Summary of Commission Decision of 10 December 2013 relating to a proceeding under Article 101 of the Treaty on the Functioning of the European Union (Case AT.39685 — Fentanyl) (notified under document C(2013) 8870)
Date: 2013-12-10
Institutions: European Commission
Subjects: Netherlands, fine, infringement of EU law, pharmaceutical industry, restriction on competition, subsidiary, unlawful agreement








C_2015142EN.01002101.xml










29.4.2015   


EN


Official Journal of the European Union


C 142/21





Summary of Commission Decision
of 10 December 2013
relating to a proceeding under Article 101 of the Treaty on the Functioning of the European Union
(Case AT.39685 — Fentanyl)
(notified under document C(2013) 8870)
(Only the English text is authentic)
(2015/C 142/10)
1.   INTRODUCTION









(1)


On 10 December 2013, the Commission adopted a decision relating to a proceeding under Article 101 of the Treaty on the Functioning of the European Union. In accordance with the provisions of Article 30 of Council Regulation (EC) No 1/2003 (1), the Commission herewith publishes the names of the parties and the main content of the decision, including any penalties imposed, having regard to the legitimate interest of undertakings in the protection of their business secrets.












(2)


The decision concerns a so-called ‘co-promotion’ agreement (hereafter ‘the agreement’) entered into by Dutch subsidiaries of pharmaceutical undertakings Johnson & Johnson and Novartis AG. The agreement provided for monthly payments from Johnson & Johnson for as long as the (at least) potential competitorNovartis abstained from entering the market in the Netherlands with its generic version of Johnson & Johnson’s product fentanyl, a strong painkiller.




2.   ADDRESSEES









(3)


The decision is addressed to Johnson & Johnson, its Dutch subsidiary Janssen-Cilag BV (hereafter ‘Janssen-Cilag’), Novartis AG (hereafter ‘Novartis’), and its Dutch subsidiary Sandoz BV (hereafter ‘Sandoz’).




3.   PROCEDURE









(4)


Proceedings were opened on 18 October 2011.












(5)


On 30 January 2013 the Statement of Objection was adopted and notified to the parties.












(6)


The parties submitted their replies to the Statement of Objections in April 2013 and no oral hearing was requested.












(7)


The Advisory Committee on Restrictive Practices and Dominant Positions issued favourable opinions on 2 and 6 December 2013.












(8)


The Commission adopted the decision on 10 December 2013.




4.   INFRINGEMENT OF ARTICLE 101 TFEU









(9)


Johnson & Johnson developed fentanyl and has commercialised it in different forms since the 1960s. In 2005, Johnson & Johnson’s product, a fentanyl depot patch, was not any longer protected in the Netherlands and Novartis’ Dutch subsidiary, Sandoz, was on the verge of launching its generic version of the fentanyl depot patch. It had, for example, already produced the necessary packaging material.












(10)


However, in July 2005, instead of actually starting to sell the generic version, Sandoz concluded a so-called ‘co-promotion a’greement with Janssen-Cilag, Johnson & Johnson’s Dutch subsidiary. The agreed monthly payments from Janssen-Cilag exceeded the profits that Sandoz expected to obtain from selling its generic product, for as long as there was no generic entry in the Netherlands. According to internal documents, Sandoz would abstain from entering the market in exchange for ‘a part of [the] cake’. Instead of competing, Johnson & Johnson and Novartis agreed on cooperation so as ‘not to have a depot generic on the market and in that way to keep the high current price’.












(11)


Consequently, Sandoz did not launch its product in the Netherlands for as long as the agreement was in force. The agreement was terminated in December 2006 when a third party was about to launch a generic fentanyl patch.












(12)


The Commission concluded the following. Based on the analysis of the economic and legal context, Sandoz was, at the time it concluded the agreement with Janssen-Cilag, a close and (at least) potential competitor of Janssen-Cilag. The agreement included a non-entry mechanism whereby Janssen-Cilag’s monthly payments would have ceased if Sandoz or any third party entered the market. Accordingly, Sandoz did stay out of the Dutch market with its own fentanyl depot patch for the entire duration of the agreement (from 11 July 2005 to 15 December 2006). As a consequence of the agreement, Janssen-Cilag’s close (at least) potential generic competitor was excluded from the market at a time when the threat of its market entry was imminent.












(13)


Moreover, for the period concerned, Janssen-Cilag paid in total approximately EUR 5 million to Sandoz in monthly instalments. The amount paid to Sandoz considerably exceeded what Sandoz itself expected, at the time it concluded the agreement, to earn if it had launched its own fentanyl depot patch in the Netherlands. Those monthly payments were provided for undefined co-promotion services. During the period covered by the initial co-promotion agreement (from 11 July 2005 to 11 July 2006), Sandoz carried out only limited promotion activities, and for the period covered by the addendum (from 11 July 2006 to 15 December 2006), there is no evidence that any promotion activities were carried out by Sandoz whatsoever.












(14)


The above objective elements of the analysis were confirmed by the intentions of the parties. Both parties designed the co-promotion agreement in a way that ensured that Sandoz’s generic product was kept out of the market and Janssen-Cilag could maximise its profits for sales of the originator product as long as the agreement was in force. Janssen-Cilag shared those supra-competitive profits with Sandoz.












(15)


The Commission therefore concluded that the agreement constituted a restriction of Article 101 TFEU by object.




5.   DURATION OF THE INFRINGEMENT









(16)


The infringement lasted at least from the date of entry into force of the initial co-promotion agreement on 11 July 2005 until the termination of the co-promotion agreement (including the addendum) on 15 December 2006.




6.   FINES









(17)


The following fines were imposed for the infringement in this case:






—


Johnson & Johnson and Janssen-Cilag BV, jointly and severally: EUR 10 798 000;










—


Novartis AG and Sandoz BV, jointly and severally: EUR 5 493 000.










(1)  OJ L 1, 4.1.2003, p. 1.