Competition law it the time of COVID-19: the Luxembourg Competition Authority rejects an application for interim relief against a testing center

The first post of 2021 is about the decision handed down by the Luxembourg Competition Authority (LCA) in the LNS case (no. 2020-NC-06, LaboratoireNational de Santé). In this case the LCA examined and rejected an application for interim relief against allegedly anticompetitive practices concerning Covid-19 testing in the middle of the pandemics.

The proceedings commenced on 14 September 2020 when Bionext, a privately-held medical laboratory, filed a complaint with the LCA. By the complaint Bionext reported a number of practices put in place by a competing public undertaking, Laboratoire National de Santé (LNS), which appeared to breach Article 102 TFEU and the corresponding national competition rules. More specifically, Bionext pointed to the decision of the Luxembourg authorities to confer on LNS a legal monopoly on some Covid-19 testing methods: the PCR tests for hospitals and serological tests to be executed in the context of the government-backed massive screening campaign. Following the granting of that legal monopoly, LNS would have gained a strategic position in the market for the provision of biologic and medical analysis. It was feared that the creation of the legal monopoly in question would breach Article 102 TFEU and Articles 106 TFEU. Then, LNS would have abused its power in this relevant market by engaging in cross-subdisation practices and hoarding staff from other laboratories.

In addition to that, Bionext argued that LNS would have infringed competition in the market for the provision of machines, reagents and markers (inputs) for the performance execution of in-vitro diagnostics exams. Also this market was dominated by LNS that would have abused such a dominant position with pricing policies (excessive prices and margin squeeze) and non-pricing policies (refusal to supply, abuse of confidential data).

In addition to reporting alleged anti-competitive practices, Bionext asked the LCA to take interim orders against LNS. This application was, however, dismissed on account that Bionext did not meet one of the statutory requirements for the granting of interim relief, not showing a prima facie competition infringement. Indeed, the applicant failed to prove that LNS had a dominant position (in the market for biological and medical analysis) and had abused it (in the market for the supply of inputs for diagnostics analysis).

The take-away lessons from the rejection decision of the LCA can be summarised as follows:

First, only the anticompetitive conducts of undertakings fall within the sphere of application of the competition rules and within the regulatory jurisdiction of the LCA. Article 106 TFEU, instead, addresses to Member States and bans them from enacting or maintaining measures contrary to competition rules. This provision only applies to competition breaches that are imputable to a measure adopted by a public authority acting as such rather than as an undertaking. Therefore, the LCA has no power to enforce a violation of Article 106 TFEU even if perpetrated in conjunction with a violation of Article 102 TFEU.

Second, according to the principle of proportionality, an interim order can be adopted when there is a matter of urgency. This requirement, however, was unmet in LNS given that at the point in time in which Bionext filed its complaint, the legal monopoly of the respondent was no longer in place.

Third, LNS reminds that for interim relief to be granted, a prima facie finding of a competition infringement is necessary. The party that applies for it should submit sufficiently convincing facts and circumstances supporting that finding. Bionext did not comply with this evidentiary rule, having produced weak evidentiary pieces that some aspects were contradicted by the facts submitted by LNS.

Fourth, consistently with the EU case law, the LCA ruled out an anti-competitive excessive pricing practice where a dominant undertaking charges higher prices as a reaction to higher costs. From the facts of the case it appears that the LNS increased in the prices for reagents charged on Bionext corresponded to the higher prices the dominant undertaking had to pay to its suppliers.

Fifth, the refusal of LNS to deal with Bionext did not amount to anti-competitive conduct as it was based on a legitimate justification. As is known, a dominant undertaking may legitimately refuse to supply an insolvent customer. In this case LNS ceased to deal with Bionext since August 2020 after the latter was in arrear with payments of previous supplies.

Sixth, the LCA considered whether the availability of confidential data of its competitors to which LNS had access as public undertaking constituted a competition infringement. The LCA considered that LNS is entrusted with the nationwide management of inputs for the performance of diagnostics exams and supplying of these items to the medical laboratories that are in need. In that regard, the LCA likened LNS to a vertically-integrated organization that is tasked with managing a network and uses such network to carry out its economic activities. Relying on the decisional practice of the French competition authority, the LCA held that for an abusive conduct to arise in this scenario, it is necessary that the manager of the network effectively makes a commercial and strategic use of confidential data it possesses because of its position. Having access to such data is not sufficient to establish a competition breach. That said, the LCA took the view that LNS used the confidential data about how many weakly tests Bionext performed only to fulfil its task of national manager. In other words, LNS employed the data only to determine the quantities of reagents and other inputs to allocate to each medical laboratory. Hence, LNS did not use the confidential data in an anti-competitive manner.

 

https://concurrence.public.lu/content/dam/concurrence/fr/decisions/mesures-conservatoires/2020/Decision-2020-MC-06-version-publiee.pdf

 

 


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