Decision on cartel of pharmaceutical distributors confirmed

14 Nov 2007

Chairman of the Office for the Protection of Competition Martin Pecina confirmed by his second-instance decision a fine amounting to 113.064 million CZK imposed on four largest pharmaceutical distributors in the Czech Republic.

Companies Alliance UniChem CZ (CZK 23.859 million), GEHE Pharma Praha (CZK 16.831 million), PHARMOS (CZK 18.638 million), and PHOENIX Lékárenský velkoobchod (CZK 53.736 million) violated the Competition Act when during the period from January 30, 2006 until February 14, 2006, they coordinated their joint intent to suspend, effective as of February 15, 2006, the supply of the full range of pharmaceuticals to three important teaching hospitals – Thomayerova, Na Bulovce (both in Prague), and Nemocnice u Sv. Anny (in Brno). They implemented their joint intent as of the said day in a coordinated fashion when they began to supply the hospitals concerned only with “vital” pharmaceuticals, with significantly shortened payment maturity periods. The suspension of the supply of pharmaceuticals to the three hospitals, and the shortened payment maturity periods as of February 15, 2006, was announced by the distributors at a joint press conference held on February 14, 2006.

They used these anticompetitive steps to accomplish a common goal, i.e., payment of debts by the hospitals concerned. While it is not a problem when distributors seek payment of their receivables, they must not coordinate their activities in the supply of pharmaceuticals, or harmonize their business terms, to that end. During the administrative proceeding, the Competition Office gathered nearly two dozen exhibits evidencing such conduct. This case constituted acting in concert, where undertakings replace the risk of mutual competition by deliberate practical cooperation.

External Relations Department of the Office