Antitrust bites - Newsletter

Antitrust Damage Actions: the EU Court of Justice on the ratione temporis application of Directive 104/2014/EU

With decision of 22 June 2022 (case C-267/20), the EU Court of Justice ruled on the application of the limitation period regime and of the quantification of harm provided for by Directive 104/2014/EU regarding compensation claims brought after the entry into force of the Directive (25 December 2014).

The decision rules on a request for a preliminary ruling filed by a Spanish judge in the context of a claim seeking compensation for the damages resulting from an anticompetitive agreement between truck manufacturers ascertained by the European Commission in 2016.

The Court of Justice held that the five-year limitation period provided for in Article 10 of the Directive (i.e. a provision of substantive nature) applies to compensation claims that, although related to offenses committed before the Directive’s entry into force, were brought after its entry into force, provided that, under the previously applicable regime, the limitation period related to such claims had not expired as of 27 December 2016 (i.e. the deadline for transposition of the Directive into national law).

In this specific case, the Court of Justice held that the one-year limitation period provided for by Spanish law before the implementation of the Directive, ran from the date of publication of the summary of the Commission’s decision in the Official Journal of the EU, i.e. 6 April 2017, and that therefore the action for compensation brought on 1 April 2018 was not time-barred. Hence, the applicability of Article 10 of the Directive to the present case.

As concerns the principles on the quantification of antitrust damage, the Court of Justice deemed that Article 17, paragraph 1 of the Directive – a procedural provision – concerning the equitable assessment by the Judge, applies to the compensation claims based on facts that happened before the entry into force of the Directive, but which were brought after its transposition deadline and after the entry into force of the implementing legislation.

On the other hand, the conclusions reached by the Court as regards Article 17(2) of the Directive, which establishes a presumption iuris tantum as to the existence of damage resulting from cartels, are opposite. The Court of Justice held that this substantive provision cannot apply to an action for damages based on facts which happened before the deadline for implementing the Directive into national law.

Google Maps Platform under the magnifying glass of Bundeskartellamt

With press release of 21 June 2022, the Bundeskartellamt announced it has initiated proceedings against Google. The proceedings are to verify whether certain conducts implemented by Google in the context of digital mapping (Google Maps platform) are capable of determining anticompetitive effects.

According to the German Authority, Google would restrict the possibility to combine its digital mapping services with those provided for by other competitors – for example, by hindering the possibility to embed location data from Google Maps, the search function or Google Street View into competing digital mapping services. According to the press release, also the terms and conditions for the use of Google’s map services in vehicles will be examined.

The proceeding was initiated by the Bundeskartellamt pursuant to the recently introduced legislative provision (Section 19a GWB) which confers wide powers to the Authority, for prevention purposes, against large undertakings of the digital sector which detain a “paramount significance for competition across markets”.

The new German competition law provision confers to the Authority, in the first phase, the power to qualify a specific undertaking as having a “paramount significance for competition across markets”. On that basis, in a second step, the Authority can take action against an undertaking to oppose certain potentially anticompetitive conducts.

Google had been already identified by the Bundeskartellamt as a company active in the digital sector having a “paramount significance for competition across markets” with a decision of December 2021.

Since the introduction of this legislation in January 2021, the Authority has initiated four proceedings against large operators active in the digital sector.

UK Competition Authority opens a public consultation on possible investigations in the mobile browsers and cloud gaming markets

On 10 June 2022, the Competition and Markets Authority opened a public consultation with the purposes of evaluating the opportunity to start investigation proceedings towards two big tech companies in relation to the mobile browser and cloud gaming markets.

This consultation follows the report, published on the same day, in which the Authority announced the outcomes of several market studies concerning “mobile ecosystems,” showing that those two big tech companies have substantial and entrenched market power on the main gateways through which users access content online through their mobile devices.

Because of the potential competition concerns raising from such situation, according to which the two big tech companies could be capable of determining the “rules of the game” and restricting competition, and also in the light of several submissions received by the Authority, the public consultation at issue has been opened.

The consultation concerns the markets for the provision of the applications that enable users of mobile devices to access the web (mobile browsers) and of those applications’ underlying technology (mobile browsers engines). It also concerns the sector of distribution through app stores of cloud gaming services, i.e. services that allow for the streaming of games from remote servers (so-called clouds) on the users’ smartphones and tablets in the UK.

On this basis, the Authority invited the stakeholders to submit their comments on whether to intervene in the markets indicated in the public consultation until 22 July 2022.

Imposition of unfair excessive prices in the pharmaceutical sector: ICA finds an abuse of dominant position

With decision no. 30156, published in Bulletin no. 21 of 6 June 2022, the Italian Competition Authority (ICA) fined several undertakings belonging to a primary group in the pharmaceutical sector for a total of EUR 3.5 million, for an alleged abuse of a dominant position in the Italian market for the production and sale of chenodeoxycholic acid-based drugs (CDCA). These drugs are used to treat a rare disease that causes severe disability and can lead to early death.

In particular, the abuse would have involved charging the National Health Service (NHS) unfairly excessive prices for the sale of an "orphan drug" containing the active principle CDCA. The alleged abuse would have been part of a multifaceted strategy intentionally pre-arranged over time, within the context of which it would have also been implemented a dilatory and obstructive behaviour during the negotiation of the reimbursement price of the drug vis-à-vis the Italian Medicines Agency, with the aim to reduce its bargaining power (among other things, by delaying the communication of information and documents relating to investments in research and development and the costs incurred).

With regard to the unjustified excessive price, the ICA has recalled the test developed by the Court of Justice since the United Brands judgment (case 27/76), highlighting that the analysis must be particularly rigorous in cases of products of which consumers are "completely dependent", as in the case of "life-saving” drugs.

The Authority has preliminarily argued that the dominant undertaking has never defined the price of the orphan drug on the basis of the costs incurred, but only on expectations about the maximum price that the demand would have been willing to pay.

In conducting the analysis of price excessiveness, the ICA has adopted two different methodologies: one of a financial nature, the other of an accounting nature. The first took into consideration the “internal rate of return” of the project relating to the marketing of the orphan drug. The second compared the revenues realized on a so-called cost plus (corresponding to the costs incurred, including a reasonable profit margin). Both methodologies confirmed the excessiveness of the price charged.

As far as the iniquity of the price was concerned, the Authority took into consideration whether additional non-cost related factors existed that could have justified the aforementioned disproportion. On this point, the ICA argued that it was necessary to assess the fairness of the price in an absolute sense and not with comparative methods. The Authority thus also considered the iniquity of the price of the drug to be proved on the basis of qualitative factors relating to: i) the nature of the product; ii) the (scarce) investments in research and development; iii) the absence of added therapeutic value compared to pre-existing therapies (on this point, it emerged that part of the abusive strategy of the dominant undertaking was to artfully differentiate its orphan drug from an allegedly equivalent off-label drug); and iv) the effects of the conduct on the NHS.

Similar behaviours by the same dominant undertaking have already been fined by the Dutch competition authority and are currently being investigated by other European authorities.

Abuse of dominance through the spreading of disparaging information about a competitor: the European Commission opens an investigation

With a press release of 20 June 2022, the European Commission announced that it has opened an investigation into an alleged abuse of a dominant position in breach of Article 102 TFEU and Article 54 of the Agreement on the European Economic Area (EEA), with regards to an undertaking active in the market for intravenous iron medical treatment.

According to the European Commission preliminary view, the allegedly dominant undertaking would have implemented an abusive behaviour by spreading disparaging information relating to its (potentially) only competitor in the relevant market. According to the Commission, the undertaking’s conduct would have been aimed to hinder competition from third-party undertakings against its blockbuster drug for medical treatment with intravenous iron.

The Commission has supposed that the alleged disparaging campaign would have been carried out for several years and it has been involving the spreading of potentially misleading information on the safety of the competing product. This allegedly misleading information campaign, according to the Commission, would be directed mainly towards medical professionals and would also have allegedly hindered the diffusion of the competing medicinal product in the EEA.

While opening the investigation, which originated from a complaint submitted by the allegedly injured competitor, the Commission has announced that this would only be the second investigation opened for cases concerning potential abuses of a dominant position, with possible exclusionary effects, represented by behaviours of disparagement of competing products in the pharmaceutical industry. The first investigation involved proceedings opened in March 2021 and is still ongoing. It relates to similar behaviours in the market for drugs for the treatment of multiple sclerosis.

The opening of the proceedings appears to be of interest as the alleged abuse supposed by the Commission appears to consist in the "mere" dissemination of potentially misleading disparaging information regarding a competitor.