United Kingdom Competition and Markets Authority Imposes £3.4 Million in Fines on Pharma Firms for Anticompetitive Conduct

On March 4, the United Kingdom Competition and Markets Authority (CMA) announced that, after an investigation into the supply of antidepressant drug nortriptyline, it had imposed fines totaling £3.4 million in fines on four pharmaceutical companies for two violations of United Kingdom competition law.

One of the violations involved market-sharing between King Pharmaceuticals Ltd and Auden Mckenzie (Pharma Division) Ltd.  According to the CMA, those two firms “shared out between them the supply of nortriptyline to a large pharmaceutical wholesaler.”  From September 2014 to May 2015, the two companies agreed that King would supply only 25mg tablets and Auden Mckenzie only 10mg tablets. The two firms also colluded to fix quantities and prices.

The CMA stated that both King and Auden Mckenzie admitted violating the competition law.  It imposed a £1,882,238 fine on Accord-UK Ltd, which has taken control of Auden Mckenzie’s nortriptyline business after the market-sharing ended, and a £75,573 fine on King.  Accord-UK and Auden Mckenzie also agreed to make a £1 million payment to the United Kingdom National Health Service (NHS) in connection with the case — only the second time that the CMA “has secured a payment to the NHS following one of its pharmaceutical investigations.”

The other violation involved King, Lexon (UK) Ltd, and Alissa Healthcare Research Ltd “illegally sharing commercially sensitive information, to try to keep nortriptyline prices up.”  The CMA said that between 2015 and 2017, when the cost of nortriptyline was falling, the three suppliers “exchanged information about prices, the volumes they were supplying, and Alissa’s plans to enter the market.”

The CMA fined Lexon, which did not admit to violating the competition law, a total of £1,220,383.  By contrast, it fined King and Alissa £75,573 and £174,912 respectively, because they both admitted in September 2019 to violating the competition law.

In addition to the corporate fines and payment to the NHS, the CMA “secured the disqualification” of Dr. Philip Hallwood, a director at King and the sole director of consultancy firm Praze.”  It reported that “Praze conducted King’s corporate and commercial services during the illegal activity and took part in this alongside King.”  After both King and Praze admitted to their involvement in the violation, Dr. Hallwood “signed a legally binding undertaking which disqualifies him as director of both companies,” meaning that he cannot be involved in the management of any UK company for seven years.  As the CMA explained,

Under the Company Directors Disqualification Act, the CMA has the power to apply to the court to disqualify a director from holding company directorships or performing certain roles in relation to a company for a specified period, if a company which he or she is a director of has breached competition law. The Act also allows the CMA to accept a disqualification undertaking from a director instead of bringing proceedings, which has the same legal effect as a disqualification order.

The CMA pointedly concluded that it “is also considering the possible disqualification of other directors.”

Note: Antitrust and competition compliance officers at United Kingdom companies should inform senior executives of these CMA penalties, to remind them that price-fixing and bid-rigging are not the only types of core anticompetitive conduct that can attract the attention of enforcement authorities.  They should also include these cases in their competition-law training materials.

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