Market definition is integral to a competition authority’s ability to sanction anti-competitive practices under Article 102 TFEU.  If the market is defined narrowly, a company is more likely to have a dominant position and thus is more likely to face increased scrutiny of its commercial strategies.  In the pharmaceutical sector, recent developments indicate that originators face a heightened risk that competition authorities will take a narrow approach when defining the relevant market. 

In May 2013, the French Competition Authority (“FCA”) fined Sanofi-Aventis €40.6 million for abusing a dominant position with respect to its blockbuster anti-clotting drug Plavix (clopidogrel).[1]  Although Plavix faced competition from generics, the FCA nonetheless found that Sanofi was dominant and that its strategy to limit generic entry was abusive.  Arguably, the most troubling aspect of this case – from the perspective of originators – is not the behaviour that constituted an abuse (a so-called “denigration strategy”), but rather the approach to market definition that led to a finding of dominance.

The FCA held that the market should be defined at the level of the molecule.  In other words, the FCA found that no other drug was substitutable for clopidogrel.  In concluding that clopidogrel constituted its own distinct market, the FCA focused on a number of factors:

  • Other molecules in the same ATC 4 class were deemed not to be interchangeable because they (i) were prescribed as second line treatments; or (ii) were for more limited therapeutic indications, or (iii) were available only in hospitals.
  • The perception of doctors (especially cardiologists) was that clopidogrel was an essential molecule.
  • Cheaper molecules (such as aspirin) had no impact on the price of Plavix.

Arguably, this extremely narrow approach heightens the suspicion that market definition in Article 102 cases can be influenced by prosecutorial incentives.  As drugs lose their patent protection (especially blockbusters, such as Plavix), competition authorities are keen to regulate and sanction unilateral conduct that hinders generic entry.  As a finding of “dominance” must precede a finding of an “abuse of dominance”, there is little temptation for a competition authority to define the market broadly.

The AstraZeneca decision exemplifies this approach.[2]  The Commission found that H2 blockers (antihistamines) were not in the same relevant market as proton pump inhibitors (“PPIs”), even though: (i) H2 blockers were the leading treatment for ulcers when PPIs entered the market and (ii) H2 blockers continued to have a significant market share following the launch of PPIs.  The European Court of Justice recently upheld this narrow approach following AstraZeneca’s appeal.[3]

Emboldened by the AstraZeneca judgment, it is likely that competition authorities will continue to define markets narrowly in an effort to facilitate generic entry (at least where there is questionable unilateral conduct).  They may even consider that they have carte blanche to define pharmaceutical markets at the narrowest conceivable level.  Yet, important questions arise:

  • Does it make sense that originators face an increased risk of being found dominant at the very point in time that they are losing exclusivity and facing competition from generics?
  • Are competition authorities stretching the intellectual parameters of market definition to achieve their end-goal and if so, what are the ramifications for other areas of competition law that may lack prosecutorial incentives (e.g., merger control)?

Irrespective of these concerns, one thing is clear: originators should not overestimate the breadth of the relevant market when assessing the risk of commercial strategies under EU competition law.


[1] French Competition Authority, Press Release of 14 May 2013

[2] Case COMP/A.37.507/F3 – AstraZeneca

[3] Covington E-Alert of 10 December 2012