Belgian Competition Authority opens first hybrid cartel proceedings
On 9 December 2022, the Prosecution Service of the Belgian Competition Authority (the BCA) submitted a draft decision to condemn and impose a fine upon one of one of Belgium’s last three pharmaceutical wholesalers, CERP SA (CERP), for allegedly participating in anticompetitive practices between April 2003 and November 2016.
This case is particularly interesting, as it constitutes the first hybrid cartel proceedings by the BCA. In February 2022, the BCA had already adopted a settlement decision with the two other pharmaceutical wholesalers still active in Belgium, Pharma Belgium-Belmedis and Febelco. In this settlement decision, the BCA imposed a fine of EUR 29.8 million on Pharma Belgium-Belmedis whilst Febelco benefited from full immunity given its role as leniency applicant. CERP is the only company to have opted-out of the settlement.
The alleged infringements are two-fold:
Firstly, the Prosecutor of the BCA is alleging that the three pharmaceutical wholesalers colluded to set the terms and conditions applicable to the so-called “Transfer Orders” service. Whilst in the traditional pharmaceutical distribution model, pharmaceutical companies sell their products to pharmaceutical wholesalers, which then in turn, sell and deliver those products to local pharmacies, in the Transfer Orders model, however, the wholesalers take care of the entire logistics (delivery, invoicing, etc.) of the sales made directly by pharmaceutical companies with local pharmacies. According to the BCA, by agreeing on a common set of terms and conditions in order to stimulate the use of Transfer Orders by pharmaceutical companies, the pharmaceutical wholesalers violated Article 101 TFEU and Article IV.1 of the Belgian Code of Economic Law.
Secondly, the Prosecutor is also alleging that the pharmaceutical wholesalers colluded to set common conditions applicable to the pre-sales of influenza vaccines to local pharmacies. Every year, pharmacists need to pre-order certain quantities of vaccines with their pharmaceutical wholesaler in order to allow the vaccines producers to assess the required number of vaccines to produce and put on the market for that specific year. According to the BCA, the wholesalers infringed competition law by applying identical conditions to those pre-sales. These conditions allegedly included the agreement to not award discounts to pharmacists and to refuse the return of unsold vaccines that were ordered during the pre-sales period. In addition, the wholesalers would have agreed on the duration of those pre-sales periods.
The proceedings regarding CERP will now go to the Competition College of the BCA that will consider the findings, hear oral arguments and issue a final decision. Such hybrid settlements have raised intriguing questions at EU level (see, for instance, here and here). It is not excluded that similar issues will be raised at national level and assessed again.
This article was published in the Competition Newsletter of February 2023. Other articles in this newsletter:
