Antimonopoly Committee and Pharmaceutical Market: Pressure or Protection?

24/ 04/ 2018

Comment by Andrii Gorbatenko, attorney, associated partner at Legal Alliance Company Yurydychna Gazeta I completely believe that decisions of the Antimonopoly Committee must reflect the practice which highlights approaches of the Committee to detection of a violation, in particular, its characteristics, criteria for assessing participants’ actions, study of its effects for competition. In other words, case participants and other market players have to see in the decision a clear picture of what actions should be avoided, unfortunately, decision in Sanofi case is not like that. May the court analyze this and other decisions of the Antimonopoly Committee regarding pharmaceutical companies in detail, while we will focus on the small allusion on the subject. It is easy to guess what brand of smartphones most readers of this comment have. This brand is quite costly at the market in spite of there being a lot of cheaper substitutes. If we apply to this situation the practice, which forms decision in Sanofi case, then in order to make conclusions that the respected brand smartphones dominance is a result of anticompetitive concerted actions between supplier and distributors, the following conditions are necessary: а) distributors must purchase more respected brand smartphones than other analogous smartphones; б) agreements between the supplier and distributors must provide for discounts (or bonuses) for the latter for some achievements in distribution of this brand smartphones; в) prices for respected brand smartphones must be higher than prices of competitors. Something hints me that such conditions can be found in relations between the supplier and distributors almost in all cases when we are talking about any good leading its market due to combination of quality and brand. Back to Sanofi case, if you should have bought Но-ШпаⓇ rather than its substitutes, in the Committee’s opinion it happened due to conspiracy between Sanofi and distributors, and not because you could not have known about substitutes. In my opinion, the conglomerate of the above features are not sufficient to carry anticompetitive concerted actions between the supplier and distributors both at smartphone and medicines market, and any other market. Despite ambiguity, decisions of the Antimonopoly Committee of Ukraine with respect to pharmaceutical companies still are important for development of competition in Ukraine. On the one hand, the investigation and fines made the market participants treat competition more carefully, and on the other – showed huge lacunae in legislation protecting economic competition and their effects. Our task for the near years is to make competition at Ukrainian markets more civilized both from the market participants’ point of view and in terms of clarity and transparency of its rules and predictability of actions of the Antimonopoly Committee of Ukraine as its main protector here. Contact the author: Andrii Gorbatenko, associated partner at Legal Alliance Company, [email protected]

Comment by Andrii Gorbatenko, attorney, associated partner at Legal Alliance Company

Yurydychna Gazeta

I completely believe that decisions of the Antimonopoly Committee must reflect the practice which highlights approaches of the Committee to detection of a violation, in particular, its characteristics, criteria for assessing participants’ actions, study of its effects for competition. In other words, case participants and other market players have to see in the decision a clear picture of what actions should be avoided, unfortunately, decision in Sanofi case is not like that.

May the court analyze this and other decisions of the Antimonopoly Committee regarding pharmaceutical companies in detail, while we will focus on the small allusion on the subject.

It is easy to guess what brand of smartphones most readers of this comment have. This brand is quite costly at the market in spite of there being a lot of cheaper substitutes.

If we apply to this situation the practice, which forms decision in Sanofi case, then in order to make conclusions that the respected brand smartphones dominance is a result of anticompetitive concerted actions between supplier and distributors, the following conditions are necessary:

а) distributors must purchase more respected brand smartphones than other analogous smartphones;

б) agreements between the supplier and distributors must provide for discounts (or bonuses) for the latter for some achievements in distribution of this brand smartphones;

в) prices for respected brand smartphones must be higher than prices of competitors.

Something hints me that such conditions can be found in relations between the supplier and distributors almost in all cases when we are talking about any good leading its market due to combination of quality and brand.

Back to Sanofi case, if you should have bought Но-ШпаⓇ rather than its substitutes, in the Committee’s opinion it happened due to conspiracy between Sanofi and distributors, and not because you could not have known about substitutes.

In my opinion, the conglomerate of the above features are not sufficient to carry anticompetitive concerted actions between the supplier and distributors both at smartphone and medicines market, and any other market.

Despite ambiguity, decisions of the Antimonopoly Committee of Ukraine with respect to pharmaceutical companies still are important for development of competition in Ukraine. On the one hand, the investigation and fines made the market participants treat competition more carefully, and on the other – showed huge lacunae in legislation protecting economic competition and their effects.

Our task for the near years is to make competition at Ukrainian markets more civilized both from the market participants’ point of view and in terms of clarity and transparency of its rules and predictability of actions of the Antimonopoly Committee of Ukraine as its main protector here.

Contact the author: Andrii Gorbatenko, associated partner at Legal Alliance Company, [email protected]