Defining relevant markets in the pharmaceutical industry

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Art 102 proceedings require concomitance: the incriminated undertaking must be deemed dominant at the time of the abuse. As a high market share is a necessary (but not sufficient) condition for establishing dominance, enforcers have had to define narrow (molecular level) markets in a number of recent cases involving the pharmaceutical industry. However, a narrow delineation was not supported by evidence pointing to intense non-price competition between similar drugs. This paper argues that defining relevant markets conditional on the nature of the infringement offers a cogent framework to establish market boundaries. Such an approach can also lead to narrow markets, without having to ignore evidence pertaining to non-price competition.

1. This article is in part motivated by a number of recent competition enforcement decisions involving unilateral behaviour by pharmaceutical firms where market definition was pivotal. While market definition is often a fairly routine exercise, it turned out to be particularly complex (and controversial) in the Servier [1] (EC 2014) and GSK/Paroxetine [2] cases (CMA 2016). [3] The evidence and arguments put forward by the various parties involved in these cases raised interesting issues. This paper’s comments only apply to the “abuse of dominance” (Article 102 TFEU and Chapter II of the Competition Act) leg of the respective decisions. 2. In Servier, the EU Commission deemed that Perindopril (an ACE [4] inhibitor to treat hypertension) and its generic versions formed an antitrust market

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