Overview of EU competition law recent developments in the HLS sector

This article aims to provide an overview of competition authorities’ recent activity regarding the Healthcare and Life Sciences sector, both at the EU level and in seven Member States, and also to identify dominant trends and perspectives in this sector.

Between March and June 2020, the Commission and national competition authorities have been particularly busy in providing businesses with guidance to organise cooperation to tackle the Covid-19 outbreak and avoid shortages of essential medicines, while always recalling that such cooperation should not be an excuse to implement crisis cartel. The “comfort letter” issued by the Commission to Medicines for Europe allows this association to implement measures that are normally prohibited under competition law, only deemed to be justified by their purpose and temporary nature.

As with anticompetitive agreements, unfair pricing practices continue to be high on the competition authorities’ agendas. As excessive pricing of highly demanded health products became a hot topic during the Covid-19 crisis, the authorities’ responses extends from close scrutiny of prices on the market, to formal investigations and sometimes resulting in temporary pricing regulation of such products. Recent investigations demonstrate that although different jurisdictions may tackle unfair pricing practices with different instruments (regulation, unfair practices or anticompetitive practices), the objective remains to ensure that consumers do not suffer from high prices, especially in the health sector.

Merger control has been impacted by the crisis: information gathering has become more difficult and notifying companies should anticipate delay. However, competition authorities’ current message is that the crisis will not result in lower standards of merger assessments. Notifying parties may now seek to invoke the “failing firm” defence, which leads to the clearance of a transaction that might ordinarily raise competition concerns.

Relaxing the State aid framework has become an important part of the Commission’s action to handle the crisis and businesses carrying out R&D projects related to Covid-19 and other antiviral-relevant research may now benefit from State aid measures in the form of direct grants, repayable advances or tax advantages.

Over the past few months, national competition authorities and courts have gradually resumed their activity. One of the future challenges for competition authorities in the Life Sciences sector will likely be in determining whether collaborations between competitors still appear to be necessary, as the crisis enters in a new phase. As cooperation implemented to face Covid-19 crisis might trigger future investigations and risks or private enforcement proceedings, companies should remain careful and continue to ensure compliance of their actions with competition law.

We also expect that the pre-crisis trend of regulating against excessive pricing will continue to be high on the agenda of the European Commission and EU competition authorities, especially in the Life Sciences sector.
Also, the coming months may confirm a trend for ensuring fairness in market behaviour, at all levels of the commercialisation chain.

See our Coronavirus (COVID-19) feature for more information generally on the possible legal implications of COVID-19.