On 28 May 2019, the Belgian Competition Authority ruled that the Order of Pharmacists had used its influence to hinder the business activities of the innovative pharmacy and parapharmacy chain MediCare-Market.
MediCare-Market’s model is characterised by the clear split between the pharmacy, parapharmacy and beauty care activities, and the focus of the pharmacy activities essentially on the supply of medicines and care products sensu stricto. It has currently around 30 pharmacies and parapharmacies in Belgium and Luxemburg.
In June 2016, CMS Belgium lodged a complaint on behalf of MediCare-Market before the Belgian Competition Authority against the Order of Pharmacists for restrictive practices aiming at preventing our client to develop its activities on the Belgian market. Indeed, since the opening of its first pharmacy and parapharmacy in Gosselies in late 2015, its innovative distribution model had been the object of legal and disciplinary harassment by the Order.
At the end of its investigation, the Competition Prosecutor adopted on 31 October 2018 its draft decision that concluded to the existence of serious anti-competitive practices by the Belgian Order of Pharmacists. According to the Competition Prosecutor, the Order tried to exclude the MediCare-Market model from the market and tried to indirectly impose on MediCare-Market a minimum selling price for its medicines.
The Competition College held its hearing on the case on 14 March 2019.
By its decision of 28 May 2019, the Competition College of the Belgian Competition Authority concluded to the existence of restrictive practices that aimed at hindering Medi-Market's development on the market for pharmacists’ services, or even expelling it from this market and imposed a fine of 1 million EUR.
Indeed, the National Council of the Order of Pharmacists infringed Articles IV.1 of the Code of Economic Law and 101 of the Treaty on the functioning of the EU by adopting a strategy and implementing it in order to defend the economic interests of the majority of its members.
Specifically, the National Council decided in October 2015 to refer to all disciplinary councils then concerned by the opening of a pharmacy belonging to the complainant group a complaint with regard to the “Medicare-Market” Model. Furthermore, it applied for judicial injunction, essentially alleging the existence of confusion between the group's pharmacies and parapharmacies. The judicial action in which CMS Belgium represented MediCare-Market was held inadmissible in 2016.
In this case, the Competition College condemned the overall strategy set up by the National Council of the Order to block MediCare-Market’s development due to its innovative concept or at least try to hinder it. This strategy included the referral to disciplinary councils, the initiation of a judicial injunction, the public dissemination of threatening information regarding MediCare-Market and the government recruitment measures between October 2015 and January 2017.
In line with a well-established jurisprudence, the decisions of the National Council of the Order were considered as decisions of associations of companies restricting competition by object. Indeed, the Competition College noticed that the Order acted for an economic purpose and took decisions aimed at excluding an innovative distribution model. Furthermore, those practices are harmful to consumer welfare, the Competition College emphasizing price competition (on the selling price of medicines) and non-tariff competition (on innovation).
The amount of the fine reflects the seriousness of the infringement. It was based on the relevant turnover achieved by Belgian pharmacies throughout Belgium. The Competition College highlighted in its press release that it corresponded to the turnover of one pharmacy, Belgium counting 5.000 pharmacies…
This decision may be appealed before the Court of the Markets.
The decision in French is available at the following link.
Annabelle Lepièce, Partner, annabelle.lepiece@cms-db.com
Bruno Fonteyn, Senior Associate, bruno.fonteyn@cms-db.com
Hanne Baeyens, Associate, hanne.baeyens@cms-db.com
