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PN 03/02 15 January 2002
The Competition Commission Appeal Tribunals have upheld an OFT ruling that Napp Pharmaceuticals had abused its dominant position. The Tribunals, however, reduced the penalty imposed from £3.21 million to £2.2 million.
The case was the first finding by the OFT of a breach of the Competition Act 1998 and the first financial penalty set by the OFT under competition law.
The OFT ruled in March 2001 that Cambridge-based Napp had supplied a drug used by cancer patients, sustained release morphine (trade name MST), to patients in the community at excessively high prices while supplying hospitals at discount levels that blocked competitors.
Community prices were typically more than ten times higher than Napp's hospital prices and up to six times the export price of MST. During this period at least one competitor withdrew from the market.
Napp's conduct was judged to have infringed Chapter ll of the Competition Act 1998, which prohibits abuse of a dominant position in a market if it may affect trade within the UK.
In addition to the penalty, the Tribunals have reinstated a direction made in May 2001 by the OFT requiring Napp to bring the infringements to an end, in particular by:
These measures will ensure more competition and lower prices overall.
John Vickers, Director General of Fair Trading said:
'Today's landmark ruling upholding the OFT's decision shows how competition law benefits the public - the ruling saves the NHS around £2 million a year. The OFT will continue to use its powers firmly but fairly to remove anti-competitive behaviour from the UK economy.'
1. Powers under the Competition Act 1998
The Act gives the Director General powers to investigate suspected infringements of the Act's prohibitions:
(i) the Chapter I prohibition prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which have the object or effect of preventing, restricting or distorting competition in the UK (or a part of it) and which may affect trade within the UK (or any part of it); and
(ii) the Chapter II prohibition prohibits conduct by one or more undertakings which amounts to the abuse of a dominant position in a market which may affect trade within the UK (or any part of it).
2. In addition to reducing its NHS list price, Napp will also backdate compensation to the NHS to 29 May 2001.
3. investigation was started as the result of a complaint by Peter Bradley, MP.
4. Director General has the power to impose financial penalties and give directions under the Act.
5. MST is a trade name for the sustained release version of the drug originally developed and patented by Napp for cancer patients.
6. Decisions of the Appeal Tribunals in England and Wales may be appealed to the Court of Appeal on a point of law or as to the amount of a penalty.
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