HomeInsightsUK Competition and Markets Authority provisionally finds that sellers of the antibiotic Nitrofurantoin broke competition law by arranging to carve up the market between them

On 25 July 2019, the UK Competition and Markets Authority (CMA) announced that it had issued a Statement of Objections (SO) alleging that, from 2014 until at least October 2017, two suppliers, AMCo (now Advanz) and Morningside, and a wholesaler, Alliance Healthcare, entered into arrangements under which Alliance Healthcare would buy equal volumes of the antibiotic Nitrofurantoin from each of the two suppliers so that they would not compete. During 2015 and 2016, the two suppliers also committed to supply the drug exclusively to Alliance Healthcare.

While Nitrofurantoin is available as tablets and a liquid, the CMA’s investigation focuses on the capsule forms (50mg and 100mg), which are a prescription-only medicine. AMCo was the sole UK supplier of both products, until Morningside entered the market in mid-2014.

The CMA has also provisionally found that, in May 2014, AMCo disclosed sensitive pricing information to Morningside with the aim of reducing competition between them.

Provisional View

The SO sets out the CMA’s provisional view that the arrangements between AmCo, Morningside and Alliance Healthcare prevented or restricted competition. According to the SO when Morningside started supplying Nitrofurantoin, this was not followed by the price falls that would normally be expected when a new competitor enters the market.

The Press Release confirms that the CMA has “provisionally found that suppliers of this important antibiotic entered into arrangements with the aim of keeping Nitrofurantoin prices artificially high, meaning the NHS wouldn’t benefit from the lower prices that come from effective competition“.

An SO is not determinative of the matter and no conclusion should be drawn at this stage that there has in fact been any breach of competition law. The parties now have the opportunity to make written and oral representations on the matters set out in the SO. Any such representations will be considered by the CMA before any final decision is made.

Potential Consequences

If the CMAs provisional views are ultimately confirmed, the infringements would likely lead to significant fines and could also give rise to claims for damages.

Other Open Investigations

The Press Release notes that the CMA currently has investigations open in relation to seven different drugs.

Recently, on 18 June 2019, the CMA issued an SO to four pharmaceutical companies in respect of alleged infringements of applicable competition law rule in relation to the supply of an anti-depressant drug. The SO alleges that King and Auden Mckenzie shared out between them the supply of nortriptyline to a large pharmaceutical wholesaler. The CMA has also accused the companies King, Alissa and Lexon of exchanging commercially sensitive information, including information about prices, volumes and entry plans, to try to keep Nortriptyline prices high.

To access the CMA Press Release, click here.