Competition Authority Consults on Pharmacy Sector

10 October 2008

The Competition Authority has today invited the public’s views on collective action by pharmacies on fees in the retail pharmacy sector. The Authority has been very active in this area in recent years and now wants to explore ways in which pharmacies could engage collectively in discussions with the State without falling foul of competition law. It has therefore invited submissions from interested parties on the subject of collective action by pharmacies, specifically with respect to the setting of terms and conditions, including fees, for the supply of services under various drugs schemes administered by the HSE.

Following the public consultation, which ends on 28th November 2008, the Authority will have a number of options:

• It can issue formal guidance to market participants;

• It can issue a more formal declaration under the Competition Act 2002;

• It can formally advise the Government and the HSE on the competition-related aspects of the community pharmacy sector.

The Competition Authority also today issued an enforcement decision giving its view that, for the purposes of Irish and EC competition law, the HSE is not an ‘undertaking’ when it engages in various activities relating to the administration of various drugs schemes, and that it therefore cannot infringe competition law in that context. The Authority had received several complaints alleging that the HSE was violating competition laws. For example, it was alleged that the HSE was abusing a dominant position as the sole purchaser of pharmacy services from retail pharmacies operating under various drugs schemes, such as the General Medical Scheme (GMS) and the Drugs Payment Scheme (DPS).

In its 25-page enforcement decision, the Competition Authority explains the reasons for its view that

(a) the HSE is not an undertaking with respect to its activities in issue under the Competition Act 2002 because it is not engaged in these activities for gain, and

(b) the HSE is not an undertaking with respect to its activities in issue under EC competition laws because it is engaging in these activities in the public interest both as part of the essential functions of the State and also on the basis of the principle of social solidarity.

Both the consultation document and the enforcement decision (ED/01/2008) are available from the Competition Authority website at www.tca.ie.

NOTES TO THE EDITOR

Section 4(1) of the Competition Act 2002 (“the Act”) prohibits and makes void agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or any part of the State.

Pursuant to section 4(3) of the Act, the Competition Authority may declare in writing that in its opinion a specified category of agreements, decisions or concerted practices complies with each of four conditions set out in section 4(5) of the Act. Where an agreement, decision or concerted practice satisfies the four criteria in section 4(5), it is not prohibited by section 4(1).

Article 81 EC, on which section 4 of the Act is based, has similar provisions to those in section 4.

Pursuant to section 30(1)(d) of the Act, the Competition Authority may publish notices containing practical guidance as to how the provisions of the Act may be complied with. Such guidance sets out the views of the Competition Authority with respect to the issue under consideration.

- ENDS -

Contact Information

Clodagh Coffey, Press Officer, The Competition Authority
Tel: 01 8045406 Mobile: 087 915 5406 email:cc@tca.ie

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