German Federal Cartel Office encourages German drug makers to challenge purchasing cooperation of health insurance companies before courts

26 March 2007

Dr Andreas Jüttner

On 22 November 2006, the German Federal Cartel Office (FCO) wrote a letter to all German associations of pharmaceutical companies informing them that the FCO will not commence proceedings against the cooperation regarding procurement planned by 16 health insurance companies (Allgemeine Ortskrankenkassen, “AOK”), however, the FCO encouraged the associations to challenge the procurement cooperation before the courts.

The AOK drew up a list of 89 active ingredients and asked all pharmaceutical companies for sales discounts. The AOK plans to select three preferred companies per active ingredient. Collectively they will procure pharmaceutical products amounting to €3 billion per year.

From the FCO’s point of view, there is little doubt that the cooperation regarding procurement constitutes a restriction of competition within the meaning of Section 1 of the German Act Against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen), in particular in view of the demand side concentration of 40%. However, pursuant to Section 69 of the German Social Security Code V (Sozialgesetzbuch V), health insurance companies fall outside the scope of German antitrust law and, hence, the FCO is not able to sanction the purchasing cooperation pursuant to German law.

The FCO believes that the cooperation constitutes a restriction of competition pursuant to Article 81 EC Treaty. However, with reference to the ECJ's judgments in Fenin (C-205/03 P) and Festbeträge (C-264/01), the FCO has raised the question whether the members of the AOK can be qualified as “undertakings” within the meaning of European antitrust law. The FCO takes the view that this is an entirely legal question and that there is no need for further investigation into the facts of the case. Therefore, the FCO decided – at least for the time being – to refrain from proceeding and to encourage the associations of pharmaceutical companies to challenge the cooperation regarding procurement before the courts.