2002/165/EC: Commission Decision of 3 July 2001 relating to a proceeding pursuant to Article 82 of the EC Treaty (Case COMP D3/38.044 — NDC Health/IMS Health: Interim measures) (notified under document number C(2001) 1695) (Text with EEA relevance.)
Date: 2001-07-03
Institutions: European Commission
Subjects: complaint to the Commission, database, health care, pharmaceutical product, restriction on competition, sale

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COMMISSION DECISION

of 3 July 2001

relating to a proceeding pursuant to Article 82 of the EC Treaty

(Case COMP D3/38.044 — NDC Health/IMS Health: Interim measures)

(notified under document number C(2001) 1695)

(Only the English text is authentic)

(Text with EEA relevance)

(2001/165/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Com-
munity,

Having regard to Council Regulation No 17 of 6 February
first Regulation implementing Articles 85 and 86
1962,
last amended by Regulation (EC)
of
No 1216/1999 (2), and in particular Articles 3 and 16 thereof,

the Treaty (1), as

Having regard to the Commission Decision of 8 March 2001
to initiate proceedings in this case,

Having given the firm concerned the opportunity to make
known its views on the objections raised by the Commission
in accordance with Article 19 of Regulation No 1 and Article 2
of Commission Regulation (EC) No 2842/98 of 22 December
1998 on the hearing of the parties in certain proceedings
under Articles 85 and 86 of the EC Treaty (3),

Having given the Advisory Committee on Restrictive Practices
and Dominant Positions the opportunity to deliver an opinion
on 19 June 2001,

(3)

Whereas:

I. THE FACTS

1. THE NATURE OF THE PRESENT DECISION

States of America, alleging that an infringement of
Article 82 of the EC Treaty had been committed by IMS
Health Incorporated (IMS) of Westport, United States of
America.

2. THE UNDERTAKINGS

(2)

The companies referred to below are all involved in
tracking sales in the pharmaceutical industry and in the
healthcare products sector. They supply pharmaceutical
firms with data on the sales performance of pharmaceut-
ical products recorded by pharmacies and on doctors’
prescriptions.

IMS

Intercontinental Marketing Services Health Inc. (IMS), a
US company,
is the world’s number one supplier
of information to the pharmaceutical and healthcare
industry.
IMS Health describes itself as ‘the world’s
leading provider of information solutions to the pharma-
ceutical and healthcare industries’.

IMS is active in 100 countries. IMS’ turnover was USD
1,4 billion in 2000 with an increase of 1,9 % compared
to 1999. The healthcare activity revenue increased 9,1 %
to USD 1,1 billion in 2000 from USD 1 billion in 1999.
Operating income for this activity was higher by 3,7 %
in 2000, USD 344 315.

(1)

This Decision provides for interim measures pending a
final decision on the application made under Article 3
of Regulation No 17 by National Data Corporation
Health Information Services (NDC) of Atlanta, United

IMS’ European headquarters are located in London. IMS’
German subsidiary is IMS GmbH & Co. OHG located in
Frankfurt am Main.

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NDC

(4)

National Data Corporation Health Information Services
(NDC), also a US company, supplies database services
mainly in the United States, specialising in the pharma-
ceutical sector. Like IMS, NDC also offers an information
service in various countries aimed at the pharmaceutical
and healthcare sector. In 1998, NDC entered the EU
market via two acquisitions in the UK, specifically having
acquired Hadley Hutt and John Richardson Computers.
In June 2000 NDC concluded an agreement for the
purchase of PI Pharmaintranet (‘PI’), thereby giving NDC
an operational platform in the German market under
the name of NDC Health GmbH. PI was established by a
former IMS employee, Mr Roland Lederer in February
1999. Following an internal restructuring in January
2001, National Data Corporation’s health and banking
services have been separated into NDC Health and
Global Payment Systems. NDC Health had a worldwide
turnover of USD 289,3 million in 2000.

3. THE COMPLAINT AND APPLICATION FOR INTERIM
MEASURES

(5)

NDC lodged a complaint on 19 December 2000
requesting the Commission to:

— initiate a procedure to establish the existence of an

infringement of Article 82, and

— grant interim measures.

basis that they constitute a personal intellectual creation
belonging to IMS. For violation of this order NDC may
be fined a maximum of DEM 500 000 and that IMS’
procedure represents vexatious litigation. The latter two
points are not related to this Decision and will not be
examined further.

The interim measures requested by NDC are an order
compelling IMS to grant NDC a licence to the 1860 structure
and all of its derivatives, upon non-discriminatory, commer-
cially reasonable terms, with such licence to be extinguished
(and royalties to be reimbursed to NDC) as and when NDC is
able to prove that IMS does not own a copyright in any of
said structures.

4. THE INVESTIGATION

The complaint was sent to IMS on 20 December 2000.
Two requests for information under Article 11 of
Regulation 17 were sent to IMS on 20 December 2000
and 19 January 2001. IMS commented on the complaint
in its letter of 12 January 2001 and replied to the
requests for information by letters of 15 and 26 January
and 7 March.

Requests for information to pharmaceutical companies
under Article 11 were initially made to a sample of
20 firms, amongst whom were 17 of the 20 largest
pharmaceutical companies in Germany and nine mem-
bers of the Working Group (see recital 76 et seq.).
Meetings took place with eight pharmaceutical compani-
es. Further requests pursuant to Article 11 were made
to other information providers such as NDC, AzyX,
Cégédim and Suomen LääkeData Oy (SLD).

(7)

(8)

(9)

(6)

NDC considers that IMS is abusing its dominant position
by refusing to grant it a licence to use the ‘1 860 brick
structure’, a segmentation of Germany into 1 860 geo-
graphical areas, used to report sales information. With-
out this licence NDC claims it cannot provide regional
sales reports based on this structure for Germany
(hereinafter ‘regional sales data services’), the largest
pharmaceutical market of the EU, and is also prevented
from making contracts for multi-jurisdictional coverage
because it would be unable to provide German reports.
Furthermore, NDC claims that the German Court has
strengthened IMS’ dominant position through its interim
judgements which prohibited PI from using the 1 860,
2 847 or 3 000 brick structures or any other brick
structure derived from the 1 860 brick structure on the

(10) On 9 March 2001 the Commission sent a statement of
objections to IMS Health. IMS replied by letter dated
2 April 2001 and requested an oral hearing, which took
place on 6 April 2001. The Commission sent a further
request for information on 3 May to which IMS replied
on 14 May. IMS also provided the Commission with
four supplementary memoranda dated 18 April, 15 May,
16 May and 5 June.
In its written response dated
2 April 2001, during the oral hearing and in subsequent
IMS commented on the statement of
submissions,
forward a number of counter-
objections and put
arguments, which are responded to in the appropriate
section of the legal assessment.

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(11)

In order to clarify further certain assertions raised by
IMS in its written and oral replies to the statement of
objections, requests for information were sent to the
original 20 companies and to a further 90 pharmaceut-
ical companies (110 in total). 85 replied, of which 11
did not buy regional sales reports. Further contacts also
took place with information providers such as NDC,
AzyX, Cégédim, Farmastat, SLD and GESDAT, the data-
marketing facility of three German wholesalers. This
new information was communicated to IMS on 22 May
and 7 June 2001 for their comments. IMS responded by
letter of 14 June. A meeting took place between IMS and
the Commission services on 18 June 2001.

and street maps) and information about the regional
organisation of the physicians’ billing associations. The
purpose of the segmentation is to allow reporting of
sales data broken down into a small, useful geographic
area, called a ‘brick’, while avoiding the identification of
sales to individual pharmacies. The latter is necessary for
data privacy protection (7) purposes. In Germany data
three
privacy protection rules require that at
pharmacies be aggregated. In order to keep the structure
stable at least four or five pharmacies are necessary in
each segment. There are around 21 500 pharmacies and
287 000 doctors in Germany.

least

5. THE FACTS

5.1. REGIONAL DATA SERVICES

(12)

Pharmaceutical companies use regional data services to
build their sales territories, to develop and implement
incentive schemes for their sales representatives and to
gain knowledge of market developments (market shares
of their products, comparison with previous time per-
iods, etc.).

(13) Regional sales reports are based on data delivered by
pharmaceutical wholesalers to report providers, such as
IMS, NDC and AzyX (4). These data represent
the
purchases of the individual pharmacies from the whole-
salers (5). It is assumed that these purchases are a good
proxy (6) for pharmacy sales and therefore for doctors’
prescriptions. Wholesalers commonly have data-supply
agreements with providers of regional sales reports,
whereby wholesalers provide data on sales to an aggre-
gation of pharmacies within geographic segments to the
report providers. Providers of regional sales reports
require from wholesalers the data broken down in a
predefined structure (the input structure). IMS licenses
this structure to the wholesalers only for the reporting
of their data and not for other uses. This input structure
differs between providers: IMS’ structure has 2 847 seg-
ments, NDC’s originally had 3 000, though this was
replaced by a 3 942 (formerly 3 944) segment structure,
and the AzyX structure has 2 881 segments.

(14) This input segmentation structure is a grid superimposed
on a country map, grouping communities of doctors,
pharmacies and patients and contains among others the
following data: postcodes of the German post office,
information of the Federal Statistical Office (political
boundaries, number of residents), distribution of phys-
icians and pharmacies, mapping materials (topographic

(15) The process of producing regional data services begins
with receipt of the data from the wholesalers to the
service provider according to the latter’s input structure.
The data are then checked and formatted in the brick
structure, on which many analyses are carried out. This
brick structure, which is used to provide regional sales
data services to pharmaceutical companies, may differ
from the input structure. The final end products, i. e. the
regional sales reports offered by the three providers in
the German market differ markedly. For example, the
‘RPM’ sales reports of IMS and the ‘RPI’ product of NDC
are different,
though the incoming data is similar.
According to customers, RPI provides for a more
complete coverage of some parts of Germany and
provides more detail on types of information, such as re-
imported products and products returned to wholesalers.

(16)

In the course of the Commission’s investigation, AzyX
explained how its regional data service products differ
from those of its competitors. First, different criteria are
used to classify pharmaceutical products into ‘ATCs’
(anatomical therapeutical classes). Both World Health
Organisation and European Pharmaceutical Market
Research Association (EphMRA) classifications are used,
the WHO criteria being more scientifically oriented and
the EphMRA criteria more marketing oriented. Clients
might define different competitive markets using differ-
ent classifications. AzyX can build competitive markets
based on which molecules are active in a certain product,
which can lead to a different views of what the market
is: for example, since the same active molecules in
aspirin can also be used to prevent cardiac infarction at
a different dosage, manufacturers are interested to know
which other painkillers could because of their active
molecules also be positioned in the cardiological market
by simply changing the dosage. Also, some data pro-
viders show ‘returns’ i.e. the quantities of a product
which are sold and then later taken back by the
pharmaceutical company. This helps measure a sales
representative’s true performance. There are also a
variety of analysis tools associated with different data
providers.

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5.2. BRICK STRUCTURES

(17)

In many countries regional sales data are provided in a
predefined segmentation known as a ‘brick structure’,
mainly so to create segments with equal sales potential,
and to comply with data-protection law (which stems
from Directive 95/46/EC (8)). For the pharmaceutical
manufacturers, the brick structure in which regional
sales data are being reported is very important because
they have organised their sales forces and the way the
sales personnel are rewarded according to this structure.
The territory of a salesperson is composed of a number
of bricks of the brick structure. A number of companies
define the sales territory of a sales representative as an
aggregation of several 1 860-bricks in that representa-
tive’s working contract. The remuneration of sales
representatives is based on movements in drugs’ market
shares and growth rates per brick.

(18) The data, formatted according to the brick structure,
forms the basis for regional market reports which are
delivered in printed form, on CD-ROM or online.
The pharmaceutical companies then process the data
internally or transfer it to other service providers in
order for it to be analysed.

(19) The 1 860-brick structure, which is the subject of the
refusal to license disputed here, is formed by allocating
a number of postcode areas to a particular brick. This
brick is then identified by a 7-digit number. The first five
of the seven digits are public numbers that represent
political borders — the first two digits represent the
Bundesland, the next digit represents the Regierungsbezirk-
skennziffer (political border) and the next two stand for
Landkreis or Stadtkreis (metropolitan area). The last two
digits are a running number which differentiates the
bricks within a particular Landkreis or Stadtkreis. Both
IMS and NDC use seven digits to differentiate the
bricks/segments of their respective structures. NDC’s
running numbers (the last two digits) are different from
those of IMS.

structure PI offered a product which was attractive to
pharmaceutical companies and thereby contracted with
a number of customers in a short period of time. After
the judgement which prohibited it from using the 1 860-
brick structure and derivatives NDC (ex PI) introduced a
regional sales data product based on a 3 942-segment
structure.

(21)

In October 1999 AzyX entered the market for regional
sales data with its product, ARD (‘AzyX Regionale
Daten’), which was able to be flexible as far as the brick
structure is concerned, i.e. it was able to deliver the data
according to a customised structure. Potential customers
nevertheless asked for the 1 860-brick structure. After
the judgement enjoining AzyX from using the 1 860-
brick structure and derivatives, AzyX launched a regional
sales data product which used a new structure with
2 881 segments.

5.3.

EVOLUTION OF THE 1 860-BRICK STRUCTURE

(22) The first brick structure used in Germany was devised in
1969 and had 329 brick segments, representing the
basic districts and non-district cities of the then West
Germany. This was later subdivided into structures
containing first 418 and later 922 segments. In 1991
selected cities were subdivided into areas, creating a
structure with 1 086 bricks. In 1992, following German
reunification, 244 bricks were added, corresponding
precisely to administrative units in the former East
Germany. In 1993, following the introduction of the 5-
digit postcode system in Germany, 119 cities were
restructured to create the 1 845 structure. Minor changes
were made to this structure in 1995 and 1998, leading
to the current 1 860 structure. A regional sales data
service formatted in this structure, the RPM 1 860
(‘regional pharmaceutical market’ reports giving infor-
mation on sales for the 1 860 territories in Germany)
was launched in January 2000.

(20)

In February 1999, PI (before being taken over by NDC
in 2000) began operations in Germany in competition
with IMS. PI entered the market with a brick structure of
2 201 segments, but this structure was rejected by
potential customers who claimed that the data was not
usable unless it could be presented within the format of
Germany’s industry standard of 1 860 segments. A
few months later, PI therefore introduced RPI 3 000
(‘Regional PharmaInformation’), regional sales reports
based on a 3 000 segment structure, which could be
aggregated to 2 847 and 1 860 segments. Using this

(23)

Each successive structure in the series was formed by the
subdivision of original segments into several units and/or
the process of taking into account changes in German
administrative system, and the inclusion of the former
East Germany. Each structure became the new industry
standard and would be adopted by the pharmaceutical
industry as a whole, with very few exceptions, although
the companies themselves were under no compulsion to
do so.

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5.4. OTHER USERS OF THE 1 860-BRICK STRUCTURE

(24) Today, in Germany, the 1 860-brick structure is also
used by companies in other markets either directly to
provide other sorts of data in this format or indirectly to
analyse the regional sales data for the pharmaceutical
manufacturers.

(25) A number of companies providing geographical and
other data services such as Globalmaps, Bacher, Macon,
Easycom and Lutum Tappert deliver their maps or data
(population, households, revenues, purchasing power
and age classes) according to the 1 860 structure. Other
marketing and mailing companies provide their services
according to the 1 860 structure.

(26)

Software providers and market research companies such
as GfK, DHM (9), GFD (10), IDV (11), ISS ais, Regware,
IfAp and P & P (12) receive information from companies
such as IMS, then analyse these data, providing market
shares analysis, trends over time, etc. and other value-
added services. Some of them also use the 1 860 struc-
ture in the specific software designed for the sales
representatives, such as an electronic territorial manage-
ment system.

5.5. THE COPYRIGHT ISSUE

(27)

[Deleted business secret]

(28) On 26 May 2000, IMS filed a lawsuit in the Frankfurt
District Court (Landgericht) against PI, alleging a breach
of IMS’ copyright in the 1 860-brick structure as well as
unfair competition. A judgment was entered in this
proceeding on 12 October 2000, which prohibited PI
and Roland Lederer, its founder, from employing the
1 860-brick structure and imposed a potential fine in an
amount up to DEM 500 000 for violating this order. On
27 October 2000, a preliminary injunction from the
Frankfurt District Court, which resulted in a confirming
judgment on 16 November effectively prohibited PI
from employing the brick structures containing 2 847 or
3 000 segments, or any other brick structure derived
from the 1 860-brick structure, as well as imposing a
potential fine of up to DEM 500 000 for the violation
of this order. On 19 June 2001 PI’s appeal against the
27 October and 16 November injunctions was turned
down by the Frankfurt Court.

(29) On 22 December 2000, IMS filed two separate actions
for copyright infringement against AzyX and NDC in
the Frankfurt District Court. On 28 December 2000, the
Court gave preliminary injunction enjoining AzyX and
NDC from using the 1 860- and 2 847-brick structures

or derivatives thereof. [Deleted business secret] The Court
in its judgment limited the injunction to 2 847 and
1 860 segments and any other number of segments so
far as it constitutes a derivative from RPM 1 860.

(30) On 20 November 2000, NDC appealed the two October
judgments of the Frankfurt District Court. AzyX also
appealed the 28 December judgment.

(31) On 15 February 2001, the 28 December preliminary
injunction to AzyX was confirmed by the Frankfurt
Court. AzyX lodged an appeal against this judgement
before the higher court.

5.6. THE REQUEST FOR A LICENCE AND THE REFUSAL

faxed a letter

(32) On 26 October 2000, NDC’s Vice President of Inter-
national Business Development,
to
Dr Wolfgang Hartmann, the head of IMS Germany,
requesting a licence to use the 1 860-brick structure,
pending resolution of
the copyright claim by IMS.
The stated deadline for the start of negotiations was
1 November 2000. This deadline was based on impend-
ing contracts that NDC would have been unable to fulfil
if it did not have access to the 1 860-brick structure.
This letter was followed up by efforts to reach Dr Hart-
mann by telephone and e-mail. [Deleted business secret]
This is likely to be the case for around three years.

(33) On 12 December 2000, NDC’s vice-president sent a
separate letter to the chief executive officer of IMS
Health, requesting that IMS begin licence negotiations
by 15 December. [Deleted business secret]

(34) According to NDC, IMS is taking positive measures to
discourage wholesalers from providing data to IMS’
competitors in the 1 860-brick structure or any associ-
ated structure, effectively threatening copyright infringe-
ment actions against the wholesalers if they fail to
comply. Similarly, IMS is now warning pharmaceutical
manufacturers that they risk infringing IMS’ copyright if
they accept regional sales reports from any third party
in an 1 860-brick structure or any derivative one.

(35) On 23 April 2001, AzyX requested from IMS a licence
to use the 1 860-brick structure. [Deleted business secret].

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II. LEGAL ASSESSMENT

(36) The Commission assumes for the purpose of these
proceedings and according to German law that the
1 860-brick structure is covered by a copyright. This
legal assessment will not consider questions of copyright
law either with regard to the specific subject matter of
the right or the national measures which the German
court employs to enforce copyright legislation. The
Commission notes that the Frankfurt Court considered
that the 1 860-brick structure is a database, and that
copyright protection for databases is harmonised under
Directive 96/9/EC (13).

Instance held in the Peugeot

(40) On the risk of serious and irreparable harm establishing
the urgent need to grant interim measures, the Court of
(para-
First
graph 80) that it was necessary to show that there was
‘damage which could no longer be remedied by the
decision to be adopted by the Commission upon the
conclusion of the administrative procedure’.

judgment

(41)

It is therefore not necessary for the Commission to make
a definitive finding that an infringement has occurred.
However, before it will grant interim measures in a case
such as the present the Commission, to be consistent
with the jurisprudence, must be satisfied that:

6. CONDITIONS FOR ORDERING INTERIM MEASURES

— there is a reasonably strong prima facie case

establishing an infringement,

(37) The Court of Justice held in the case Camera Care (14)
(paragraph 18), that the Commission may ‘take protec-
tive measures to the extent to which they might appear
indispensable in order to avoid the exercise of the power
to make decisions given by Article 3 from becoming
ineffectual or even illusory because of the action of
certain undertakings’.

(38) On the conditions to be met for the granting of interim
measures, the Court of Justice also made clear in the
judgment Ford (15)
(paragraph 19) confirmed in the
Court of First Instance’s judgment in Peugeot (16), that
‘the provisional measures which the Commission may
adopt on a temporary basis must come within the
framework of the final decision which may be adopted
by the Commission’. The Court added in the judgment
La Cinq (paragraph 28) as follows:

‘... protective measures may be granted only where the
practices of certain undertakings are prima facie such as
to constitute a breach of the Community rules on
competition in respect of which a penalty could be
imposed by a decision of the Commission. Furthermore,
such measures are to be taken only in cases of proven
urgency, in order to prevent the occurrence of a situation
likely to cause serious and irreparable damage to the
party applying for their adoption or intolerable damage
to the public interest.’ (17)

— there is a likelihood of serious and irreparable harm
to the applicants unless measures are ordered,

— there is an urgent need for protective measures.

(42) Any measures the Commission takes must be of a
temporary and conservatory nature and restricted to
what is required in the given situation. The Commission
must also have regard to the legitimate interests of the
undertaking which is the subject of the interim measures.
The interim measures may not go beyond the framework
of the Commission’s powers to order the termination of
an infringement in the final decision.

APPLICATION OF THESE PRINCIPLES
TO THE PRESENT CASE

7.

PRIMA FACIE CASE OF INFRINGEMENT

OF ARTICLE 82

(43) At this stage and for the reasons mentioned above the
Commission does not have to make a final determination
on all points at issue in this case. The question here is
whether legal and factual elements exist showing a
reasonably strong prima facie case.

(39) On the prima facie infringement, the Court of First Instance
held in the Peugeot case cited that the test of prima facie
infringement required showing the ‘probable existence’
of an infringement. The Court of First Instance made
clear in the same judgment (paragraph 61), that the
requirement of a finding of a prima facie infringement
cannot be placed on the same footing as the requirement
of certainty that a final decision must satisfy.

(44) Article 82 states that any abuse by one or more
undertakings of a dominant position shall be incompat-
ible with the common market in so far as it may affect
trade between Member States. In this case the point at
issue is whether IMS’ refusal to license the 1 860-brick
structure amounts to an abuse of any dominant position.

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7.1. THE RELEVANT MARKET

(45)

In order to determine whether an undertaking is domi-
nant it is necessary first to identify the relevant market,
i.e. the area of competition in which the market power
of the allegedly dominant undertaking (and of any actual
or potential competitors) is to be judged.

(46)

In principle, the product market comprises all products
that consumers regard as being reasonably substitutable
by dint of their characteristics, price or intended use (18).

(47) The information in question is very specific and would
only be useful to pharmaceutical companies, since it
tracks sales of medicines. In a memorandum of 7 March
IMS defined two main sources of data and four types of
services, as follows.

Data collected from retail pharmacists

(a) National prescription data services provide infor-
mation on prescriptions dispensed at national level,
measuring the broad movement of pharmaceutical
products out of pharmacies and into the hands of
patients. These data are collected from samples of
pharmacies that are analysed regionally and then
projected to national level.

(b) Regional prescription data services measure the
number of prescriptions dispensed by pharmacies
in a given area. They are used by the marketing and
sales departments of pharmaceutical companies to
determine which products to promote or
to
improve promotional effectiveness.

Data from pharmaceutical wholesalers

(c) National distribution services provide an analysis
of sales of pharmaceutical products to pharmacies
by wholesalers and manufacturers at a national
level. These data are used by market research
departments to plan national product strategies,
determine which drugs to research and develop,
to set prices, position them in the market and
benchmark company performance against other
pharmaceutical companies.

(d) Regional distribution services provide an analysis
of sales of pharmaceutical products to pharmacies
by wholesalers and manufacturers with a higher
degree of territorial disaggregation than national

data. Regional data are used primarily by pharma-
ceutical manufacturers to monitor the performance
of their sales representatives and determine their
remuneration.

(48) The four services are different both in terms of the way
the data are collected and of the uses to which the data
are put. In the memorandum of 7 March referred to
above, IMS states that data collected from one source
cannot be used to meet a different customer demand.

(49)

(50)

For each of
the four abovementioned services the
German data are a separate product that is not substitut-
able for data of another country, because the data relate
to the sales or the prescriptions of medicines at national
or regional level or relate to the sales territories which
are limited to the territory of a single Member State.

Furthermore in the case of regional sales data services, it
is the subsidiaries that make the decision and subscribe
to the services in question without reference to the
headquarters, as the replies from the pharmaceutical
companies show. This is so because the pharmaceutical
companies use these services mainly to measure the
sales performance of their sales representatives who are
allocated a small geographical area inside a specific
country.

(51)

For these reasons, the relevant product market in this
case is the market
for German regional sales data
services.

(52) As regards the geographical market, the Court of First
Instance in its judgment in Ladbroke (19) (paragraph 102)
recalled that the geographical market can be defined as
the territory in which all the traders concerned are
exposed to objective conditions of competition which
are similar or sufficiently homogeneous.

(53)

From the replies to the requests for information and the
meetings with the pharmaceutical companies, it appears
that demand for the regional data is confined to the
relevant country. AstraZeneca headquarters stated that
the central business support functions of AstraZeneca UK
Limited buy sales data at a country level. AstraZeneca’s
subsidiary companies in the relevant markets buy regional
sales data for their own market research purposes. Roche
Basel also explains that at corporate level the need for
that detailed structure is not obvious. NDC considered
that from the demand point of view, German pharma-
ceutical manufacturers have shown that they are unwill-
ing to purchase regional sales reports from anyone not
established in Germany.

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(54) The data in question relate to fundamental aspects which
differ from one Member State to another, such as the
name of the drug, the packaging, the product code, the
therapeutic category and the method of reimbursement.
As a result of differences between countries in how
pharmaceutical products are sold at retail
level, the
packaging, language and safety requirements, what the
medicines on offer are trademarked as, consumers’
expectations and habits and so on, pharmaceutical
markets tend to be national, with many features specific
to those markets. This means it is essential for the sales
data providers themselves to have a subsidiary in each
country to sell and support their services and to know
well the market they are supplying data on. Trust is
very important in this sector and a local presence is
indispensable in order to offer informatics support,
technical assistance and to have the contacts with
customers but also with wholesalers for the collection
of raw data. The value-added process requires a lot of
controls and checks on the raw data which have to be
done locally.

(55) Therefore the relevant geographic market is considered

to be Germany.

(56)

In conclusion, the relevant market is German regional
sales data services.

7.2. DOMINANT POSITION

(57) The Court of Justice has defined a dominant position
as a position of economic strength enjoyed by an
undertaking which enables it to prevent effective compe-
tition being maintained on the relevant market by
affording it the power to behave to an appreciable extent
independently of its competitors,
its customers and
ultimately of the consumers (20).

Instance further stated (at paragraph 76) that ‘a dominant
position may be the outcome of a number of factors
which, considered separately, would not necessarily be
determinative. However, in the absence of exceptional
circumstances, extremely large market shares are in
themselves evidence of the existence of a dominant
position’ (22).

(60) Germany, as a Member State, and indeed the one with
the largest market for regional sales data services in
Europe, may be regarded as a substantial part of the
common market as regards the relevant market. This
follows from consideration of, for example, the Suiker
Unie (23) case (paragraph 375), in which the Belgium and
Luxembourg market for sugar was considered to be a
substantial part of
the common market, or BP v
Commission (24), where the Advocate General indicated
that Luxembourg would be likely to be considered such
a substantial part. In the Bronner (25) judgment, the Court
of Justice also stressed that ‘the case-law indicates that
the territory of a Member State over which a dominant
position extends is capable of constituting a substantial
part of the common market’.

(61)

[Deleted business secret].

(62) However, for the above reasons, the Commission con-
siders that IMS is dominant on the relevant market.

(58)

IMS is in a quasi-monopoly situation. Based on 2000
sales, the market shares of the three providers are: IMS
— [deleted business secret]; NDC (PI) — [deleted business
secret]; AzyX — [deleted business secret]. Prior to the entry
of NDC and AzyX, there was no competition in this
market.

(63)

(59) Amongst the criteria for evaluating the dominance, high
market shares were mentioned by the Court of Justice in
its judgment AKZO (21) as decisive: with regard to market
shares, the Court of Justice has held that very large shares are
in themselves, and save in exceptional circumstances, evidence
of the existence of a dominant position. That is the situation
where there is a market share of 50 % such as that found to
exist in this case. In CMB v Commission, the Court of First

7.3. ABUSE OF A DOMINANT POSITION

In its complaint, NDC, referring to what is known as the
‘essential facilities’ doctrine, considers that IMS is obliged
to license the 1 860-brick structure since it is a prerequi-
site for effective competition on the regional sales data
services market. According to that doctrine a company
which has a dominant position in the provision of
facilities which are essential for the supply of goods or
services abuses its dominant position where, without
objective justification, it refuses access to those facilities.
As stated by the Advocate General in his opinion on
the Bronner case: thus in certain cases a dominant
undertaking must not merely refrain from anti-competi-
tive action but must actively promote competition by
allowing potential competitors access to the facilities
which it has developed.

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(64) Neither the European Court of Justice nor the Court of
First Instance has as yet explicitly referred in its case-law
to the essential facilities doctrine. Nevertheless it has
ruled in a number of cases concerning refusal from an
undertaking in a dominant position to supply goods or
services. In two early cases the Court stated that the
cutting off of supplies to an existing customer could
constitute an abuse. In the Commercial Solvents (26) judg-
ment (paragraph 25), it held that an undertaking in a
dominant position as regards production of a raw
material could not cease supplying an existing customer
who manufactured derivatives of the raw material simply
because it had decided to start manufacturing the
derivative itself and wished to eliminate its former
customer from the market.

(65)

(66)

judgment

in the United Brands (27)

Similarly,
(para-
graph 182), the Court held that an undertaking in a
dominant position for the purpose of marketing a
product — which cashes in on the reputation of a brand
name known to and valued by customers — cannot
stop supplying a long standing customer who abides by
regular commercial practice, if the orders placed by that
customer are in no way out of the ordinary.

In two further cases involving goods or services covered
by intellectual property rights, the Court considered
whether refusal to supply constituted an abuse. In the
Volvo (28) judgment (paragraphs 8 and 9), the Court held
that ‘it was not an abuse of a dominant position for a
car manufacturer holding the registered designs for body
panels for its cars to refuse to license others to supply
replacement panels necessary for the repair of the cars.
[ ... ] It must however be noted that the exercise of an
exclusive right by the proprietor of a registered design
in respect of car body panels may be prohibited by
Article 86 if it involves, on the part of an undertaking
holding a dominant position, certain abusive conduct
such as the arbitrary refusal to supply spare parts to
independent repairers, the fixing of prices for spare parts
at an unfair level or a decision no longer to produce
spare parts for a particular model even though many
cars of that model are still in circulation, provided that
such conduct is liable to affect trade between Member
States’.

(68)

(69)

exceptional circumstances, involve abusive conduct and
the appellants’ refusal to provide basic information by
relying on national copyright provisions thus prevented
the appearance of a new product, a comprehensive
weekly guide to television programmes, which the
appellants did not offer and for which there was a
potential consumer demand. Such refusal constitutes an
abuse under heading b of the second paragraph of
Article 86 of the Treaty. The Court therefore recognised
that in exceptional circumstances the exercise of an
exclusive right deriving from an intellectual copyright
may be abusive even in the absence of abusive additional
conduct when, inter alia, it prevents the appearance of a
new product.

In a subsequent case, Ladbroke, cited above (para-
graph 131), the Court of First Instance stated that the
refusal to supply the applicant could not fall within the
prohibition laid down by Article 86 unless it concerned
a product or service which was either essential for the
exercise of the activity in question, in that there was no
real or potential substitute, or was a new product
whose introduction might be prevented, despite specific,
constant and regular potential demand on the part of
consumers. This judgment makes clear that a refusal to
license may constitute an abuse not only when this
refusal prevents the introduction of a new product but
also when the product or service in question is essential
for the exercise of the activity in question.

judgement

In the Bronner judgment (paragraph 41) cited above, the
Court said that therefore, even if that case-law on the
exercise of the intellectual property right were applicable
to the exercise of any property right whatever, it would
still be necessary for the Magill
to be
effectively relied upon in order to plead the existence of
an abuse within the meaning of Article 86 of the Treaty
in a situation such as that which forms the subject
matter of the first question, not only that the refusal of
the service comprised in home delivery be likely to
eliminate all competition in the daily newspaper market
on the part of the person requesting the service and that
such refusal be incapable of being objectively justified,
but also that the service in itself be indispensable to
carrying on that person’s business, inasmuch as there is
no actual or potential substitute in existence for that
it does not
home-delivery scheme. [ ... ] Moreover,
appear that
legal or even
there are any technical,
economic obstacles capable of making it impossible, or
even unreasonably difficult, for any other publisher of
daily newspapers to establish, alone or in cooperation
with other publishers, its own nationwide home-delivery
scheme and use it to distribute its own daily newspapers.

(67)

In the Magill judgment (29) (paragraphs 49, 50 and 54)
cited above, the European Court of Justice declared that
refusal to grant a licence, even if it is the act of an
undertaking holding a dominant position, cannot in
itself constitute abuse of a dominant position. However,
the exercise of an exclusive right by a proprietor may, in

(70) Therefore the criteria for the establishment of abuse
under Article 82 in cases relating to the exercise of a
property right, as further clarified by the Court in
Bronner, are whether:

— the refusal of access to the facility is likely to
eliminate all competition in the relevant market,

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Official Journal of the European Communities

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— such refusal
justified, and

is not capable of being objectively

— the facility itself is indispensable to carrying on
business, inasmuch as there is no actual or potential
substitute in existence for that facility.

(71)

In the present case and following the above reasoning,
the Commission is required to assess whether the
1 860-brick or compatible structure is indispensable to
compete on the relevant market, that is to say whether
there is a realistic possibility for undertakings wishing to
offer regional sales data services in Germany to employ
— instead of the 1 860-brick or a compatible structure
— another structure which would not infringe IMS’
copyright.

(72) Clearly the answer to this question depends on whether
there is a real possibility for customers of regional sales
data of buying data formatted in another structure. To
ascertain this, the Commission requested information
from first 20, then a further 90 pharmaceutical compani-
es. A total of 85 replies were received.

(73) According to IMS the Commission’s initial market survey
was inadequate and no conclusions should be drawn
from it. In all, the 110 requests for information from the
Commission have yielded 85 replies. The responding
companies represent 56 % of total pharmaceutical sales
in Germany. The companies which responded to the
Commission’s inquiry contained a representative survey
both of pharmaceutical companies generally and cus-
tomers of regional sales data services, including almost
all of the largest companies and a sample of both small
and medium-sized firms.

(74)

In the present case, the Commission considers that the
following facts show clearly that the legal tests set out
above have been met.

7.3.1. The 1 860-brick structure — Role of the
working group, function as an industry stan-
dard, and economic dependence of the pharma-
ceutical companies

— Role of the working group

(75) The German pharmaceutical industry has a long history
of involvement in the shaping of the brick structures
that have been used in Germany. A body entitled the
RPM Arbeitskreis (working group) was established in the
early 1970s by IMS for this purpose. The working group

tends to have around 15 members, elected by IMS’
customer base as a whole, and involves major pharma-
ceutical companies such as Bayer, Ciba-Geigy, Aventis
(Hoechst), Goedecke (Warner Lambert), Asta Medica,
Byk Gulden, Astra Zeneca, Hoffmann-La Roche, Klinge
Pharma, Merck, Pfizer and Boehringer Ingelheim. The
full working group usually meets twice a year, though it
to
has often established subgroups, or workshops,
consider particular issues such as the subdivision of
existing bricks to create a more granular structure.
Minutes of the working group meetings and reports of
decisions taken through it were regularly circulated to
pharmaceutical companies in Germany.

(76)

IMS says that the working group ‘... essentially serves as
a vehicle for eliciting customer comments and sugges-
tions on a wide range of issues relevant to IMS Health’s
data services offered in Germany’, and that it presented
fully developed new brick structures to certain customers
through the working group. NDC responds that the
brick structures were in fact created by the working
group.

(77)

In fact, the Commission’s investigation shows that the
working group played an extensive role in designing the
current structure. The origin of the current structure was
predominantly in the creation of the 1 845 structure
in 1993, since this is around 92 % similar to the
1 860 structure; IMS says that 142 changes were made
to the 1 845 structure to create the 1 860 structure.
[Deleted business secret].

(78)

[Deleted business secret]

towns, number of pharmacist

(79) Testimony from third parties is explicit on this point.
Lilly considered that:
‘IMS was independently very
capable of grouping standard parameters e.g. postal
codes,
to define the
evolving bricks. However, more specific know-how (e.g.
patient travel routes, pool pharmacists, etc.) could only
be gained through the knowledge of pharmaceutical
sales reps.
this was why IMS was
very wise to formalise their cooperation with the
pharmaceutical industry by sponsoring a work group’.
Klinge Pharma agrees with this analysis, and also refers
to the IMS letter of 8 October 1993 to customers.

In my opinion,

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(80) Krewel Meuselbach stated that

‘the pharmaceutical
industry, or the members of
the Arbeitskreis, co-
developed the 1 845 and 1 860 RPM structures ... The
detailed planning and development of the new structure
was done in collaboration with the pharmaceutical
companies because the field representatives of
the
pharmaceutical companies had the necessary local
knowledge. The IMS employee specifically mentioned
that the field representatives of Glaxo Wellcome adjusted
certain segments in the Hamburg area ...’. IMS’ marketing
director from 1993 to 1995, now working for Gesdat,
states that ‘In these workshops, suggestions of IMS were
presented. IMS further provided maps and administrative
items. It was, however, the field representatives who
always had the final say concerning the exact definition
of the individual segments. This can be explained by the
fact that the field representatives had the necessary local
expertise to develop a reasonable and practical structure.’

(81) Merck says that ‘it is true that IMS had already developed
its own suggestions for a segmentation of the federal
territory; however,
these were, because they were
developed merely by looking at a map, for the most part
not useful to the pharmaceutical industry. ... In order to
be able to meaningfully divide the segments, one had to
know which physicians prescribed which medicines and
to which pharmacies the corresponding patients then
went with their prescriptions. ... This knowledge could,
however, only have been contributed by the field service
representatives ... Thus the creation of the new RPM
structure without the contribution of the field service
representatives would not have been possible at all.’
‘The segments were determined, in part, in very time-
consuming discussions with massive participation of the
industry representatives. In the end, the entire RPM
structure was based on a consensus of participating field
service representatives of the pharmaceutical industry.
Their work results were then adopted by IMS as is’.

(82)

(83)

local knowledge of

Fournier says that representatives of the pharmaceutical
companies, the elected members of the Arbeitkreis, co-
developed the 1 845 and 1 860 RPM structure. Leo
Pharma adds that it was fundamentally necessary for
IMS to have the detailed,
the
field service representatives of multiple pharmaceutical
concerns as to the geographical details, streams of
prescriptions from doctor to pharmacy, proximity of
pharmacies to hospital, etc in order to establish the
segments in the 1 845/1 860 structure. Without the
contributions of
IMS
Health would have hardly been able to produce this
structure.

the pharmaceutical concerns,

is also clear that the pharmaceutical

It
industry in
Germany invested considerable resources in ensuring
that the brick structure fully met their requirements. For
example, BPI, the German Association of pharmaceutical
companies, said that the pharmaceutical industry mass-
ively participated in the development of the 1 860 struc-
ture. Even smaller companies or companies not partici-
pating in the RPM Arbeitskreis gave their direct or indirect
input. Extensive further documentary evidence and

testimonies (30) concerning the time of the creation of
the 1845 structure, close forerunner to the 1 860
structure, make clear the extensive and crucial role
played by the pharmaceutical companies in this task. In
part because of this, the 1 860-brick structure appears
to be the optimum to be achieved and to correspond
exactly to the requirements of the pharmaceutical com-
panies. This in part explains their dependence, built up
over a long period, on this structure, the extremely high
disincentives they have to switch to a new one, and so the
impossibility for a regional sales data service formatted in
another structure to be able to compete.

(84) The working group has played a significant role at other

times too. [Deleted business secret]

(85)

[Deleted business secret]

— Function of the 1 860 brick structure as an industry

standard

(86) According to information provided to the Commission,
the 1 860-brick structure functions as an industry
standard,
in part because of the role played by the
firms in this industry in its creation. An overwhelming
majority of the pharmaceutical companies who replied
to the Commission’s information request pursuant to
Article 11 of Regulation 17 who purchase regional
sales reports (74 companies) consider the 1 860-brick
structure or compatible brick structures as an industry
standard or a ‘common language’. Nine companies had
differing or unclear views (31). Three of
these nine
considered that the 1 860 structure is a de facto industry
standard, for the sole reason that it is used by the
majority of pharmaceutical companies. Three of the
remaining six companies, although stating that they did
not consider the 1 860 structure to be an industry
standard, said that they would nevertheless not switch
brick structures in order to receive regional sales data
from other service providers. The remaining three
companies, Robugen, Hermal and Berlin Chemie, are
small or medium-sized companies, the former two of
which specialise in making specific products: Robugen
makes camomile products; Hermal makes creams for
skin complaints. These companies make up only 4 % of
the companies which responded on this particular point.
They were also the only three firms who said that they
would be prepared to accept another brick structure. All
other pharmaceutical companies said that either they
could not change the current 1 860 structure or they
could not accept a new structure which would require
them to modify their current sales territories.

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(87)

Examples of the statements given to the Commission
are as follows: ‘the 1 860-brick structure is an industry
standard because all sorts of pharma data are available
from different suppliers on this basis’ (Yamanouchi); ‘To
our opinion a co-existence of non-compatible bricks
structures is out of possibility. Only one standard must
be available e.g. to avoid immense costs when switching
from one provider to another’ (Kreussler); ‘The 1 860-
brick structure is an industrial standard because of the
uniqueness of the reporting, the proven comparability
of the bricks and the long and frequent usage in the
industry’ (Schering); ‘I cannot imagine that several non-
compatible structures can co-exist. There must be a
standard to compare competitors, and own performance
of sales. Different structures would question the validity
of the data in the sales reports. Costs would be immense
to switch from one provider to another, so competition
would not exist’ (Fournier).

(88)

IMS however, argues that the 1 860-brick structure does
not bear any of the features of a proper industry
standard, that its use is not required by law, and that
30 % of German customers do not use it.

(89) Whilst the Commission agrees that the 1 860-brick
structure is not required to be used by law, this structure
is a de facto industry standard as mentioned above
because the overwhelming majority of surveyed pharma-
ceutical companies would not change the current
1 860 structure or could not accept a new structure
which would require them to modify their current sales
territory. The 1 860-brick structure is a ‘common’
language for communicating information between all
players in the pharmaceutical industry, a fact which was
confirmed by the industry itself.

(90)

[Deleted business secret] The Frankfurt Court appeared to
agree with this conclusion when it stated in its judgment
of 16 November 2000 that ‘the structure of territory
division utilised by the plaintiff (IMS) became a current
standard for creating regional evaluations of German
drug industry; the customers of the plaintiff aligned their
distribution and IT structure with the territory structure
used by the plaintiff’.

(91)

IMS’ claim that around 30 % of German customers are
not using the industry standard is incorrect, since well
over [Deleted business secret] by value of regional sales
data services are sold by IMS in the brick structure. The
remaining [Deleted business secret] are supplied by AzyX

and NDC with regional sales data services formatted in
a structure whose compatibility with the 1 860-brick
structure has not yet been examined by the Frankfurt
Court.

— Economic dependence of the pharmaceutical com-

panies on the 1 860-brick structure

(92) As the above information shows, the 1 860-brick struc-
ture, in part because of the role played by the working
group, has become an industry standard. The pharma-
ceutical companies have become ‘locked in’ to this
standard such that to switch away from it to buy sales
data formatted in a non-compatible structure, whilst
theoretically possible, would be a unviable economic
proposition. According to the information received,
the reasons why pharmaceutical companies could not
switch to using another brick structure are as follows.

— Comparability and compatibility of data

(93) One of the reasons pharmaceutical companies purchase
regional sales data is to enable them to record sales of
particular drugs vis-à-vis those of their competitors, and
hence market shares, and to measure the performance
of their sales representatives. Both are vital competitive
parameters in the pharmaceutical market, and have to
be calculated for different time periods so as to allow
comparisons. Data for different time periods therefore
need to be comparable, and data in any new structure
would have to be converted to the 1 860 structure (or
vice versa) to ensure such comparability, at considerable
cost. Marketing campaigns and market research are
organised according to the data in this structure. Novo
Nordisk considered that any data that has to be com-
pared is compiled and collated under the 1 860- or
2 847-brick structures.

(94)

Ensuring data comparability over time when changing
two different companies
between the structures of
presents more problems than did past changes to the
prevailing IMS structure. Those changes, as mentioned
earlier, usually involved original bricks being subdivided
into smaller ones. In these cases the sum of relevant new
smaller bricks could be compared with the original
larger one, making comparability very easy. Other
changes to the structure tended to be quite small, for
example the move from 1 845 to 1 860 bricks. The fact
the data were from the same company (IMS)
that
also made comparability easier, because the data were
formatted in the same way.

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(95)

IMS stated that comparability of data over time and
compatibility presents no difficulties since wholesalers
keep at least two years’ back data. [Deleted business secret]

data for minimum three years, we have to see the
development of sales in the bricks (Solvay); three years
will be enough (Galderma).

(96) As far as the first part of IMS’ argument is concerned, it
appears that at least some wholesalers keep only 15 to
18 months’ back data at pharmacy level, which is the
necessary level of detail to allow aggregation according
to a completely new structure. Gesdat stated that for the
three wholesalers represented by Gesdat, the raw data
are stored since 1999 and are destroyed after 15 or
18 months. However this might be unique and other
wholesalers might possibly only store data in the
structures already delivered. The fact that at least three
of the 16 wholesalers in Germany keep data for only
this length of time means that no census of sales data is
possible, and back data, if not complete, are close to
worthless because pharmaceutical companies require
comprehensive data coverage of German pharmaceutical
sales and anything else is unacceptable to them.

(97) Whilst two years’ back data is perceived to be the
minimum required by pharmaceutical companies (mini-
mum for back data is a two-year period (Medac)), a
longer period is needed for specific applications or
purposes: 28 months (is needed) for calculating the
commission (Wyeth Pharma), five years’ sales (back) data
is optimal (Zambon); we at least need last year’s data,
better last five years (Essex Pharma), for general targeting
and analysis application, two to three years’ back data is
generally enough. However for statistically relevant
methods for measuring the impact of spending, etc.
five years might in some cases be appropriate (Lilly);
depending on the analysis, varying amounts of back data
are required. Usually two to five years (32). (Schaper &
Brümmer); market shares development for 36 months
[is needed] (Takeda); the data are required for approximately
if
three years (MSD); we use backdate for two years,
possible also three years to show long-term develop-
ments and calculate capture rates (Novo Nordisk);
it
would be favourable to have the data for the same period
as the product is under promotion by representatives.
Therefore the period is currently between one-and-a-half
and three years (Bayer); we need comparable back
data for at least three years for market research and
calculation of incentives (33) (Novartis); we need the back
data at least for the last three years (Verla Pharm); for
our planning and sales territory development we need
three years’ back data (34) (Pohl Boskamp); we need back

(98) Krewel also stated that a change of

the structure
would, however, have the substantial disadvantage of
not allowing a comparison of data to those from
previous years. Sales developments could therefore not
be tracked anymore. Dermapharm indicated that a
change to another structure is financially and time-wise
hard to imagine, for such a change would mean the
complete restructuring of the entire marketing and field
services areas of our company. A further considerable
disadvantage would be that a comparison to data of
previous years would not be possible any more. But these
historical data are absolutely necessary to determine sales
developments, evaluation of marketing actions and
payment of commissions. Schering said that because of
the comparability of the data it is absolutely necessary to
have all regional data available in the same geographical
structure.

(99) The Commission’s investigation in this area therefore
shows that pharmaceutical companies often demand
older back data than potential new providers of regional
data services can provide. This is another important
current disincentive for pharmaceutical companies to
demand data formatted in a brick structure other than
the 1 860 structure.

(100) There is also the issue of compatibility of regional sales
data with other data and other software products. With
respect to data, pharmaceutical companies buy data
other than that on regional sales in the 1 860 structure,
such as prescription data, socioeconomic information,
location of doctors, etc. and integrate it with sales data
for further analysis. Hence a change in structure would
mean changing the format requested for the other
information, or converting the data in-house.

(101) It is particularly important to have prescription data in
a compatible structure, since it is commonly accepted
that both forms of data are needed to correct for the
measurement problems caused by customers receiving
prescriptions in one brick but purchasing drugs in
another brick. [Deleted business secret] Merck indicated
during the oral hearing that in any case it is absolutely
vital that prescription data are delivered in a structure
derived from 1 860 or compatible to. DuPont Pharma
said that
(compatible) no clear performance
measurement can be achieved. Galderma stated that
only with the same structure can you compare the
effectiveness and development of your salesmen and the
effectiveness of the marketing activities. Lichtenstein

if not

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Official Journal of the European Communities

L 59/31

Pharmazeutica indicated that for the analysis of differ-
ences of sales and prescriptions it
is necessary to
have identical structures for regional sales data and
prescription data. Servier also explained that the (pre-
scription and sales) data are only of value if they are
comparable. AzyX considered that: ‘Both data are used
to measure the success of field force work. If they were
not compatible, one of the two could simply not fit the
sales territory alignment of the company. Also, one of
the main purposes of buying both data, prescription and
sales, is to measure the effect of the so-called travelling
prescription. This would become impossible if
the
‘If
structures were different’. NDC considered that:
prescription and sales structures were not compatible, it
would not be possible to measure the relationship of
prescriptions written with the stocking of the product in
the pharmacy. In addition it would not be possible to
determine where and how many prescriptions travel
from one sales territory to another when patients don’t
fill their prescriptions in the same local [area] as their
doctor is located.’

(102) [Deleted business secret] Moreover IMS states that any
third party that developed a different brick structure
could offer the same data in its brick structure format.
in fact
The Commission’s investigation shows that
around 44 % of pharmaceutical companies do purchase
such data, which is a significant proportion. One reason
for the difference in these two figures might be that IMS
is only one of many providers of data formatted in the
1 860-brick structure and considers that these data are
largely incidental to its principal data services offerings
and customers’ requirements. In effect, other specialised
address or map providers
such as Pan Address
like regio
Direktmarketing, Easy map, or systems
graph 5.0 are widely used by pharmaceutical companies
for mailing activities or mapping purposes.
In this
context, Schering stated that all data like number of
inhabitants by sex, square kilo-
doctors, pharmacies,
metres of the brick, etc. has to be in the format of the
1 860 structure. Hoffmann-LaRoche also buys sociode-
mographic, purchasing power and targeting group selec-
tion data and maps from different providers.

which are all available in the 1 860 structure only.
Especially for smaller pharmaceutical companies it is
impossible to finance all data suppliers to switch to
another structure imposed by a new supplier of sales
data. It follows that pharmaceutical companies could
only consider switching structures if these other data
were also available in this new structure. Whilst it would
technically be possible for all this other data to be
provided in another format, the costs which would have
to be imposed on any pharmaceutical companies which
demanded this other data in something other than the
industry standard structure would be so high as to put
those companies at a clear competitive disadvantage.

(104) In terms of software, as explained at recital 26 above,
third-party software providers also deliver products in
the 1 860-brick structure amongst which P & P software,
IDV, ISS, DHM, GFD, GfK, Easycom. An example of
such software is that used to make sales territory
alignments, which allows the assignation of postcodes
or bricks to a sales representative. The software is pre-
loaded with the sales potential and doctor counts for
each postcode or brick, and as postcodes or bricks are
added or subtracted from a sales territory, the software
calculates the cumulative sales and doctor counts for
that territory. As Zambon, a pharmaceutical company
indicated, all related information (i.e. address data etc)
are somewhat linked to this (1 860/3 000) regional
structures and Zambon would not change brick structure
because it would lose compatibility to the pharma world.
More than half of the companies contacted transfer the
regional sales data to marketing analysis or software
companies.

(103) According to the Commission’s investigation, many
companies in fact use other sorts of data in this structure,
which they consider are essential to allow meaningful
analysis of regional sales data reports. Pharmaceutical
companies naturally need this data in a format compat-
ible with the 1 860 structure.
In this respect, BPI,
the German association of pharmaceutical companies
indicated that receiving sales data in a different regional
structure would cut us off from any other relevant data
which are needed to complement the sales data, and

(105) On this point, IMS argues that the other regional data
service providers (AzyX and NDC) would be able to give
access to their structures to the software providers in
order to develop new software compatible with their
brick structures. However, whether this is technically
possible is beside the point, for the same reasons as
given above with respect to the provision of data in a
non-1 860 compatible structure. Moreover, pharmaceu-
tical companies departing from the established standard
for regional sales data would have to financially support
the creation of other software to allow the analysis and
use of this data, which again represents an important
disincentive to demanding data in a different brick
structures.

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(106) Pharmaceutical companies consider this issue as an
important one, as the following comments show. Lilly
explained that the historical 1 860-brick structure is
used internally by most
(if not all) pharmaceutical
companies for defining sales rep territories, etc. More-
over, all market research and software vendors who
specialise in the pharmaceutical industry have had free
access to this standard structure. If the structure differs
from company to company, vendors (e.g. software and
market research) will have great difficulties to create
standard products. This may hinder innovation. Janssen-
Cilag indicated that all available external data are also
based on the 1 860-brick structure.

— Change of sales territories:

loss of relationship

between the sales representative and the doctors

(107) Contrary to other sectors where the orders are taken
directly, the sales representative of pharmaceutical prod-
ucts can only recommend the prescription of a product.
His/her success at marketing a product is therefore
strongly dependent on establishing a good relationship
with doctors, and sustaining it
for a long period.
Evidence suggests that such relationships take a period
of time to develop. Novo Nordisk explained the import-
ance of this relationship: ‘the main reason for keeping
the structures as they are is that a change will have
negative effects on our customer relationship manage-
ment. In our business areas, it is very important to foster
the relationship to our customers. [ ... ] A lot of
customers will be visited by other sales representatives
and a lot of well-developed close relationships will be
destroyed.’ Pharmacia also stated that ‘each restructuring
of sales force destroys customers’ relationships with our
reps, which means that we would lose a significant
number of sales at
the day’. Novartis
the end of
considered that the loss of the relationship between sales
representatives and prescribing doctors would have a
very significant negative effect on sales. Without a
relationship that has been developed and nurtured over
time, a sales representative will often simply not be
heard by busy doctors, particularly those who are already
visited several times a day by other sales representatives.
Novartis added that it sometimes took several years to
develop a relationship that translated into good sales
performance.

(108) If regional sales data were supplied in a structure which
was not compatible with the 1 860 structure, this would
necessitate significant changes in the territories allocated
to sales representatives by their pharmaceutical com-
panies. [Deleted business secret] BPI the German associ-
ation of pharmaceutical companies stated that using any
other structure would result in a mandatory significant
realignment. Essex Pharma GmbH in its reply of 26 Janu-
ary 2001 indicated that this would change the territorial
responsibility of the representatives. The result would

be inefficiencies due to organisational reason on the
representative’s side as well as in administration. In the
same way, Lilly Deutschland noted that the major cost
would be disruption in our sales organisation as our
territories are designed using the brick structure. Essex
explained in its reply that
technically
changing the structure are estimated to be minor
compared to the financial impact of the major competi-
tive disadvantage described above (changing the terri-
torial responsibility of the representatives).

the costs of

(109) A study (35) made by I + G, a consultancy company
specialised in the pharmaceutical sector based on a
sample of practitioners shows that continuous contacts
with a sales representative is one of the most important
conditions, out of 77 performance parameters tested,
for customer retention.

(110) IMS consider that the adverse effect of switching on the
sales representative and doctor relationship is overstated,
mainly for three reasons: first pharmaceutical companies
frequently change the structure of their sales force on
their own initiative, second even a significant change to
a brick structure will only affect relationships at the
periphery of each sales representatives’ territory and
third the closeness of the relationships is exaggerated.

(111) On the first aspect, comments received from the request
for information gave a different picture. Bastian said that
no modification occurred within the 10 last years; Bayer
said that sales territories are very seldom modified, in
general only in case of a bigger restructuring. AstraZene-
ca said that so far as possible we try to make no changes
and Dr Kade said that the sales territories are changed
very seldom. Moreover, a company acquisition or a
launch of a new pharmaceutical product represents a
much better justification for losses of sales representati-
ve/doctor relationships than a modification resulting
from a new brick structure, because of the important
underlying business reasons for this move. Schering said
modification in these cases is an investment in the
future and follows the strategic business development.
Therefore disruptions in doctor/sales rep relationship are
justifiable and inevitable. Hoffmann La Roche considered
that in the case of a merger or acquisition a restructuring
is inevitable and must be accepted. A restructuring
through a change in data provider is hardly acceptable,
since apart from the technical modification costs the
losses through the destruction of relationships are
incalculable (36). Lilly said that: modifying sales territories
are only done if absolutely necessary, Essex we avoid
changes to our structure due to the enormous effort
involved.

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IMS says that

(112) On the second aspect of IMS’ argument, it appears likely
that it would probably be possible for pharmaceutical
companies, especially those with small sales forces
whose sales territories are correspondingly large, to add
the bricks of a new structure together so as to largely
recreate the original
if a
territories.
number of large, small and medium-sized companies
had switched to the 2201 structure developed by NDC,
even the largest of the companies with the smallest sales
territories would lose under 3 % of doctor/sales rep
relationships. NDC has not responded to this argument.
The Commission considers that even if the IMS figures
were correct (many in the pharmaceutical industry doubt
this). [Deleted business secret], this still constitutes a non-
negligible loss of relationships which pharmaceutical
companies would be very reluctant to accept because it
would be a loss incurred without a sound business
justification. This is so especially if key specialists or
doctors who are very eminent in a particular field are to
be covered by a new sales representative.

(113) On the third aspect, the pharmaceutical companies
attach great importance to the relationship between a
doctor and a sales representative, which is one of the
few means to promote a drug. According to the law on
advertising in the healthcare system (37), products that
are available only on prescription can be advertised
solely to doctors, dentists, veterinarians or pharmacists.
That explains why the work of the sales reps is so
important. BPI the German association of pharmaceuti-
cal companies stated relationships between medical
doctors and reps [ ... ] are the main asset a pharmaceutical
company has. Apogepha for instance explained that any
change of doctor/sales representative relationship is a
threat to the business regardless of the reason, TAD
stated that changes in brick structure should be reduced
to a minimum to avoid disrupting the relationship
between doctor and sales rep, Yamanouchi pharma
said ‘the relationship doctor representative is such an
important capital
that we try to avoid changes if
possible’, Lilly stated that maintaining stable relation-
ships between the physician and sales rep are top
priority. Medac said ‘every disruption of the relationship
between customers and sales reps has big disadvantages
for our company. Therefore we hesitate to modify
regional structure if it is possible’.

(114) Consequently, the Commission considers that the loss of
relationships between doctors and sales representatives
which would be the inevitable result of a change to a
brick structure which was incompatible with the 1 860-

brick structure would act as a important disincentive for
certain pharmaceutical companies to make such a
change.

— Change of sales territories: modification of the

working contracts

(115) The sales territory is defined as the aggregation of a
number of bricks. This territory may be indicated in the
working contract between the company and the sales
representative, in which case a change of structure would
require a modification of the working contract. This
procedure would be another disincentive to switch brick
structure. Moreover, such changes would be subject to a
procedure of ‘co-determination’. According to German
employment law (‘Betriebsverfassungsgesetz’), the co-deter-
mination procedure is compulsory when the working
conditions change (Articles 87, 98 and 91 of this law).
That would mean that the elected workers’ council must
participate in the decision-making process. In case of
disagreement, a conciliation council has the last word.

(116) Many pharmaceutical companies perceive this to be a
problem. One indicated that the brick structure consti-
tutes the basis for negotiations with the company advisor
especially regarding assessment and bonus rules for field
service employees. Gsk (GlaxoWellcome SmithKline
Beecham) also mentioned the high risk of not reaching
agreement with the workers’ council if the brick structure
were to change. Klinge Pharma considered that if it
switched from using the 1 860-brick structure to using
a novel segmentation, it would experience severe prob-
lems with its workers’ council, because in the employ-
ment contract of sales representatives the place of
employment is defined by reference to sales in their
territories (which are an aggregate of a number of
bricks). Another pharmaceutical company stated ‘the
territorial structure of our field service is based on
2 847 segments (RPM 3 000). If we were not allowed to
use this structure anymore due to a change to a
competitor, this would have considerable organisational
and financial consequences’.

(117) IMS stated in its comments that employment law issues
and procedures are not determinative. IMS consider
that the working contracts typically describe the sales
territories in broad geographic terms. IMS is right with
respect to certain pharmaceutical companies, where the
sales territories in the working contract are defined very
broadly with a mention only of a region. But for almost
half of the companies who gave information to the
Commission on this point,
the sales territories are
effectively defined as a list of brick codes. Any change of
the brick structure would therefore pose for them the
problems referred to above.

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— Costs of modifying software and applications which

use the 1 860-brick structure

existing RPM and the involved territorial structure would
destroy the established and very developed existing
contacts to our customers. This leads to unforeseeable
and therefore unacceptable losses for our company’.

(118) NDC stated that under a change of structure ‘Manufac-
turers would incur the cost of redoing all the analytical
work supporting their compensation plan, restructuring
their territory alignments, embedding the alternative
structure into their sales force automation systems and
the extensive training and explanation of the change’.
They further claim that pharmaceutical companies esti-
mate conversion costs at between DEM 200 000 and
400 000. This is corroborated by a number of com-
panies.

(119) IMS stated in its comments that there is no clear evidence
from customers’ responses that the cost of switching to
an alternative brick structure form a material barrier.
The responses are characterised as inconclusive or
unreliable. The Commission is aware that a certain
number of pharmaceutical companies were unable to
estimate switching costs. Evaluation of additional direct
costs appears to be difficult for the companies contacted.
Mentioned direct costs vary from DEM 40 000 to
DEM 1,85 million,
i.e. around 30 % of the annual
budget for regional sales data for a large pharmaceutical
company. For small and medium-size companies, the
costs represent from 25 % to more than 100 % of the
annual budget for regional sales data.

(120) Another pharmaceutical company indicated that ‘other
structures, even if they are acceptable for reasons of
confidentiality, entail high investment, both in financial
terms and in terms of the work involved’. A further firm
said ‘a different RPM structure would have considerable
financial and organisational consequences for our com-
pany. In addition to the pure costs of the rearrangement
for the computer application within the office and the
field work and the organisational efforts related thereto,
there would be the necessary structural adjustments
concerning the existing field service structures [ ... ]
These might cause the loss of established customer
relations, and would surely first have to be arranged
with the workers’ council’. In its reply, MSD Sharp &
Dohme stated ‘our sale force as well as the entire
reporting system and other data available on the market
are based on this structure. [ ... ] Specification of costs is
not possible. However, both the expenses and timely
efforts are extremely high. There would be a need to
create a new sales force structure and for a complete
internal redesign of data and systems’.

(122) IMS stated in its comments that the Commission did not
properly survey those companies that seem best placed
to comment on switching costs: NDC’s and AzyX’s
customers. According to IMS AzyX and NDC have
these
approximately 61 customers and only 28 of
companies were surveyed. In order to have a fair view
from customers, the Commission surveyed customers
from the three services providers. The Commission used
a large sample of customers of each provider customer
base and does not claim to have surveyed the whole
industry. Nevertheless, even according to IMS’ figures,
the Commission surveyed 46 % of AzyX’s and NDC’s
customers, which is sufficient to draw statistically sound
conclusions. Therefore the Commission considers that
the costs of modifying internal applications which are at
present wholly dependent on the 1 860-brick structure
are significant and represent a significant disincentive to
switching brick structures.

(123) The conclusion of this part of the legal assessment,
therefore, is that the role played by the working group
has contributed significantly to the present situation in
which the 1 860-brick structure is a de facto industry
standard and is acknowledged to be so by almost all
pharmaceutical companies. This in turn means that the
costs, competitive disadvantages and other problems
cited above which pharmaceutical companies would
incur if they were to switch from this structure to
buy regional sales data services formatted in another
structure would be unacceptably high, so creating a very
significant obstacle to their doing so.

7.3.2. No likelihood of competitors creating an alter-

native structure

(124) To investigate further the alleged indispensability of
the 1 860-brick structure, the Commission considered
whether there were technical and legal constraints
which at least make it unreasonably difficult for other
undertakings to create another structure in which
regional data services could be formatted and marketed
in Germany.

(121) Another pharmaceutical manufacturer considered that
‘a change of the existing RPM structure, which has been
developed by the pharmaceutical industry and which
represents the basis of our territorial and therefore field
service structure, will involve considerable expenditure
and time for [...]. At the same time, a change of the

(125) The lack of such constraints was influential in the Court’s
judgment on Bronner (paragraph 44) in coming to the
conclusion that access to a newspaper home-delivery
scheme was not indispensable to carrying on business:

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‘Moreover, it does not appear that there are any technical,
legal or even economic obstacles capable of making it
impossible, or even unreasonably difficult, for any other
publisher of daily newspapers to establish, alone or in
cooperation with other publishers, its own nationwide
home-delivery scheme and use it to distribute its own
daily newspapers.’

To give the views of customers no weight in these
proceedings would have been to consider the question
of whether the structure was indispensable only from
the perspective of the possibilities for creating any new
brick structure, without regard to whether or not it was
at all possible to use that structure to compete on the
relevant market (38) (39).

(126) IMS argues that the brick structure is not indispensable
because the information needed to create a brick struc-
ture is publicly available and there are a very large
number of potential brick structures which can be
created.
IMS considers that a new structure could
therefore not be a ‘real or potential substitute’ for the
1 860 structure within the meaning of the phrase used
by the Court of First Instance in the Ladbroke case
(paragraph 131). IMS further argues that the test for an
essential facility is whether it is impossible for competi-
tors to duplicate and does not depend on individual,
subjective or evolving attitudes of customers.

(127) The Commission agrees with IMS that the information
needed to construct a brick structure is publicly available,
and that without taking into account existing constraints
affecting brick structure creation there are in theory
many possible structures. However, competitors have
no choice but to take into account these constraints if
they wish to produce a useful structure. Respecting
constraints necessarily means that the possibilities for
creating a new structure are very limited, for technical
(need to respect postcode boundaries and other objective
constraints) and legal reasons (compliance with data
protection law, need to avoid infringing IMS’ copyright),
as will be shown below.

(128) [Deleted business secret] In this context it is useful to quote
the Frankfurt Court judgment of 16 November 2000,
which noted that (emphasis added): ‘Defendants initially
attempted to distribute their pharmaceutical information
based on a subdivision of the territory of the German
Federal Republic into 2 201 segments. However numer-
ous conferences between defendants and potential cli-
ents proved that data material prepared in this manner
would be hardly marketable because it would not
correspond to the territory division into the normal
1 860 segments’.

(129) The Commission cannot agree with IMS’ comments on
the admissibility of the customers in the finding that the
1 860 structure is indispensable. The pharmaceutical
companies, as users of data in brick structures, are well
placed to know, for example, whether or not the 1 860-
brick structure functions as an industry standard. They
can also comment authoritatively on the likely costs of
switching from this structure to another structure.

7.3.2.1. Lack of options available to potential sup-

pliers of regional sales data services

(130) It

is important

to consider whether, starting from
nothing, potential suppliers of regional sales data ser-
vices could in fact develop alternative structures. Evi-
dence for this perception is provided by the outcome of
a meeting of 15 March organised by AzyX, which
concluded, inter alia, that: ‘From a legal standpoint, IMS
would again attack each structure which could only
halfway reconstruct the 1 860 structure. For this reason,
unless deliberate nonsense was produced, even a new
structure could not fulfil the purpose of legal certainty.’

(131) Most of the parameters used in building the structure
are in the public domain and fixed (postcode areas,
location of pharmacies and doctors, sociodemographic
data, topology, territory able to be covered by sales
representatives in a day, and so on), as noted above. The
choice of boundaries between bricks depends greatly on
these objective parameters, and so limits the choices
available to would-be structure creators. ‘Common sense’
also limits the options available. There are many possible
structures which could be created but which would not
represent viable segmentations for the presentation of
regional sales data, because they could not be usefully
employed by customers.

— Administrative boundaries are a significant techni-
cal constraint in the creation of a new structure

(132) The 1 860 structure relies significantly on postcodes.
Around 500 of
the bricks in the 1 860 structure
are identical with a single postcode area. For around
1 100 further bricks, there is no other scientific choice
as to which postcodes to combine than the one IMS and
the RPM workgroup have made (AzyX), and ‘1 100 seg-
ments which combine two or more postcodes in a
way unambiguously defined by the geographic and
demographic nature of the area (Gesdat).’ The Com-
mission considers that the clear importance of using
postcode areas limits the choices available to potential
designers of new brick structures.

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(133) The Commission considers that there are clearly very
strong reasons for using postcodes as the basis for a
structure. Other data with which pharmaceutical sales
data is integrated is provided in this format; it appears the
only practical way to allocate doctors and pharmacies to
particular bricks; and postcodes also appear to be the
‘natural’ basis for brick structures, as seen in the decisions
of non-European countries to use them as the basis for
a structure (see recital 153) in the absence of the data
protection legislation which exists in the EU.

(134) Gesdat said that some wholesalers are capable of
delivering data according to another criterion, others
not. The only other criterion which could be used to
locate a pharmacy is the address but it is technically
more difficult and not reliable as the addresses are
written in different ways in different regions of Germany.
Also, there is not a unique identification code for a
pharmacy, so the wholesaler has to have a straightfor-
ward method to allocate a new pharmacy without a
need to refer to the provider. The postcode is very useful
as it is an obvious and accurate way of allocating a
pharmacy to a brick.

(135) AzyX said that postcodes are mandatory. If for no other
reason, then because wholesalers have postcodes as the
only practical criteria that enables them to allocate their
sales figures to a territory structure i.e., a structure not
respecting postcodes could simply not be handled by
most wholesalers,
thus no data could be acquired.
Using postcodes as building blocks requires to provide
wholesalers with a bridge file that specifies which
postcode belongs to which brick, and to agree that the
sales to each pharmacy in this postcode are allocated to
the respective brick.

Alternatively, at least in theory, wholesalers could be
provided with a file which lists all 21 600 pharmacies
and allocates them individually to bricks. In practise,
however, this would always fail, because:

(a)

even the slightest difference in spelling would make
the allocation not work, as the computer system
would no longer recognise the pharmacy (such
spelling differences are the rule, not the exception
— wholesalers might even use the name of the
pharmacist instead of the name of the pharmacy in
their address file etc.);

(b)

any new pharmacy and/or pharmacy changing
address would have to be manually allocated, which
in practise is impossible to manage.

(136) NDC noted that ‘Any new structure not based on the
German postcodes would be completely incompatible

with other, publicly available software, such as socio-
economic survey data, which are used by pharmaceutical
companies in marketing and drug-use analyses conduc-
ted by the pharmaceutical companies. Thus, a company
that chose to use the new structure would be unable to
do such analyses and be at a serious competitive
disadvantage’. NDC added that ‘It would be necessary to
demonstrate to the [pharmaceutical product] manufac-
turer why the non-postcode methodology is superior in
order to gain their buy-in and conversion, which is
highly unlikely.’

(137) The Commission also considers that there are strong
arguments for the necessity for brick structures to
respect the boundaries of the 440 German Kreise (coun-
ties), as alleged by NDC and AzyX. They referred to the
fact that public prescribing and dispensing policies are
set on a Kreis basis, and so sales data for any brick which
crossed a Kreis border might not be able to be associated
with one prescription and dispensing policy. This means
that sales data might not give an accurate picture of the
popularity of a drug or the success of a sales representa-
tive in marketing it. AzyX added that: ‘Kreis boundaries
are also mandatory, mainly because a regional structure
also needs to meet the territories of doctor associations.
Those territories are organised around Kreis boundaries’.
It is noteworthy that German Länder boundaries, which
are also obvious administrative regions to use in the
construction of a structure, are made up of Kreis
boundaries.

— Data protection law imposes further constraints on

creation of a second structure

(138) NDC argues in its submission that the German data
protection law would be violated by the creation of a
second brick structure, because it would be possible to
compare data in this structure with that in the 2 847 and
1 860 structures so as to identify information about
individual pharmacies. IMS considers that this is only a
theoretical possibility, because no party would have a
commercial reason to carry out this comparison work,
and it would involve disproportionate effort.

(139) However, some industry players have a different view.
Merck considered that ‘The fact that is de facto imposs-
ible to come up with a different sales data structure
which is still compatible to the prescription data struc-
ture has been proven at the occasion of the recent switch
from 1 845 to 1 860 segments’. Even though 93 %
of all segments remained completely untouched, the
pharmacy coding centres refused to deliver back data for

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1999 on 1 860-brick structure. As 1999 data were
delivered on 1 845 segments, single doctors would have
the workshop held on
been identifiable. Similarly,
15 March of various pharmaceutical companies, data
providers, wholesalers, etc. concluded that the coding
centres and wholesalers pointed out that they could not
deliver in very different structures for data protection
reasons, unless the delivery to IMS was stopped (which
they could in practise not do for economical and
contractual reasons).

preventing the selling of data in both the 2 847 and
1 860 segments and any other number of segments so
far as it constitutes a derivative from RPM 1 860. The
Court did not define precisely what it would consider to
be derivatives, and no clarification is likely for around
three years. Pharmaceutical companies are aware of this
uncertainty, having been warned by IMS not to infringe
its copyright, and would be sceptical about the legality
of any new structure which competitors of IMS might
use to format a new regional sales data service.

(140) IMS further claims, in response to NDC’s argument, that
there is no evidence that competing brick structures in
other EU Member States, where the same data protection
rules exist as in Germany, have run into data privacy
problems. IMS further argues that NDC’s 4 000-brick
structure in Germany did not run into these data privacy
problems.

says that:

(141) The Commission’s investigations suggest however that
there is support within the pharmaceutical industry for
the view that data protection law does impose real
constraints on the construction of a second brick
structure. Gesdat
‘As there are around
21 000 pharmacies in Germany and around 3 000 seg-
ments in the input structure, it means that there are
seven pharmacies per segment. If three very different
brick structures were to coexist, it would be easy only
by deduction to identify the sales of a specific pharmacy.
In Germany, a pharmacy is owned by a pharmacist (an
individual) who cannot be the owner of another one. It
would be then very easy to deduct from the sales of a
specific pharmacy the income of the pharmacist in
violation of the data privacy protection law. If three very
different brick structures were to coexist, each time a
pharmacy were to close or open, the wholesaler would
have to check that there is no violation of the data
privacy law. One of the three brick structures would
have to be amended but which one? Mr Hirth thinks that
the same issue would arise with two brick structures’.

(142) On balance, and in the context of these interim measures
proceedings, the Commission considers that there is a
probability that German data protection laws do impose
certain constraints on the construction of a second
structure in Germany. [Deleted business secret] Given the
limited options available to would-be creators of a new
brick structure, this assumption is questionable. IMS also
refers to the lack of analogous problems in other EU
countries and with NDC’s earlier structure. However,
this lack of problems can be explained by the fact that
brick structures in other countries are compatible with
each other, so that, provided neither structure itself
breaches data protection law, combining the data in two
structures would not do so either.

7.3.2.2. Legal uncertainty around selling data in a

new structure

(143) As mentioned above in recital 29, the Frankfurt Court
judgment of 28 December 2000 gave an injunction

(144) There is evidence that IMS is likely to exploit this
uncertainty by mounting a legal challenge for copyright
infringement against any other regional data services
product which uses a structure which is similar to the
1 860-brick structure, or to any company which receives
data in such a structure. According to a recent example,
the similarity to the 1 860-brick structure would not
need to be great in order that IMS would mount such a
challenge. AzyX noted as follows:

‘It is to be noted that IMS attacked AzyX legally in Germany
on the basis of a delivery to a client Ribosepharm. This client
received data in a segmentation with 2 793 bricks. AzyX has
never before and never after produced data in this segmentation.
The segmentation was deliberately constructed to be NOT
compatible to 1 860 (even though this is almost impossible
to avoid if a base structure is — as the AzyX base
structure — based on postcodes). The underlying reason AzyX
constructed a structure like this was the suspicion that this
client would collaborate with IMS. Indeed IMS then received
this delivery and attacked AzyX, claiming that even if it was
not compatible to 1 860 in parts,
it was equal enough
(because of the postcode base) to be considered derived from
1 860. In conclusion, it can be expected that IMS will attack
any new structure that is not deliberate nonsense (i.e. any
structure which is based on postcodes and which follows
common scientific sense).’

(145) It is clear from the above that structures which are
similar (where this term is broadly defined) to the 1 860-
brick structure will be perceived by pharmaceutical
companies as being legally questionable and so not
marketable. This means that any new brick structure
would have to be very significantly different from the
1 860 structure in order that it could be perceived as
not carrying any legal risk. However, as noted above, a
number of objective constraints limit very severely the
possibilities to create such a different structure.

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7.3.2.3. Attempts to create new structures

(146) The experience of AzyX in attempting to create a new
brick structure is instructive. It tried two approaches:
using university academics and consultants to devise a
new structure using scientific principles, and getting
AzyX staff to group segments together taking account
of ‘common-sense’ industry rules (the use of postcodes,
administrative regions, doctors’ associations’ areas,
health insurance schemes, geographic features, sociode-
mographic factors, etc.)

(147) The structures resulting from these two approaches were
similar to each other and to the 2 847-brick structure.
In AzyX’s view, there were only realistic alternative
choices available with respect to the creation of around
100 to 150 bricks. The remainder was determined by
criteria which would have to be adhered to if the
structure were to stand a reasonable chance of being
attractive to the pharmaceutical industry. This suggests
a very low ‘margin of creativity’ of around 3 to 5 %.
According to Merck Sharp Dohme, if one were to create
a brick structure which was useful and well suited to the
needs of the industry, one would inevitably arrive at a
segmentation very similar to the 1 860-brick structure.
Both NDC and AzyX found after creating their brick
structures that only in a small number of cases could
these bricks not be aggregated to form the 1 860 struc-
ture.

(148) The fact that both structures had around 3 000 segments
is also instructive. The granularity of
the structure
cannot be decided arbitrarily, due to several objective
constraints. First, German data protection law requires
at least three pharmacies to be grouped together, and
changes in pharmacy locations means that the minimum
needs to be higher — the working group agreed on
five. There are approximately 22 000 pharmacies in
Germany, so 4 400 bricks is the maximum number
available. Second, bricks have to be large enough to
address the problem of ‘travelling prescriptions’, where
a doctor prescribing a drug is located in a different brick
to the pharmacy dispensing it. This situation distorts
companies’ attempts to measure the effectiveness of
their sales force because a sale resulting from the work
of the sales representative for brick A will be recorded
in brick B and so credited to another representative. In
practice it appears that
this phenomenon increases
markedly if more than 2 000 segments are used.

(149) On 15 March 2001, AzyX instigated an initiative to find
out whether it was possible to develop and establish a
new brick structure on the basis of cooperation between
all market players: pharmaceutical companies, whole-
salers, pharmacy coding centres, software companies
who process sales data for the pharmaceutical industry,
providers of prescription data, providers of regional
sales data services, scientific consultants specialised
in regional structure development and lawyers. AzyX
describes the outcome as follows:

‘It became clear already during this first kick-off meeting
that there is (unfortunately) no way to develop a new
industry standard structure.

(a) When reviewing the different factors to be taken
into account for each reasonable structure (e.g.
doctor and pharmacy addresses, administrative
borders, sociodemographic data, etc.) and the dif-
ferent possible scientific methodologies, it became
clear that the result of the development would be
quite similar to the IMS structure.

(b) When reviewing the areas where differences to the
IMS structure were possible without producing
nonsense, the pharmaceutical industry pointed out
that the choice between these options was already
made within the RPM working groups, and that
they would not accept other choices against better
knowledge now.

(c) The coding centres and wholesalers pointed out
that they could not deliver in very different struc-
tures for data protection reasons, unless the delivery
to IMS was stopped (which they could in practice
not do for economical and contractual reasons).

(d) A base structure with approximately 3 000 seg-
ments (± 300 to 500) would be the request of the
industry. However, with such a fine segmentation,
whether equal to the IMS 2 847 structure or not, it
would be practically impossible to avoid that most
of the 1 860 structure could be reconstructed by
adding segments of the new structure together. The
finer (more segments) a base structure were, the
more difficult it would be to avoid compatibility to
the 1 860 structure.’

(150) This meeting was followed by a letter from 17 pharma-
ceutical companies (40) asking IMS to licence the 1 860-
brick structure to anyone in the industry who asks for
it, in order to allow competition in the market.

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(151) IMS states that it has developed three different structures
in Germany over the years and that NDC and AzyX
claim to offer or to have developed new brick structures
in Germany.

(152) The Commission considers that the creation of a new
structure by IMS in the past, whether by subdividing
existing segments or taking account of changes due to
administrative restructuring (e.g. incorporation of the
former East Germany, in 1992), is not comparable to
the creation of an entirely new structure. The challenges
which would be faced by prospective creators of such a
new structure were in general not faced by IMS in these
situations. Although NDC and AzyX have launched new
structures, there continues to be a legal uncertainty, as
mentioned previously, around their compatibility with
the 1 860 brick structure. The Commission considers
that there remains significant uncertainty in this area.

7.3.2.4. Brick structures in other countries

(153) In countries where there are no data protection law
requirements which prohibit reporting data for an
individual postcode with only one or two pharmacies
— such as the US, Canada and Australia, the postcode
areas are used — there is no ‘brick structure’ as such. In
Japan there is no brick structure because doctors dispen-
se drugs directly to their patients and pharmaceutical
manufacturers track sales directly from doctor to patient.
Brick structures are common in European countries,
mainly because of the existence of data protection
legislation. In these countries the ‘bricks’ in the structure
are formed by aggregating several postcodes. The brick
structure situations in countries where two or more
regional sales data service providers are in competition
are examined below. [Deleted business secret]

(154) IMS argues that the two or more brick structure coexist
in a number of countries, and that
this enhances
competition, and implies that there is no reason why
this could not happen in Germany. It cites Portugal,
France, Finland, Norway and Poland as examples of such
countries.

structures appear to be wholly or largely compatible
and in the case of the United Kingdom are identical.
Furthermore, it is clear that no other market is similar to
Germany, in terms of the length of time during which
there have been brick structures in the country, the
role played by the pharmaceutical
industry in these
structures, the number of pharmaceutical companies
the regional
who buy sales data, and the size of
pharmaceutical sales data market generally.

(156) In Portugal both AzyX and IMS are present on the
market for regional sales data services. [Deleted business
secret], whilst AzyX had 212 bricks when it entered the
market in 1999. In 2001, AzyX has a structure with
324 bricks (called basic information units (BIU)). Neither
IMS nor AzyX has asserted that these structures are
incompatible.

(157) In France, Cégédim is the only company on the market
for regional sales data services. Cégédim is the service
provider for the GERS, which is a ‘groupement d’intérêt
économique’ created by all the pharmaceutical com-
panies located in France. In 1998 Cégédim changed its
structure from one containing 509 bricks to one with
4 612 bricks (agrégats de points de vente) which are
grouped in 746 bricks (or ‘UGA’, unités géographiques
d’analyses). The 509 structure is still used by a small
number of pharmaceutical companies in the transitional
period before switching to the 746 structure, so no
incompatible brick structures for sales data coexist in
France. [Deleted business secret] The APV segmentation
applied to this sample raises issues with regard to the
French legislation on privacy (informatique & libertés)
and the French Health Code. [Deleted business secret]. The
two structures although used to provide services on
distinct markets (regional sales data and regional pre-
scription data services) are compatible.

(158) IMS argue that it is possible for competitors to create
their own brick structures and compete effectively, citing
the example of France, where, after Cégédim changed its
sales data brick structure, 90 % of GERS’ customers
moved to this new structure.

(155) It is important to consider whether the situations in
these countries do suggest that it would be possible for
competitors to develop substitutes for the 1 860-brick
structure in Germany. First, it is important to note that
in France and Norway the several coexisting brick

(159) The transition to the 746 brick structure in France and
the possibility of creating a new brick structure in
Germany are not comparable. Cégédim created the
746 structure in France at the request of the pharmaceut-
ical companies, and it was the subject of a convention
between the industry, the wholesalers and the French
Government, which needed a new segmentation to
create an index of price information for drugs. Therefore

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the structure Cégédim created has an official status,
rather than merely being the creation of a private-sector
It was also an almost automatic decision for
firm.
pharmaceutical companies to move to the 746 structure,
since they had requested a new structure in the first
place. There are only very few companies using the old
structure on this transitional period. Therefore this
situation contrasts sharply with that in Germany.

(160) In Norway, IMS and Farmastat AS are present on the
market. [Deleted business secret] Farmastat was formed in
1994 by the pharmaceutical
industry association.
[Deleted business secret] It is now possible, since 1 March
2001, to provide information on a per pharmacy basis
in Norway, and Farmastat expects to launch a product
covering each of the 392 pharmacies in Norway shortly.

(161) In Finland, Suomen LääkeData Oy (SLD), which was
until very recently 100 % owned by the pharmaceutical
industry, and IMS, are the providers of regional sales
data services. [Deleted business secret] SLD entered the
market for regional sales data in 1999. SLD’s structure
was created by subdividing the 24 Finnish healthcare
districts, to create 161 regional segments. The decision
on the creation of bricks was based on municipal
regions, healthcare cooperation areas, the structure of
main pharmacies and satellite pharmacies, geographical
features and postcodes.

(162) The extent to which SLD’s structure and that of IMS are
compatible is not clear. However, many of the con-
straints which prevent competitors to IMS in Germany
from entering or remaining on the market are in any
event not present in Finland. In particular, when SLD
entered the market it was much easier for it to attract
business from the pharmaceutical industry, since these
companies owned 100 % of SLD and had a clear interest
in it succeeding. [Deleted business secret] Also, the market
in Finland — which has only around 800 pharmacies,
as opposed to around 21 600 in Germany — is much
less complex and mature than in Germany, so pharma-
ceutical companies could not be so ‘locked-in’ to the
brick structure as in Germany. The Finnish situation can
therefore not serve as a basis for inferences about the
German market.

(164) AzyX’s and IMS’ brick structures are only slightly
compatible with each other. The Commission notes,
however, the comment of AzyX as follows:

‘It is to be noted, however, that Poland compared to
the more mature pharmaceutical markets in western
countries is a fast developing market. Pharmaceutical
companies are increasing their field forces rapidly (they
in average double every two to three years), so that
frequent fundamental territory realignments are needed
anyhow. All in all, the market situation in Poland is not
at all comparable to the one in mature western markets.’

(165) IMS does not comment on the situation in Poland in any
detail. The Commission considers that the differences
between Germany and Poland with respect
to the
the pharmaceutical market, stability of
maturity of
administrative boundaries and length of time that brick
structures have existed indicates that the experience of
Poland does not show that it would be possible for
competitors to develop substitutes to the 1 860-brick
structure in Germany

(166) In the United Kingdom there were until 1999 two
providers of pharmaceutical sales data: IMS and Source
Informatics. Source’s product,
‘Source Dispenser’, was
nevertheless specific as the information provided to
clients was restricted to sales data on their own products.
Sales of the products covered were analysed by each
individual pharmacy or dispensing general practitioner.
Source had no real brick structure at that time. [Deleted
business secret] Following an investigation of the trans-
action by the MMC, IMS offered, and the UK Compe-
tition and consumer Affairs Minister accepted, undertak-
ings in October 1999 among which was the divestiture
of Source Dispenser. NDC was the eventual purchaser
of Source Dispenser in October 2000. The RSA brick
structure was part of the sale of Source Dispenser in the
form of a perpetual, non-exclusive, royalty-free licence.
Therefore, in the United Kingdom, there are two sales
data services providers using exactly the same brick
structure.

7.3.3.

Justification for refusal to license

(163) In Poland, AzyX is the main competitor to IMS. AzyX
has a 646-brick (basic information units) structure
[Deleted business secret]. The IMS structure cannot be
recreated using AzyX’s 646-brick structure. In Poland a
new administrative structure was put in place two years
ago, creating new set of administration regions. [Deleted
business secret]

(167) It should be recalled that the right of the proprietor of
an intellectual property right to prevent third parties
from manufacturing and selling or importing, without
his consent, products incorporating that right constitutes
the very subject-matter of his exclusive right. The
European Court of Justice held in Volvo that an obligation
imposed upon the proprietor of a protected design to

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grant to third parties, even in return for a reasonable
royalty, a licence for the supply of products incorporat-
ing the design would lead to the proprietor thereof being
deprived of the substance of his exclusive right and that
a refusal to grant a licence cannot itself constitute an
abuse of a dominant position.

(168) However, it is equally clear from the case-law that, in
exceptional circumstances, a refusal to grant a licence
may constitute abusive conduct in itself. In this context,
the European Court of Justice referred in its Magill
judgment to the absence of justification for the refusal
to grant a licence to an intellectual property right.
Likewise, the Court considered in Bronner that in order
to argue for an abuse of a dominant position it was
necessary, inter alia, that ‘... such refusal [of the service
comprised in home delivery] be incapable of being
objectively justified ...’.
It is necessary, therefore, to
consider whether IMS’ refusal to licence the 1 860-brick
structure is capable of such justification.

(169) In this respect, IMS, invoked the fact that NDC infringed
IMS’ copyright, is still contesting the copyright’s validity
and did not accept that it was bound by the judgment
against PI as justification for it not entering into licensing
discussions with NDC. However, NDC’s conduct can
only be seen against the background of IMS’ refusal to
licence the 1 860-brick structure, which is indispensable
to compete with the relevant market. In this context,
NDC’s reaction to IMS’ behaviour cannot be an objective
justification for not entering into licensing discussions.
Moreover, for IMS to grant NDC a licence would not
necessarily impact on the question under German law
of whether a copyright exists or not, and if so, who
owns it. Similarly,
to
an objective justification not to enter into licensing
discussions.

these factors cannot amount

(170) In its submissions, IMS argues that the Commission’s
position in this respect is contrary to Community law,
which recognises that licensors may legitimately refuse
not to maintain contractual relationships with licensees
which contest the licensed rights. IMS refers to Com-
mission Regulation (EC) No 240/96 on the application
of Article 85(3) (now Article 81(3)) of the Treaty to
certain categories of technology-transfer agreements to
support its case. Article 1 of this Regulation sets out the
criteria for licensing agreements not
to fall within
Article 85(1) (now Article 81(1)). Article 2 says that

Article 1 applies notwithstanding in particular various
clauses in such licensing agreements, which are not
generally restrictive of competition. Clause 15 is:

‘a reservation by the licensor of the right to terminate
the agreement if the licensee contests the secret or
substantial nature of the licensed know-how or chal-
lenges the validity of licensed patents within the com-
mon market belonging to the licensor or undertakings
connected with him.’

(171) This paragraph shows only that clauses in licensing
agreements which foresee termination if the licensee
later contests the licensed rights do not generally infringe
Article 81(1). It does not show that interim measures
requiring IMS to licence NDC, which does indeed at
present contest the licensed rights, would be contrary
to Article 81(1), Article 82, or any other aspect of
Community law.

(172) IMS further argues that NDC offered only a nominal
sum for a licence. It is clear that IMS refused, in spite of
repeated requests, even to discuss a licence. [Deleted
business secret] If IMS considered that the sum offered by
NDC was not enough, it clearly decided against making
any counter-proposal or suggesting an amount which it
considered reasonable.

(173) Finally, IMS argues that there are criminal allegations
against former senior PI and current NDC officials for
theft of information from IMS. In response, NDC says
that this allegation is at a preliminary stage (a report to
the police), that there are no proceedings in this case,
that all those accused strongly deny the allegations, and
that no charges have been filed. NDC further mentions
that NDC itself has not been accused of any wrongdoing
and that the allegations relate to theft of information
not related to the brick structure. The Commission does
not consider that this factor represents an objective
justification for the refusal to license. First, IMS has not
produced any evidence which shows that there is a
criminal
investigation or proceedings underway, as
opposed to a preliminary inquiry into allegations.
Second, the allegation is against an individual and not
NDC itself. Thirdly, the individual concerned is no longer
an employee of NDC. Even if none of the above factors
was present in this case, it is incumbent on IMS to
address any perceived harm it has suffered through
alleged criminal behaviour through appropriate lawful
means, and not by attempting to eliminate competition
in the relevant market.

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(174) As stated above, IMS has recently refused a licence to
AzyX also. IMS’ reasons for this refusal are similar to
those for refusing NDC except for the criminal allegation
element, which is not present in the case of AzyX. The
Commission notes that the amount proposed by AzyX
is 10 times larger than that offered by NDC and IMS did
not make any counter offer or indicate what a reasonable
fee should be. In conclusion, the Commission considers
that IMS had no objective justification not to licence
NDC or AzyX.

7.4.

EFFECT ON TRADE BETWEEN MEMBER STATES

(175) Article 82 of

the Treaty prohibits any abuse of a
dominant position within the common market or in a
substantial part of it in so far as it may affect trade
between Member States.

(176) As the Court of Justice ruled in its judgment in United
Brands (paragraph 201), ‘if the occupier of a dominant
position, established in the common market, aims at
eliminating a competitor who is also established in the
common market, it is immaterial whether this behaviour
relates to trade between Member States once it has been
shown that such elimination will have repercussions on
the patterns of competition in the common market.’
The refusal in question aims, among other things, to
eliminate NDC and AzyX from the relevant market. If
these two companies were eliminated from the market,
the structure of competition in the common market
would be altered, as no competition would be present
on the relevant market.

(177) NDC is prohibited from using the 1 860-brick structure.
According to NDC, it is barred from competing in the
provision of regional sales reports. It is clear that IMS’
conduct is affecting the survival of the only competitors
on the market.
likelihood this conduct will
foreclose the market to potential new entrants and so
eliminate all prospect of competition in the future.

In all

(178) It

is assumed that

IMS’ policy on the 1 860-brick
structure is to pursue only its competitors on the
relevant market for potential copyright infringement. If
IMS were to pursue all other users of the 1 860 structure
(software providers, providers of socio-economic data,
etc.) for potential breach of copyright, there could be
even more widespread competition problems.

7.5. CONCLUSION ON ABUSE UNDER ARTICLE 82

(179) The Commission considers that this case meets the
requirements for the establishment of abuse under
Article 82 as developed in European Court of Justice and
Court of First Instance jurisprudence, beginning with the
Commercial Solvents and Volvo judgments and taken
further in Magill, Ladbroke and Bronner.

(180) The Commission considers that there are ‘exceptional
circumstances’ in this case within the meaning of the
phrase used by the European Court of Justice in Magill
(paragraph 50) read in conjunction with the Ladbroke
and Bronner cases. IMS has created, in collaboration with
the pharmaceutical industry over a long period of time,
a brick structure which has become the de facto industry
standard for the presentation of regional data services
and which the Frankfurt Court has found is its intellec-
tual property right. IMS is now excluding all competition
from the market for regional data services by refusing,
without objective justification, to license this structure
to competitors. As clarified in the Ladbroke judgment,
there is no requirement for a refusal to supply to prevent
the emergence of a new product in order to be abusive.

(181) It is clear that refusal of access to the 1 860-brick
structure is likely to eliminate all competition in the
relevant market, since without it is not possible to
compete on the relevant market. IMS’ reasons for its
refusal to licence are not capable of being objectively
justified. Moreover, use of the 1 860 structure is indis-
pensable to carrying on business on the relevant market;
there is no actual or potential substitute for it. These
exceptional circumstances meet
in
Bronner for a refusal to supply to be considered an abuse
of a dominant position.

the test set out

(182) IMS makes a number of arguments attacking the legal
analysis set out in the statement of objections. It says
that there is no suggestion that IMS has engaged in any
abusive conduct or has tried to use its control of
intellectual property to monopolise downstream or
related markets. IMS is entitled to refuse licences of its
copyright
to which
to competitors for the market
copyright relates (see the Volvo case). A refusal is only
abusive if coupled with additional abusive behaviour,
and there is none here.

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(183) Furthermore, IMS does not consider that the 1 860-
brick structure is an essential facility, since there is
no second related market on which competition is
restricted.

data services. It is therefore the case that refusing access
to this structure to competitors on the relevant market
would exclude all competition from this market, and
that therefore IMS’ refusal to license the 1 860-brick
structure involves abusive conduct.

to the Volvo case makes clear that

(184) As regards the first of these two arguments, European
Court of Justice and Court of First Instance case-law
subsequent
in
exceptional circumstances the refusal
to license an
intellectual property right in itself can be considered to
be an abuse under Article 82. As described above in
recitals 75 to 174, such circumstances exist here. A
dominant company has negotiated over a long period
with its customer industry so as to produce a structure
on which the industry is now very highly dependent, to
the extent that they consider it a de facto industry
standard, and which a national court has now found is
the dominant company’s intellectual property. This
dominant company now refuses to license this structure
to competitors, so that no competing products based on
this structure can be produced. On the second argument,
the fact that the cases considered by the European Court
of Justice and Court of First Instance to which IMS refers
involved two markets does not preclude the possibility
that a refusal to licence an intellectual property right can
be contrary to Article 82. In the Magill case cited above,
the basic information about television programmes was
considered to be an indispensable input to allow an
undertaking to compete in a downstream market (that
for television-listings magazines). The circumstances are
similar in this case,
in that use of the 1 860-brick
structure is an indispensable input to allow undertakings
to compete in the market for regional sales data services
in Germany. As explained above in recitals 15 and 16,
there is an important distinction between the product,
which is regional sales data services, and the brick
structure in which data used to create these services is
formatted. In this case, in the specific and exceptional
circumstances in which the 1 860-brick structure was
developed and copyright was asserted and found to
subsist, the work in question for the technical, legal and
economic constraints referred to above is incapable of
being replicated by means of a non-infringing parallel
creation.

(186) The overall conclusion here is therefore that, on the
evidence available at present, there is sufficient prima
facie case of behaviour constituting abuse under
the other
Article 82 to order interim measures,
conditions for ordering such measures are fulfilled.

if

8.
LIKELIHOOD OF SERIOUS AND IRREPARABLE HARM
AND INTOLERABLE DAMAGE TO THE PUBLIC INTEREST;
URGENCY

(187) In its judgement in the La Cinq case (paragraph 28), the
Court established that in addition to the prima facie
infringement of the Community rules on competition a
second condition had to be fulfilled for it to be possible
to order interim measures: there must be proven urgency
requiring the prevention of the occurrence of a situation
likely to cause serious and irreparable damage to the
party applying for their adoption or intolerable damage
to the public interest. In this case both aspects are
present.

(188) On the risk of serious and irreparable harm establishing
the urgent need to grant interim measures, the Court of
First Instance held (in La Cinq, at paragraph 4) that it was
necessary to show that there was ‘damage which could
no longer be remedied by the decision to be adopted by
the Commission upon the conclusion of the administrat-
ive procedure.’

(189) In La Cinq, the Court of First Instance confirmed that the
risk of serious and irreparable damage does not require
the risk of cessation of business or insolvency. However,
it is clear that where the applicant for interim measures
is threatened with going out of business prior to the
Commission’s taking of a final decision, this in and of
itself would demonstrate the urgency of the interim
relief sought in order to prevent serious and irreparable
damage to the party seeking such relief.

(185) The finding here is that there is a prima facie case that
use of the 1 860-brick structure is indispensable to
compete on the relevant market. The input which the
pharmaceutical companies have made to the structure
has contributed greatly to its status as a de facto industry
standard and to their current dependence on this
structure as a format for the receipt of regional sales

(190) On the basis of the evidence obtained there is good
reason to suppose that unless NDC is granted a licence
to the 1 860-brick structure, its German operation will
go out of business, and that there will be intolerable
damage to the public interest.

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(191) NDC entered the German market in 1999 by making
substantial investments to acquire Pharma Intranet AG.
It has invested additionally a number of millions of
German marks in the expansion of the German com-
pany, and the ongoing costs of running this business are
substantial. As a result of IMS’ behaviour, NDC has lost
[...] contracts from larger pharmaceutical companies
worth around DEM [...] million per year and its costs are
such that it is currently losing around DEM [...] million
per year in its German operations. This is an unsustaina-
ble financial position. The losses are material to the NDC
group as a whole, and will force NDC to withdraw
from the German market unless it is able to compete
effectively in the very near future.

(192) NDC’s only current source of revenue in Germany is
derived from the sale of regional sales data services. Such
services are the ‘core’ product which a data provider
must offer in order to establish itself in the marketplace.
NDC currently has a number of contracts for the
provision of these services which amount to around
DEM [...] million for 2001. There is legal uncertainty
around the ability of NDC to fulfil those contracts unless
it is granted a licence to the 1 860-brick structure.
Pharmaceutical companies do not want to receive data
in a structure which is affected by this legal uncertainty,
[Deleted business secret]. The negative impact on NDC of
this legal uncertainty is substantial, and is increasing
markedly at the present time, making the requirement
on IMS to license NDC urgent. If NDC had to default on
these contracts, this would result in serious financial
damage as well as the long-lasting damage to its
commercial reputation in Germany.

(193) Also, NDC’s current customers have indicated that they
will all revert to IMS if NDC is unable to provide a
product formatted in the 1 860- or compatible brick
structure. If it cannot have legally certain access to the
1 860 structure, therefore, NDC will
lose its current
customers. Industry practice is for contracts for the
coming calendar year to be negotiated a number of
months in advance of the start of that year, so NDC’s
need for such access is urgent. Moreover, without
interim measures, NDC will also have no prospect of
attracting new customers for the coming years. It is
probable that without interim measures a situation will
occur which will cause NDC to cease trading in Germany.

be able to legally employ the 1 860-brick structure
before around 2004, by which time it is very likely to
have ceased trading in Germany. The Commission also
notes that, under the present circumstances, it is unlikely
that another company will be able for the foreseeable
future create a brick structure similar to the 1 860-brick
structure a priori and successfully publicly claim that this
intellectual creation that should be
was an original
covered by a new copyright.

(195) Aside from the serious and irreparable harm to NDC,
there is a risk of an intolerable damage to the public
interest within the meaning of the la Cinq judgment.
Since without the 1 860-brick structure it is not possible
to compete on the market now or in the foreseeable
future, there will be, in the absence of interim measures,
a serious risk to the continued presence of the other
current competitor, AzyX on the market. AzyX is
very much smaller than NDC (its worldwide revenue
was USD 1,53 million in 2000,
compared to
USD 289,3 million for NDC), and its European operation
(in effect, the entire business) is even more susceptible
to going out of business in the absence of interim
measures.
IMS would then revert to being the sole
provider of regional sales data in Germany.

(196) An eventual finding in the main decision that IMS had
abused its dominant position under Article 82 would be
illusory if meanwhile NDC’s German subsidiary and
other competitors had been put out of business. If that
were to happen, not only will IMS be confirmed as the
only supplier of regional sales data services in Germany
but there is also likely to be complete foreclosure of the
relevant market for the foreseeable future.

(197) IMS claims that in granting an injunction, the German
courts have already established that
legitimate
commercial interests would suffer greater harm than
those of the copyright infringers. However, it cannot be
the case that the interim judgment of a national court
can pre-empt the application of Community compe-
tition law.

IMS’

(194) There is no prospect of NDC being able to compete on
the relevant market by means other than the present
Decision in the medium term. The Commission under-
stands that the final verdict on the appeals against the
injunctions delivered against NDC in the Frankfurt Court
will not be known for around three years. Even should
these appeals go in its favour, therefore, NDC would not

(198) IMS further argues that any harm suffered by NDC is the
result of unlawful activity, and so cannot be legitimately
relied upon, and that it is not open to NDC to claim that
it will suffer harm unless it is able to maintain a customer
base that the German courts have found was unlawfully
obtained to begin with. The Commission considers that
in which NDC
the circumstances,
irrespective of

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operates, it is likely to suffer serious and irreparable
harm, because the refusal to grant a licence, as mentioned
above, is illegal in itself. NDC therefore urgently requires
interim relief.

original collections of works and compilations of data
or other materials are covered by its copyright part. In
addition, the Directive introduces a sui generis regime to
protect non-original databases made with substantial
investments for a period of 15 years.

(199) The balance of interests in this case favours the applicant.
If, at the end of the full procedure the Commission
decides in favour of IMS, IMS will have only have
suffered harm to the extent that it will have had to
compete with NDC and AzyX on the relevant market.
Moreover, if this were to happen, the situation would be
easily reversible, in that IMS would no longer be obliged
to grant a licence to other undertakings and would
recover any share of the relevant market it had lost. For
IMS, granting a licence to the 1 860-brick structure will
disclose only information which is already in the public
domain, and so does not imply an irreversible disclosure
of secret information by IMS.

(200) IMS’

legitimate interests will not be prejudiced by
licensing the 1 860-brick structure, since it will receive
licence fees from any undertaking to whom it grants a
licence, in connection with the investments it has made
in developing the structure. On the other hand, if interim
measures were not granted, there would be a strong
possibility that NDC (and AzyX) would cease trading in
Germany, and furthermore that all competition on the
relevant market would be eliminated.

(201) In conclusion,

for the reasons set out above,

the
Commission considers that there is in this case the risk
of serious and irreparable harm and intolerable damage
to the public interest which establishes the urgent need
to grant protective interim measures.

(204) In its copyright part, the Directive harmonises copyright
applicable to the structure (schema) of a database. In
line with similar provisions contained in Directive
91/250/EEC on the legal protection of computer pro-
grammes, it establishes the level of originality as the
eligibility criterion for protection (‘the author’s own
intellectual creation’). Copyright protection provided by
the Directive is accorded to the selection or arrangement
of the contents and covers the structure. It does not
extend to the contents of a database and applies without
prejudice to any rights subsisting in those contents
themselves.

(205) Under the Directive, exceptions only apply in certain
limited circumstances to databases protected by copy-
right. Article 13 states that the Directive is without
prejudice to provisions concerning, inter alia, laws on
restrictive practices and unfair competition. Moreover,
the application of a Treaty article takes precedence over
a Directive, as recently confirmed by the Court of First
Instance in Institute of Professional Representatives before the
European Patent Office v Commission of
the European
Communities (41).

9. OTHER ISSUES

9.2. CONSISTENCY OF THIS DECISION WITH THE COM-

MUNITY’S INTERNATIONAL OBLIGATIONS

9.1. DIRECTIVE 96/9/EC OF THE EUROPEAN PARLIA-
MENT AND OF THE COUNCIL OF 11 MARCH 1996
ON THE LEGAL PROTECTION OF DATABASES
(‘DIRECTIVE 96/9/EC’)

(202) According to decisions of German courts on provisional
measures in current proceedings quoted above, IMS has
copyright in the 1 860-brick structure by virtue of a
provision in German copyright law which transposes
Directive 96/9/EC.

(206) IMS claims that the Commission’s position may preju-
dice its exclusive right and give rise to conflict with the
Community’s international obligations because it
is
not a special case within the meaning of the Berne
Convention (42) and the World Trade Organisation’s
TRIPS (43) and therefore would unreasonably prejudice
IMS Health’s legitimate interests as a copyright owner.

(203) Directive 96/9/EC provides for harmonised protection,
both of original databases under copyright, and of non-
original databases through a sui generis regime. Any

(207) The Commission is fully conscious both of the benefits
of intellectual property rights and of the need for such
rights to be fully subject to the respect of competition
laws. It considers that this interim Decision is fully
compatible with the Berne Convention and TRIPS.

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(208) The TRIPS Agreement explicitly obliges Contracting
Parties to protect creative databases in Article 10(2).
Article 13 also recognises that members may provide
for limitations and exceptions to exclusive rights pro-
vided that the application of any such exception or
limitation meets the conditions of that Article. Excep-
tions or limitations are to be confined to certain special
cases which do not conflict with a normal exploitation
of the work and do not unreasonably prejudice the
legitimate interest of the rightholder (44). The Com-
mission considers that this Decision is compatible with
these provisions. The compulsory licence ordered in this
Decision constitutes a special case, which is clearly
defined and narrow in scope. The Decision does not
conflict with the normal exploitation of IMS’ copyright
on the 1 860-brick structure. IMS’ legitimate interests
will not be prejudiced unreasonably, since IMS can
demand payment for licences granted pursuant to this
Decision and so will not suffer an unreasonable loss of
income as a consequence of the Decision.

(209) In addition, Articles 8 and 40 of TRIPS expressly address
the measures that Contracting Parties may take to
prevent the abuse of intellectual property rights. Article 8
of TRIPS provides that measures to prevent the abuse of
intellectual property rights may be needed, provided
that they are ‘consistent with the provisions of this
Agreement’. Similarly, Article 40 of TRIPS requires that
when Contracting Parties adopt measures aimed at
control of abusive intellectual property licensing prac-
tices or conditions, they do so ‘consistently with the
other provisions of this Agreement’.

9.3. ALLEGED EFFECT ON INTELLECTUAL PROPERTY

RIGHT PROTECTION

(210) As a general point, IMS argues that the Commission’s
position would effectively render copyright granted
under national law nugatory and so deter investment in
intellectual property, since potential investors would not
consider that their investments could be recovered.

stances’. Such exceptional circumstances exist in this
case. A dominant company has negotiated over a
long period with its customer industry, who are now
dependent on it, so as to produce a structure which it
subsequently claims is its intellectual property, and
refuses to license this structure to competitors so that
no competing products based on this structure can be
produced. These circumstances, which give rise to an
abuse of Article 82, are extremely specific. Under these
circumstances, exclusive use of the 1 860-brick structure
and its derivatives by IMS is a means of monopolising
the market for regional data services in Germany.

(212) [Deleted business secret]

9.4. APPROPRIATENESS OF INTERIM MEASURES

(213) According to IMS it is not possible to impose interim
measures in this case, since there is no breach of
competition rules in respect of which a penalty could be
imposed. IMS argues that there are novel legal principles
involved in this case, and that it is Commission practice
not to impose fines in such cases. The Commission
cannot agree to this proposition. This is a prima facie
breach of Article 82 in respect of which a fine could be
imposed, pursuant to Article 15 of Regulation 17. This
would still be the case even if there were novel legal
principles involved in this case which the Commission
might take into account in deciding whether or not to
impose a fine in a particular case.

III. THE ORDER

(214) The Commission considers that it is justified to make an
order which will as far as possible ensure that the
applicant
is not put out of business, and that no
intolerable damage to the public interest occurs, pending
the final outcome of the administrative procedure by
means of which the applicant complains. In the present
case the most urgent need is to maintain the status quo
by permitting the other undertakings which, according
to the Commission’s investigation, are currently present
in the relevant market to continue to compete on this
market.

(211) The Commission fully recognises the essential role
played by intellectual property rights in promoting
innovation and competition. Nevertheless, as IMS admits
and as the Court of Justice established in the Magill
judgment (paragraph 50), read in conjunction with the
Ladbroke and Bronner cases, Community law can apply
to the exercise of that right in ‘exceptional circum-

(215) The Commission therefore intends to require IMS to
license the 1 860-brick structure on a non-discriminat-
ory basis to NDC and AzyX. In any agreements in which
IMS licenses the use of the 1 860-brick structure, it is
important to ensure that any fee which is charged is
reasonable, and that the process does not take an undue
amount of time, as this would frustrate the purpose of

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L 59/47

the order. The order therefore provides for any royalties
to be paid for these licences to be determined by mutual
agreement between IMS and the party requesting the
licence or failing that, by a Decision of the Commission
on the basis of a determination by one or more
independent experts. The term expert refers to any
suitably qualified person. In the event, the expert(s) will
be chosen by mutual agreement of IMS and the other
party, or if the parties cannot agree, will be appointed
by the Commission. The expert(s) should have access to
all documents of the parties they might need in order to
carry out their task. The expert(s) shall be bound by
professional secrecy and not disclose any evidence or
documents to third parties except to the Commission.
The expert(s) will make the determination on the basis
of transparent and objective criteria, and transmit it to
the Commission for approval.

the terms of
the licence before taking an interim
Decision. As to the method of calculation of licence fees,
the Commission considers that allowing the parties to
reach a mutual agreement, and failing that, to engage an
expert, is entirely appropriate. The Commission will not
stipulate in detail the terms of any licence for the 1 860-
brick structure.

(219) The Commission considers that IMS and the undertaking
requesting the licence should each bear half the cost
of employing the expert(s) referred to above. The
Commission cannot accept
the
expert is doing a job which can only lawfully be done
by the Commission and so the parties should not be
expected to pay for this service.

IMS’ argument

that

(216) According to IMS, interim measures are intended only
to maintain or restore the status quo, and NDC’s
application does not meet this criterion, since before
IMS’ refusal to negotiate a licence NDC had no licence
and was illegally infringing IMS’ copyright. IMS cites the
Camera Care judgment of the Court of Justice in support
of its argument, namely: ‘a further requirement is that
these measures must be of a temporary and conservatory
nature and restricted to what is required in the given
situation’.

(217) This judgment cannot be interpreted to give the meaning
desired by IMS. The intention of interim measures is to
prevent a situation likely to cause serious and irreparable
damage to the applicant party or intolerable damage to
the public interest. If such measures were merely to
restore a situation which existed before an abuse took
place, they would only preserve the ability of IMS to
abuse its dominant position, contrary to Article 82.
The interim measures granted in this Decision merely
maintain NDC’s ability to compete on the market, and
are no more than what is required in this situation to
prevent intolerable damage to the public interest.

(218) IMS also argues that the Commission would have to
specify how any licence fees were to be calculated and

(220) Finally, it is necessary to make provision for periodic
penalty payments in the event of any default under the
terms of this Decision,

HAS ADOPTED THIS DECISION:

Article 1

IMS Health (IMS) is hereby required to grant a licence without
delay to all undertakings currently present on the market for
German regional sales data services, on request and on a non-
discriminatory basis, for the use of the 1 860-brick structure,
in order to permit the use of and sales by such undertakings of
regional sales data formatted according to this structure.

Article 2

In any licensing agreements relating to the 1 860-brick
structure, any royalties to be paid for these licences shall be
determined by agreement between IMS and the undertaking
requesting the licence (‘the parties’).

If an agreement has not been reached within two weeks of the
date of the request for a licence, appropriate royalties will be
determined by one or several
independent experts. The
expert(s) will be chosen by agreement of the parties within one
week of the parties’ failure to agree on a licence fee. If an
agreement on the identity of the expert(s) has not been reached
within this time, the Commission shall appoint an expert or
several experts from a list of candidates provided by the
parties, or,
if appropriate, choose one or several suitably
qualified person(s).

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The parties will make available to the expert(s) any document
which the expert(s) consider necessary or useful to carry out
their task. The expert(s) shall be bound by professional secrecy
and shall not disclose any evidence or documents to third
parties except to the Commission.

The expert(s) will make a determination on the basis of
transparent and objective criteria, within two weeks of being
chosen to carry out this task. The expert(s) will communicate
this determination without delay to the Commission for
approval. The Commission’s Decision shall be final and take
effect immediately.

Article 3

A penalty of EUR 1 000 per day shall be payable in respect of
any period during which IMS fails to comply with the
provisions of this Decision.

Article 4

The provisions of this Decision shall apply until notification
of the decision concluding the proceedings.

Article 5

This Decision is addressed to IMS Health of Harewood Avenue,
London NW1, United Kingdom.

Done at Strasbourg, 3 July 2001.

For the Commission

Mario MONTI

Member of the Commission

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(1) OJ 13, 21.2.1962, p. 204/62.
(2) OJ L 148, 15.6.1999, p. 5.
(3) OJ L 354, 30.12.1998, p. 18.
(4) Group AzyX is composed of Pharma Groupe SA, a holding
company set up in February 1999 under Luxemburg law and five
national subsidiaries: AzyX Belgium, AzyX Deutschland GmbH
Geopharma Information Services, AzyX servicos de Geomarketing
Farmaceutico Lda, AzyX Polska Geopharma Information services
Sp.z.o.o. (all set up in 1999) and is active on the same markets as
IMS and NDC.

(5) There are 16 wholesalers in Germany. On average three whole-

salers serve each pharmacy.

(6) Only 15 % is purchased by the pharmacies directly from the

manufacturers and not through wholesalers.

(7) Federal Data Protection Act

(Bundesdatenschutzgesetz) as most

recently amended on 23 May 2001.

(8) OJ L 281, 23.11.1995, p. 31.
(9) DHM: Dr. Haase Managementsysteme.
(10) GFD: Gesellschaft für Datenverarbeitung mbH.
(11) IDV — Bodenheim.
(12) P & P: P & P Software u. Consulting GmbH.
(13) OJ L 77, 27.3.1996, p. 20.
(14) Case 792/79 R, Camera Care v Commission [1980] ECR 119.
(15) Joined Cases 228 and 229/82 Ford v Commission [1984] ECR

1129.

(16) Case T-23/90 Peugeot v Commission [1991] ECR II-653.
(17) Case T-44/90 [1992] ECRII-1.
(18) Case 27/76 United Brands v Commission [1978] ECR 207.
(19) Case T-504/93 Tiercé Ladbroke SA v Commission [1997] ECR II-

923.

(20) Case 85/76 Hoffmann-La Roche [1979] ECR 461.
(21) Case C-62/86 AKZO Chemie BV v Commission [1991] ECR I-

3359.

(22) Cases T-24/93, T-25/93, T-26/93 and T-28/93 Compagnie Mari-
time Belge Transports and Others v Commission [1996] ECR II-
1201.

(23) Cases 40-48, 50, 54-56, 111, 113-114/73 Cooperatieve Vereniging

Suiker Unie and others v Commission [1975] ECR 1663.

(24) Case 77/77 BP v Commission [1998] ECR 1513.
(25) Case C-7/97 Oscar Bronner GmbH & Co KG. v Mediaprint Zeitungs-
und Zeitschriftenverlag GmbH & Co KG. [1998] ECR I-7791.
(26) Cases 6/73 and 7/73 Istituto Chemioterapico Italiano and Commercial

solvents [1974] ECR 223.

(27) Case 27/76 United Brands v Commission [1978] ECR 207.
(28) Case 238/87 AB Volvo v Erik Veng (UK) Ltd [1988] ECR 6211.
(29) Joined cases C-241/91 P and C-242/91 P. Radio Telefis Eireann
(RTE) and Independent Television Publications Ltd (ITP) v Commission
[1995] ECR I-0743.

Notes

(31) Aventis, Robugen, Hermal, Dr Winzer Pharma, Dr Mann, Stada

and TAD, Berlin Chemie and Amgen.

(32) Original text: Je nach Auswertung werden unterschiedliche Anzahlen

von Jahresdaten benötigt. In der Regel 2-5 Jahre.

(33) Original text: Wir brauchen vergleichbar Vorjahreszeiträume von
minimal 3 Jahren für Marktforschung und Incentiveberechnungen.
(34) Original text: Wir nutzen für unsere Planungen und Gebietsentwick-

lungen die Verganheitsdaten von 3 Jahren.

(35) Strategic performance benchmarking 1998 for 23 pharmaceut-

ical companies.

(36) Original text: Im Falle von Zusammenschluss oder Akquisition ist eine
Umstrukturierung unvermeidlich und muss akzeptiert werden. Eine
Umstrukturierung durch Wechsel des Datenanbieters ist kaum zu
akzeptieren, da ausser den technischen Umstellungskosten die Verluste
durch Wegfall der Beziehungen nicht abzuschätzen sind.

(37) The Heilmittelwerbegesetz, or Law on advertising in the health care

system.

(38) See for example John Temple-Lang in Defining legitimate compe-
tition: companies’ duties to supply competitors, and access to
essential facilities, (1994) Fordham Corporate Law Institute, at
286: ‘The practice of the industry and the expectation of buyers
or users may make it essential to have access to a facility that in
other circumstances might not be essential’.

(39) See also the judgement of the Court of First Instance in the
Ladbroke case. The Court of First Instance rejected (paragraph 132)
the argument put forward by Ladbroke in saying (emphasis
added) that transmission is not indispensable, since it takes place
after bets are placed, with the result that its absence does not in
itself affect the choices made by bettors and, accordingly, cannot
prevent bookmakers from pursuing their business. It is therefore
clear that the Court of First Instance took the interests of
customers into account in forming its view on the indispensa-
bility of transmission of sounds and pictures of horse racing.
(40) Including the following companies: Abbott, Krewel Meuselbach,
Bionorica Arzneimittel, Lilly Deutschland, Engelhardt Arzneimit-
tel, Merck, Pohl-Boskamp, Novo Nordisk, Galderma Laborato-
rium, Schering Deutschland, Hormosan-Kwizda, Solvay Arznei-
mittel, Klinge.

(41) See Case T-144/99, paragraph 50: Even if that were the case, the
principle of the hierarchy of norms precludes this provision in a
measure of secondary legislation from permitting a derogation
from a Treaty provision.

(42) Concluded in 1886 for the protection of literary and artistic

works and as last revised at Paris in 1971.

(43) World Trade Organisation’s agreement on trade related apects of
intellectual property rights. Council Decision 94/800/EC of
22 December 1994.

(44) Article 9(2) of the Berne Convention contains very similar

(30) In particular Essex, Hexal, Lilly, Lundbeck, Schering and Solvay.

wording.