Antitrust Law Daily Wrap Up, ANTITRUST NEWS: European General Court confirms French ONP restricted competition in clinical biology analysis market, (Dec 10, 2014)

By Linda O’Brien, J.D., LL.M.

The General Court of the European Union has confirmed the judgment of the European Commission (EC) that the Ordre national des pharmaciens (ONP) restricted competition by laboratories in the clinical biology analysis market and reduced the fine imposed on the ONP from €5 million to €4.75 million, according to an announcement today.

The Ordre national des pharmaciens (ONP) is the state authorized governing body over the practice of pharmacy in France. The ONP has the task of contributing to public health and quality of care, including the safety of professional actions. In France, clinical biology is principally carried out by pharmacists.

In 2007, Labco, a European group of laboratories operating in France and in several other European countries, filed a complaint with the European Commission (EC). The complaint related to decisions adopted by the ONP with a view to hindering the development of Labco and restricting its ability to compete with other laboratories on the clinical biology analysis market. At the conclusion of the investigation, the Commission found that the ONP had restricted competition by preventing groups of laboratories from developing and by attempting to impose a minimum price on the French market for clinical biology analysis. It therefore fined the ONP €5 million. The ONP brought an action before the General Court, seeking annulment of the EC’s decision or, in the alternative, a reduction of the fine.

In response to the argument that the ONP’s actions were those of a public authority to which the competition rules do not apply and that they were justified for the protection of public health, the General Court found that, although the competition rules do not apply to activities which are connected with the exercise of the powers of a public authority, the ONP does not have regulatory powers and brings together pharmacists, at least some of whom carry on an economic activity and may be regarded as undertakings. The General Court observed that, the ONP could not claim to be acting merely as an extension of the power of the public authorities, nor was it empowered to extend the scope of legal protection with a view to protecting the interests of a group, since the national legislature had set the limits of the protection afforded and made allowance for a certain degree of competition. In those circumstances, the General Court concluded that the restrictive conduct of the ONP was covered by the competition rules of the European Union (EU).

The General Court also found that the Commission correctly analyzed the restrictive nature of the various measures adopted by the ONP. The ONP attempted to impede, by a variety of means, the participation by groups in the capital of laboratories with the aim of reducing the competitive threat that the development of groups of laboratories posed to the numerous small laboratories active on the market. Thus, the ONP systematically chose to interpret the law in the manner most unfavorable to the opening up of the market to groups of laboratories and opposed legal arrangements that were nevertheless consistent with the law.

In addition, the ONP misconstrued the French legislation by requiring the disclosure of certain documents and by making the entry into force of structural changes to companies operating laboratories conditional on receipt of prefectural orders and on registration on the list of the ONP. Finally, by obstructing the economic activities of professionals operating on the market or by preventing external capital from investing in the market, the ONP limited or controlled production, technical development and investment.

The Court confirmed the Commission’s assessment that the ONP’s minimum price policy had the object of imposing a minimum market price by prohibiting laboratories, from 2005 onwards, from granting discounts above a ceiling of 10 percent. The General Court observed that the EC correctly interpreted the applicable legal framework, for that framework, contrary to the rules imposed by the ONP, does indeed allow laboratories freely to grant reductions in the price of clinical biology analysis services in the context of cooperation agreements or contracts concluded between laboratories or with hospitals. The ONP’s conduct with regard to discounts did not amount to a mere application of the law, since on several occasions the ONP went beyond the limits of its statutory task in order to impose its own economic interpretation of the law. The Court pointed out that the Commission relied on documentary evidence which was sufficient to support the conclusion that there was an infringement by object, consisting of a horizontal price agreement.

Although confirming the Commission’s decision, the General Court reduced the fine imposed on the ONP from €5 million to €4.75 million. The Court observed that there was a circular in existence which could have led the ONP to think that prefectural approval was required in certain cases of structural changes to companies operating laboratories. In the Court’s view, the EC should have recognized that there was a mitigating circumstance in that regard. In those circumstances, it was appropriate to reduce the fine by €250,000.

Companies: Labco

News: Antitrust