Genzyme ordered to end abuse of dominant position

OFT welcomes remedy imposed by Tribunal

184/05 29 September 2005

A remedy set out by the Competition Appeal Tribunal to end a breach of the Competition Act by Genzyme Limited has been welcomed by the OFT.

The Tribunal had previously upheld the OFT's decision that the price charged by Genzyme to independent third party homecare service providers for Cerezyme, a treatment for the rare inherited disorder Gaucher disease, was set at a level that allowed them no possible margin (see OFT press release 31/03). (In addition to the drug itself, homecare service providers supply nursing services, dispensing, home delivery, waste disposal etc.)

The Tribunal has agreed a direction that Genzyme must terminate the margin squeeze infringement and must supply Cerezyme to any bona fide provider of homecare services at a discount from the prevailing NHS list price of not less than 20 pence per unit (which is 7.2 per cent of the current NHS list price). The OFT had argued that the figure should be at the higher end of the range between 5.3 per cent and 7.7 per cent.

Penny Boys, OFT Executive Director, said:

'Healthcare is one of the OFT's five priority sectors – fair competition is vital in this market; it benefits the NHS, patients and the taxpayer. Today's judgment will allow other companies to provide homecare to Gaucher patients.'

In the earlier judgment in March 2004, the CAT upheld the OFT's finding on the margin squeeze, although it reduced the fine imposed on Genzyme from £6.8 million to £3 million (see the CAT website for more information).

NOTE

The Competition Act 1998 came into force in March 2000. The Act contains two prohibitions:

(a) 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 within the UK (or any part of it) and which may affect trade within the UK (or any part of it)

(b) 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).

Businesses that infringe the Act may be liable to financial penalties of up to 10 per cent of their annual worldwide turnover.

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