Member Article

The sector inquiries "into a particular sector of the economy or into a particular type of agreements  cross various sectors", set in Article 17 of EC Regulation 1/2003, are one of the tools available to the European Commission to enforce Competition Policy.  These sector inquiries are investigations that the European Commission may decide to carry out into a determined sector of the economy, when there may be signs of restrictions to competition. The action of the Commission consists, essentially, in an information gathering and analysis. Exercise that provides the Commission with an in-depth knowledge of the market from the competition point of view.  When verified that the reasons for a distorted competition in a given sector are the existence of anticompetitive behaviors entered into by certain undertakings, the Commission may, a posteriori, carry out specific investigations to ensure the respect of EC competition rules on restrictive agreements and abuse of dominant position (Articles 81 and 82 of the EC Treaty).

Contrary to its earlier practice, the Commission intends, in articulation with the respective Competition Authorities of the Member States, to launch a sector inquiry into the pharmaceutical sector. nothing new so far. except that in this investigation it shall carry out unannounced inspections at the premises of pharmaceutical companies.  According to the Commissioner Neelie Kroes, the investigation is a response to the apparent distortion of competition in the pharmaceutical sector, evidenced by the fact that an ever-smaller number of new pharmaceuticals are being brought to market and by the fact that the entry of generic pharmaceuticals sometimes seems to be delayed. The inquiry will, firstly, examine whether agreements between pharmaceutical companies, such as settlements in patent disputes, may infringe the EC Treaty's prohibition on restrictive practices (Article 81). Secondly, it will address whether undertakings may have created artificial barriers to the entry of other undertakings in the market, either by the misuse of patent rights, either through a vexatious litigation, inter alia, practices that may infringe the EC Treaty's prohibition on abuses of a dominant position (Article 82).  Unlike the Commission and Competition Authorities. Common dawn raids, which are carried out following a gathering of evidences that specific companies seem to be infringing competition law, these unannounced inspections are not aimed at investigating specific companies allegedly infringing competition rules, they rather seek to be the starting point of this general sector inquiry to pharmaceutical companies and ensure that the Commission has immediate access to relevant information that will guide the next steps of the inquiry.

It is, therefore, the first time that the European Commission triggers an inquiry process to an economic sector resorting, not to requests for information, but to unannounced inspections. The Commission justifies this practice by the kind of information involved (the use of intellectual property rights, litigation and settlement agreements covering the EU, for instance) that, by its nature, is information that undertakings tend to consider highly confidential. Such information may also be easily withheld, concealed or destroyed, reason why inspections, without prior notice, have been considered appropriate.  It remains, however, to be demonstrated that the practice that the Commission wants to implement is supported by the relevant legal provisions.