On May 13, 2014, the Competition Bureau (Bureau) announced that
it has discontinued its inquiry into Alcon for alleged abuse of
dominance with respect to prescription ophthalmic drugs. As
outlined in our
previous article on the new draft Intellectual Property
Enforcement Guidelines, the Bureau has indicated that it is
focusing on the interface between intellectual property and
competition law, more specifically in the pharmaceutical
The Bureau was investigating whether Alcon had engaged in
"product hopping" (also known as "product
switching"), a product life-cycle management strategy whereby
a brand name drug company patents a new formulation of an existing
drug, protected by one or more additional patents, and then tries
to prevent or delay competition from generic companies with respect
to the original formulation by forcibly switching patients to the
newer formulation before patent expiry on the original
As the patents on its ocular anti-allergy drug, Patanol, were
approaching expiry, Alcon introduced a new reformulation called
Pataday in 2011. Pataday contains the same medicinal ingredient as
Patanol, with twice the concentration. In July 2012, Alcon stopped
supplying Patanol to Canada and informed customers that Patanol was
indefinitely on "back order." Afterwards, sales of
Pataday replaced the vast majority of Patanol's sales.
The Bureau began an abuse of dominance inquiry into Alcon in
November 2012, because it was concerned that Alcon was attempting
to block or limit upcoming generic competition to Patanol. As part
of the inquiry, Alcon had to supply information to the Bureau in
response to a court order under section 11 of the Competition
The Bureau concluded that, following the supply disruption, most
Patanol prescriptions were switched to Pataday, Alcon's
second-generation formulation with longer patent protection.
However, the disruption in supply of Patanol was only temporary,
and Alcon resumed supply of Patanol to the Canadian market in
The Bureau found that Alcon's conduct did not result in a
substantial prevention or lessening of competition, one of the
required elements to establish abuse of dominance, because generic
entry was not delayed as a result of the temporary supply
disruption and generic versions of Patanol have been able to
capture significant market shares. In addition, Patanol sales
quickly went back in line with sales prior to the supply
disruption. As a result, the competitive dynamic was restored, and
consumers and prescribing physicians now can choose between
Patanol, generic Patanol, Pataday and competing treatments.
Therefore, the Bureau discontinued its inquiry in March 2014.
The Bureau recognizes that product life-cycle management has
pro-competitive effects, such as spurring new innovation. However,
the Bureau indicates that abuse of dominance concerns are likely to
arise where there are deliberate attempts to block or delay
competition from generic drug companies: for example, by
eliminating, repurchasing or recalling the market supply of a drug
about to face generic competition in order to force a switch in
demand to a reformulation under longer patent protection.
This inquiry demonstrates the willingness of the Bureau to
investigate practices in the pharmaceutical industry. Moreover, the
Bureau has developed its expertise in product hopping during this
inquiry by making market contacts as well as consulting with
experts and foreign competition agencies. Accordingly, product
life-cycle management strategies should be carefully reviewed to
minimize risks under the Act.
The Commissioner of Competition addressed innovation, enforcement and policy initiatives at the Competition Bureau in his keynote speech, "Strengthening Competition: Innovation, Collaboration and Transparency."
Used car listing website operator CarGurus Inc.'s attempt to force rival Trader Corporation to supply it with vehicle listing data has encountered a dead end as the Competition Tribunal denied it leave to commence a private application under several provisions of the Competition Act.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).