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Competition Alert – June 2018

Home Insights Competition Alert – June 2018

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Contributed by: Sarah Keene, Troy Pilkington and Hamish Saunders

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Published on: June 01, 2018

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ACCC unsuccessful in appeal against Pfizer on misuse of market power claim

Since Australia has moved to an effects test for misuse of market power, the Pfizer case recently handed down by the Federal Court may be the last Australian senior court decision providing guidance on the operation of the New Zealand test. 

The facts were that Pfizer had established a supply model whereby they created an accrual funds scheme and provided a rebate only to pharmacies that agreed to acquire the patented product, Lipitor and, after the expiry of that patent, the generic atorvastatin, from Pfizer.

The ACCC claimed that Pfizer's strategy had the purpose of preventing generic manufacturers from engaging in competitive conduct in the atorvastatin market in Australia.

While the Federal Court found that Pfizer had a substantial degree of market power in the atorvastatin market, it concluded that it did not have an anti-competitive purpose. This was because Pfizer was anticipating facing intense competition in the atorvastatin market from the major generic manufacturers and their aligned wholesalers even after the bundled offers. The internal documents demonstrated that the strategies it adopted were not expected to achieve much more than gaining a first-mover advantage for Pfizer, "to enable Pfizer to have a fair and reasonable opportunity to minimise the erosion of its market share…as a result of its monopoly position."  

The case demonstrates once again the power of internal documents to either exonerate or condemn parties subject to competition law enforcement action, given decisions often turn on a matter of a degree – whether the conduct was designed to allow a party to fairly compete or to prevent competition.    

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