the ICA. The prices proposed by Aspen to the AIFA only partially complied with the criteria laid down by the ICA. Moreover, the documents supplied by Aspen was considered by the AIFA as unsuitable to determine the new prices. As a result, in February 2018 the AIFA suspended the procedure for the revision of the prices for the Cosmos drugs. In addition to the above facts indicated by the AIFA, the ICA noted that the report filed by Aspen did not set out the steps the dominant firm had to make to bring the infringement to an end, and namely by setting fairer prices for the Cosmos drugs. Hence, the ICA opened a monitoring procedure against Aspen.
This decision was contested by Aspen that argued that the ICA had only jurisdiction to assess the completeness of the information supplied to Aspen; on the contrary, according to Aspen, the ICA did not have the power to examine the price negotiations between Aspen and AIFA as this matter fell within the exclusive jurisdiction of the AIFA.
To that, the ICA replied that Article 102 TFEU empowered it to make a cease and desist order to the dominant undertaking. Under Article 102 TFEU, the ICA can also order the dominant undertaking to adopt positive measures with the view to bring the detected competition infringement to an end. The obligation imposed on Aspen to fix new prices for the Cosmos drugs that were fair and not excessive was then a manifestation of that power.
The ICA added that at the time of the opening of the monitoring procedure, it had reasons to believe that Aspen did not comply with the cease and desist order imposed by the infringement decision. Indeed, it was only one month afterwards that Aspen gave to the AIFA all the required information. Later in April 2018, Aspen and AIFA agreed on the new prices for the Cosmos drugs, which were between 30% and 82% lower than those previously charged. The agreement would apply retroactively starting from September 2014. It also featured a compensation mechanism, applicable from September 2016 to indemnify those that purchased the drugs at higher prices.
Considering that Aspen had eventually fulfilled its disclosure obligation providing the AIFA with all the required information and that Aspen and AIFA set the new prices by way of a retroactive agreement, the ICA concluded that Aspen complied with the cease and desist order as well as with the order to take the necessary steps to end the infringement. Anticompetitive excessive pricing policies are in place until the point in time when such prices are no longer applied. Aspen met this requirement by concluding with the AIFA the above retroactive agreement whereby it would charge fair prices in accordance with the infringement decision. Therefore, the ICA closed the monitoring procedure without imposing a fine on Aspen.
The decision handed down in the Case A480B Aspen embodies the pro-active stance taken by the ICA when enforcing competition provisions in the pharma sector. The decision also illustrates which facts and circumstances the ICA may take into account in the context of a monitoring procedure concerning a finding of excessive pricing. Whether the dominant undertaking gave the AIFA all the necessary information to fix new fair prices and whether the prices proposed by the dominant firm have been calculated in accordance with the requisite criteria are factors that come into relevance. The ICA might also look at how the dominant undertaking have conducted the pricing negotiations with the AIFA. In this case the ICA seemed to be concerned about the possibility that Aspen might have adopted dilatory tactics so to delay the adoption of new price. However, the fact that the Aspen and the AIFA eventually reach a satisfactory agreement on the new prices for the Cosmos drugs dispelled all the ICA’s fears.
  

 

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