The Belgian Competition Authority fines Novartis for abuse of collective dominance regarding eye disease medicines
On 23 January 2018, the European Court of Justice (“ECJ”) handed down its judgment (C-179/16) in relation to Novartis’ Lucentis® and Roche’s Avastin® eye disease medicines, and ruled that disseminating misleading information on the off-label use of a medicine could constitute a restriction of competition ‘by object’. Exactly 5 years later, on 23 January 2023, the Belgian Competition Authority (“BCA”) imposed a fine on Novartis Pharma SA and Novartis AG (together “Novartis”) for abuse of collective dominance resulting from disseminating misleading information regarding risks in relation to the off label use of Roche’s Avastin®.
The BCA’s decision relates to the period between the end of 2013 and the end of 2015. Novartis’ more expensive medicine Lucentis® was authorised on the market for treatment of the ophthalmologic disease of age-related macular degeneration (AMD). Roche also had a cheaper medicine – under the brand name Avastin® – that was used by ophthalmologists for the treatment of that same disease. However, Avastin®’s ophthalmologic use concerned an off-label use, as Avastin was not authorised on the market for AMD treatment but for the treatment of certain tumorous diseases.
According to the BCA, Novartis continued to warn ophthalmologists, hospitals and the regulator about the risks of off-label ophthalmologic use of Avastin® after the publication of studies that no longer allowed doing so without qualification or reference to the scientific uncertainty created by these studies. Following a complaint by Test-Achats, the Belgian consumer organisation, in 2014 and the BCA’s long investigation, the BCA has now concluded that these communications were misleading and qualify as an abuse under Article IV.2 of the Belgian Code on Economic Law (“CEL”) and Article 102 of the Treaty on the Functioning of the European Union (“TFEU”). It has therefore imposed a fine on Novartis of EUR 2,782,808.
It remains to be seen whether Novartis will appeal the BCA’s decision. In a first reaction, Novartis has already stated that it is convinced that it has always acted correctly and in accordance with competition law and in the interest of patients, and that it is carefully studying the decision to consider its next steps. Novartis considers that the off-label use of a medicine for a non-authorised indication poses a threat and risk for the legal and regulatory framework which aims to guarantee the patients’ efficacious and safe use of medicines. 
The BCA’s decision can also not be seen separately from the ECJ’s decision regarding Avastin® (C-29/17), in which it held that national health insurance is allowed to reimburse a medicine for off-label use. Following this decision, Avastin was reimbursed for the relevant off-label use in some European countries, but that was not the case in Belgium.
Competition law angle
Interestingly, the BCA’s decision differs from earlier decisions by other national competition authorities in similar “Lucentis-Avastin cases”, both regarding the grounds for finding a competition law infringement as well as concerning the parties that were fined.
- The Italian Competition Authority had already in 2014 (and which was then upheld by the Italian Cassation Court in 2021) fined both Novartis and Roche for agreeing to denigrate the off-label use of Roche’s Avastin® and to delay its entry into the Italian market, which favoured the sales of Novartis’ medicine, Lucentis®. The Italian Competition Authority thus qualified Novartis’ and Roche’s behaviour as a restrictive agreement in violation of Article 101 TFEU and the respective national equivalent. In 2021, the Turkish Competition Authority also fined both Novartis and Roche for anticompetitive collusion. On the other hand, the Brazilian competition authority in 2017 found no proof of collusion between Roche and Novartis.
- Based on the BCA’s press release (as the decision itself has not yet been published) it appears that the BCA did not find such a restrictive agreement under Article 101 TFEU and the Belgian national equivalent, but only found an abuse of collective dominance. According to the BCA, Novartis held a collective dominant position together with the Roche group in the period between November 2013 and the end of 2015. The BCA’s press release does not mention the exact market on which that collective dominance was found, but it presumably applied the ECJ’s judgment from exactly 5 years ago on this point, which ruled on a preliminary request by the Italian Council of State in the Italian “Lucentis-Avastin case”. A relevant market contains all the products that are considered substitutes from a product and geographic point of view. The ECJ took the view that a medicine that is used off-label for certain therapeutic indications (like Avastin®), can be a substitute of, and thus belong to the same market as, another medicine (like Lucentis®) whose market authorisation covers specifically those therapeutic indications (like AMD in this case).
|What is collective dominance? |
Collective dominance is a competition law concept arising both in merger cases and in abuse of dominance cases. While a dominant position is generally found to be held by one undertaking on the market, there are situations in which two (or more) undertakings together are considered to have a dominant position together, as opposed to the other players on their market. The European courts have developed a three-pronged test to assess the existence of collective dominance: (i) transparency: there is such a level of transparency that each company can monitor the other firms’ conduct and detect deviations, (ii) deterrence: deterrents must exist that provide incentives not to cheat, and (iii) external stability: there should not be countervailing competitive pressure from actual or potential competitors or countervailing buyer power from consumers.
- Despite the finding that Novartis and Roche held a collective dominant position, the BCA only fined Novartis and not Roche. This is unlike the French Competition Authority, who, like the BCA, found an infringement of collective dominance (and thus not an infringement of a restrictive agreement), but in 2020 imposed fines on Genentech, Roche and Novartis for abusing that collective dominant position (and which is currently under appeal).
With this decision, the BCA has confirmed that the pharmaceutical sector is high ‘on its radar’. The full version of the BCA’s decision will hopefully shed more light on the reasons why the BCA came to this conclusion, to what extent the particularities that characterize the pharmaceutical sector as a whole and the the off-label use and reimbursement of medicines in particular influenced the decision, why its decision differs from other earlier national decisions and why it only imposed a fine on Novartis and not on Roche. Given the possibility for Novartis to appeal, we may not have seen the end of this saga yet.
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