Annulment of the Board's Decision Due to Lack of Evidence
With its decision dated 30 December 2022 and numbered 2022/2912, the Ankara 13th Administrative Court ("Administrative Court") annulled the Turkish Competition Board's ("Board") decision dated 21 January 2021 and numbered 21-04/52-21 regarding its conclusion that two pharmaceutical undertakings were involved in a concerted practice to expand the use of a drug over its cheaper alternative, because of the Board's failure to demonstrate concrete findings of violation.
The Board's assessment
A complaint was lodged with the Turkish Competition Authority ("Authority") on 22 January 2019, alleging that two pharmaceutical companies were engaged in an anticompetitive relationship to expand the use of an eye treatment drug, Lucentis, which is a more expensive option than its alternative, Altuzan, by spreading misleading information and increasing the doubts about the safety of using the latter for a specific eye disease, macular degeneration. In fact, two national authorities also previously investigated this conduct. While the Board mainly referenced the Italian Competition Authority's conclusion that the two companies violated competition law,1 just recently, the Belgian Competition Authority also took a parallel stance and imposed administrative fines accordingly.2
The Board initially reviewed the active ingredients of the two drugs and found that they are highly substitutable, in addition, it also found that the two companies hold a license-based relationship through their subsidiaries, whereby the company with the more expensive product would indirectly pay the other company's licensing fees from the sale of its drug. In its market assessment, the Board also noted that the companies had been applying to associations of undertakings or taking legal actions to obstruct the use of the cheaper alternative, that Altuzan's drug information in its certificate explanation based on a wrong translation was misleading, and that the undertaking with the higher-priced product was also defaming Altuzan to doctors to reduce its use. As a side note, the Board, during its on-site inspection at the competitor's premises, found an internal document — "Lucentis Value Proposition Campaign Plan" — that the other one should not have. This was later considered a supporting factor in the Board's cartel conclusion. By doing so, the Board took a parallel stance with the Italian Competition Authority and concluded that the two undertakings engaged in a concerted practice to favor the expensive option, Lucentis. The EU Court of Justice also concluded that the undertakings violated competition by object through their practice to spread misinformation.
In addition, the Board did not grant an individual exemption to such conduct as per Article 5 of Law No. 4054 on the Protection of Competition ("Law No. 4054"), by providing that such practice cannot create economic benefits. Such restriction led to significant increases in healthcare costs and damage to consumers, and, therefore, it failed to meet the exemption criteria. It also rejected the companies' defenses where they argued that the Board failed to provide any sufficient evidence to prove the concerted practice, the common will.
The Board concluded that the companies violated Article 4 of Law No. 4054 and aggravated the finest as the violation took place between 29 December 2011 and 2019, which is longer than five years. Therefore, a total fine of almost TRY 280 million (at the time, around EUR 30 million) was imposed on the undertakings.
Administrative Court's judgment
In its decision, the Administrative Court conducted a separate analysis for each argument on which the Board based its conclusion and provided the following:
- The start of the violation was not 29 December 2011, as the misleading product certification explanation was not announced until 30 May 2014; however, even then, as the reviewing authority (Turkish Medicines and Medical Devices Agency) had not raised any related claim, this concern was not applicable from the viewpoint of the Administrative Court.
- While spreading misleading information to the market through various channels is indeed an unfair competitive practice, the Administrative Court found no concrete proof to determine that the companies were involved in cartelistic behavior beyond a reasonable doubt.
- Although the Authority's officials did find the internal "Lucentis Value Proposition Campaign Plan" during the on-site inspection at the competitor's premises, the Board had not carefully assessed or explicitly provided whether the document was relevant to the activities in Turkey.
- In general, the Administrative Court explained that the Board's reasons to conclude that the companies were involved in cartelistic behavior were not sufficient to fulfill the standard of proof and, therefore, annulled the Board's decision conclusively.
Annulment of the Board's decision is a clear demonstration of the need for concrete findings in the Board's assessments. The annulment decision is an important example of the fact that the Board must exceed the level of reasonable doubt with concrete findings to prove the competition law concerns in concerted practices.
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