Evaluating Disparaging Practices against Competitors in the Pharmaceutical Sector: A Competition Law Perspective

The competition investigation initiated by the European Commission (the “Commission”) against Vifor Pharma on June 20, 2022, has attracted attention due to the fact that this is the first investigation in which the act of disparaging competitors will be considered as a violation of competition law alone. Competition investigations launched against pharmaceutical companies by the Commission and the competition authorities of the member states in recent years relating to the abuse of dominant position through disparagement have shown that disparagement activities, which were previously evaluated under unfair competition law, can also be dealt with in the competition law dimension.

In this article, we aim to shed light on how the concept of disparagement is evaluated by the Turkish Competition Board, the Commission and different competition authorities in Europe.

Activities of Disparagement of Competitors Within the Scope of Unfair Competition Law

Many court decisions in Türkiye show that the Commercial Courts of First Instance consider themselves to be the competent court for the examination of requests related to disparagement and evaluate these acts within the framework of unfair competition provisions.

According to the Article 55/1-a.1 of the Turkish Commercial Code (“TCC”) No. 6102, disparaging others or their goods, business products, prices, activities or commercial transactions with false, misleading or unnecessarily hurtful statements is among the acts considered unfair competition.

The main purpose of unfair competition provisions is to protect the competitive environment, not the personal rights of the person who is subjected to disparagement. Within this framework, in order for disparagement to constitute unfair competition, it must be associated with a person's commercial activities and the competitive environment.[1] In addition, the act of disparagement must contain a false, misleading or unnecessarily hurtful explanation. In this context, the Court of Appeal, in a decision[2], stated that making applications to the administrative authorities about a competing product that the administration determined that it does not meet the conditions specified in the technical specification of the tender will not constitute disparagement.

As can be understood from the wording of the article, even if the statement made about others or the property of others reflects the truth, if the statement is misleading or unnecessarily hurtful, this act will constitute unfair competition. At this point, the criterion for a statement to be considered misleading or hurtful is not how the statement is perceived by a specific person or persons, but how the statement is perceived by the average addressee.[3] In this context, for example, within the scope of the promotional activities of a pharmaceutical company aimed at healthcare professionals, if a competitor makes factual criticisms about the effectiveness or safety of the product, when assessing whether these actions constitute unfair competition, it will be necessary to assess whether the statements in question exceed their purpose and create an unnecessarily offensive/negative impression on the addressee healthcare professionals of average skill.

Activities of Disparagement of Competitors within the Scope of Competition Law

The disparagement action is examined by the competition authorities within the scope of abuse of dominant position in accordance with Article 102 of the Treaty on the Functioning of the European Union (“TFEU”) and Article 6 of the Law No. 4054 on the Protection of Competition.

In this framework, while dominant undertakings are expected to compete with their own marketing strategies for their own products and services in order to create a fair market, it is considered anti-competitive to act to exclude competitors from the market by disparaging them. It should be noted that the act of disparagement is interpreted as an infringement of competition by object, especially in European competition law. In other words, it is sufficient to determine that the act committed is disparaging, and it is not required that this infringement has an effect on the market.[4]

Below, the decisions of the Commission, Member State competition authorities, the European Court of Justice ("ECJ") and the Turkish Competition Board regarding disparagement will be evaluated in the context of the pharmaceutical industry.

The Approach of the Commission and the National European Competition Authorities to Disparagement

As is well known, the Commission considers that exclusion of existing or potential competitors constitutes an infringement of competition law and that undertakings in a dominant position have a special responsibility for their activities in the market compared to other players. It is envisaged that disparaging statements made by dominant market actors will also constitute a violation of competition to the extent that they distort competition and exclude competitors from the market. The Commission currently has competition investigations into two different pharmaceutical companies regarding disparaging activities.

The first investigation examined by the Commission was initiated on 20.06.2022[5], alleging that there were indications that Vifor may have disparaged Monofer, which had been on the market for many years as a generic of its original pharmaceutical Ferinject, by spreading misleading information about its safety. In the press release published by the Commission on 19.04.2024[6], the Commission issued its preliminary opinion, stating that Vifor's acts may restrict competition in the intravenous iron treatment market and amount to an abuse of dominant position in breach of Article 102 of TFEU, and that Vifor has made the following commitments to address these competition concerns:

“To launch a comprehensive and multi-channel communication campaign to rectify and undo the effects of the potentially misleading messages previously disseminated by Vifor regarding the safety of Monofer.  In particular, Vifor commits to: (i) disseminate via email, mail and in-person meetings a succinct and factual clarificatory communication to a significant number of healthcare professionals in the nine Member States where the Commission preliminarily found it is dominant; (ii) to publish such communication prominently on its website; (iii) to publish such communication in leading medical journals in each of the Member States concerned; and (iv) to allow third parties, including Pharmacosmos, to use such communication when contacting healthcare professionals.

For a period of 10 years and across the entire European Economic Area, not to engage in external promotional and medical communications, in writing or orally, about Monofer's safety profile using information that is neither based on Monofer's Summary of Product Characteristics nor derived from randomised, controlled clinical head-to-head trials.

To implement a number of measures and safeguards to ensure compliance, including internal mechanisms to ensure that all relevant external promotional and medical communications as well as internal training materials are in line with the commitments prior to their use, as well as annual internal trainings of staff and a system of certification of compliance.”

The commitments listed above shall be monitored by a monitoring trustee appointed by Vifor who will report to the Commission for a period of 10 years. The Commission invited all interested parties to submit comments on Vifor's proposed commitments. On July 22, 2024, after the Commission agreed that the commitments were a satisfactory way to address competition concerns, the commitments became binding for Vifor, and a fine of up to 10% of the company's worldwide turnover may be imposed in case of failure to meet the commitments. The Commission's investigation against Vifor is of great importance as it is the first investigation in which the allegation of disparagement alone is considered as a competition violation, and the Commission's findings and the commitments given by Vifor may set an example for both the Competition Board in Türkiye and other countries.

In the Teva – Copaxone case, the second investigation examined by the Commission[7], allegations are being evaluated that Teva has delayed the entry of generics into the market through secondary patents in order to protect the exclusivity of its Copaxone product in the relevant market, and has engaged in a systematic disparagement campaign targeting healthcare professionals and casting doubt on the safety, efficacy, and therapeutic equivalence of competing generic products to Copaxone. In the press release published on its official website[8], the Commission emphasized that the investigation is the first official investigation into potential abuses in the pharmaceutical industry related to the misuse of patent procedures and the exclusionary disparagement of competing products, and that the investigation will set a precedent for the sector. In a press release dated 31 October 2024, the Commission imposed a fine of €462.6 million on Teva for abusing the patent system to delay the launch of a rival multiple sclerosis pharmaceutical for its Copaxone product and for systematically discrediting key stakeholders, including physicians and national decision-makers on the pricing and reimbursement of pharmaceuticals, by disseminating misleading information about the safety, efficacy and therapeutic equivalence of the competing pharmaceutical to Copaxone.[9]

There are also decisions by local competition authorities in Europe regarding competitor disparagement. In 2014, the Italian Competition Authority found that Roche and Novartis had involved in concerted practices to discourage off-label use of Avastin® and had a common interest in higher sales volumes of the more expensive Lucentis®, which restricted competition contrary to Article 101 TFEU. On appeal, the Italian Court referred the case to the CJEU; and in its decision, the CJEU stated that if two undertakings marketing two competing products disseminate misleading information to the European Medicines Agency (“EMA”), healthcare professionals and the public about adverse reactions resulting from the use of one of the medicinal products in the treatment of diseases not covered by the marketing authorization of the other product – in the context of scientific uncertainty – with the aim of reducing competitive pressure on the use of the other product, this situation may constitute a restriction of competition “by object”. The decision also addressed the suspicion regarding Novartis, which was not the marketing authorization holder, was involved in pharmacovigilance activities that were essentially Roche's responsibility.[10] Five years later, on 23.01.2023, the Belgian Competition Authority, in its press release regarding its decision on a similar case[11], stated that Novartis, the manufacturer of Lucentis, continued to warn ophthalmologists, hospitals and regulators about the risks of the off-label use of Avastin, even after the publication of studies that no longer permitted this, without referring to or qualifying the scientific uncertainty created by these studies, and therefore considered these communications to be misleading in light of the ECJ case law. The first instance, upholding or overturning decisions in different countries regarding the concerned medicinal products show that the debate is still ongoing.

The French Competition Authority's investigation against Johnson&Johnson found that the company had conducted a campaign disparaging generic versions of fentanyl through letters sent to healthcare professionals by the French Health Authority, and Johnson&Johnson was fined EUR 25 million as a result of the investigation. Although the decision of the French Competition Authority was appealed before the French Supreme Court on the grounds that the competition authority lacked jurisdiction to supervise the actions of the French Health Authority, Johnson&Johnson's appeal was rejected[12]. In another decision[13], the French authority found Schering-Plough had violated competition law rules by disparaging generics of its pharmaceutical used in the treatment of opioid addiction and by providing unfair commercial discounts to pharmacists.

The Approach of the Competition Board in Türkiye against Disparaging Activities

When we look at the past decisions of the Competition Board, we see that the Board has generally determined that disparagement activities do not fall within the scope of competition law and that complaints in this respect should be evaluated within the scope of the unfair competition provisions of the TCC[14].

However, recently, in its EAE Elektrik Asansör Endüstrisi İnşaat Sanayi ve Ticaret A.Ş. decision last year, the Competition Board, instead of stating that disparagement will be considered within the scope of unfair competition directly, made some guiding findings on what kind of an effect the disparagement should have on the market in order to be considered as a violation of competition law.

Within the scope of the investigation initiated by the Competition Board against EAE Elektrik Asansör Endüstrisi İnşaat Sanayi ve Ticaret A.Ş. ("EAE")[15], it was alleged that EAE made misleading and disparaging statements to customers about the products of the competitor who filed the complaint before the Competition Board, and that EAE led customers to purchase EAE's products instead of the complainant's products. The Competition Board, stated that in order to be able to evaluate the allegations of disparagement in terms of competition law, it is important to determine whether the relevant actions distort competition in the market and cause consumer harm, however, the written or verbal “disparagement” statements made to the customer within the scope of the concrete case do not have any effect on consumer welfare and are not of a nature that could disrupt the structure of the busbar systems market, and therefore the allegations in question can be evaluated within the scope of unfair competition.[16]

The Competition Board also determined in its decision that the abuse of dominant position results in consequences that may harm consumer welfare at the level of resellers or final consumers, such as price increases, decreases in product quality and innovation levels, and decreases in the variety of goods and services, and actual or potential market foreclosure effects; however, the disparaging statements in the present case are not of a nature that may create an exclusionary effect in the relevant markets in their current form.[17]

In addition, in the Lucentis decision, where the Competition Board examined the actions of Novartis Sağlık Gıda ve Tarım Ürünleri San. ve Tic. A.Ş. and Roche Müstahzarları San. A.Ş. in order to popularize the use of  more expensive Lucentis, among the pharmaceuticals used in eye diseases Altuzan and Lucentis,[18] the Competition Board has important findings regarding the promotion of pharmaceuticals through the dissemination of misleading information although the focus of the violation analysis was the elimination of price competition through the forming a cartel in accordance with Article 4 of the Law on the Protection of Competition No. 4054.

In this context, the Competition Board made the following findings, clearly stating that giving misleading information to physicians and disparaging a pharmaceutical would violate competition law: "Unnecessarily encouraging the use of Lucentis by providing doctors with misleading information about Altuzan that is not compatible with academic studies and world practices is also not in accordance with the relevant legislation."[19] and "it is assessed that the fact that they discouraged the use of Altuzan by directing administrative or judicial processes with misleading information by highlighting the risk of endophthalmitis and side effects of Altuzan in a way that would shift the demand to Lucentis for treatments applied inside the eye, the fact that the aforementioned attempts tried to create a perception of difference that does not reflect the truth regarding the difference between Altuzan and Lucentis, and that they made negative advertisements about Altuzan to doctors within this scope violated Article 4 of Law No. 4054.”[20]

As a result of the investigation, the Competition Board decided to impose an administrative fine of 165,464,716.48 TRY on Novartis Sağlık Gıda ve Tarım Ürünleri San. ve Tic. A.Ş. and 112,972,552.65 TRY on ve Roche Müstahzarları San. A.Ş., which were found to have violated Article 4 of the Law No. 4054 on the Protection of Competition. The decision made by the Competition Board was brought to court by the undertakings at the Ankara 13th Administrative Court, and the court decided to annul the decision of the Competition Board. The annulment decision made by the Ankara 13th Administrative Court is currently under appeal before the Council of State.[21]

Evaluation

Although the Competition Board's previous decisions were in the direction of considering disparagement activities within the scope of unfair competition, the EAE and Lucentis decisions should be considered as an indication that the Competition Board has recently adopted the view that disparagement acts can be considered within the framework of competition law in certain cases. Given the recent investigations and decisions of the Commission and foreign competition authorities in Europe, where disparagement alone is considered as an infringement of competition through abuse of dominant position, it is assessed that the Competition Board, which closely follows the European Union in terms of legislation and jurisprudence, may increase its decisions in which disparagement is considered in terms of competition law, in parallel with the European Union. 

[1] Nomer Ertan, Füsun, Unfair Competition Law, On İki Levha Yayıncılık, 2016, p. 131

[2] The decision of the Court of Cassation 11. Civil Chamber, E. 2015/2674 K. 2015/7615 T. 3.6.2015

[3] The decision of the General Assembly of Civil Chambers of Court of Cassation, E. 2017/2475, K. 2021/246 dated 11.3.2021

[4] See. European Court of Justice, the Hoffman v. La Roche/ Novartis decision (C-179/16)

[5] European Commission, AT.40577

[6] See. Press release of the European Commission dated 19.04.2024 and titled “Commission seeks feedback on commitments offered by Vifor over possible anticompetitive disparagement of iron medicine”

[7] European Commission, AT.40588

[8] See Press release of the European Commission dated 04.03.2021 and titled “Antitrust: Commission opens formal investigation into possible anticompetitive conduct of Teva in relation to a blockbuster multiple sclerosis medicine”

[9] See Press release of the European Commission dated 31.10.2024 and titled “Commission fines Teva €462.6 million over misuse of the patent system and disparagement to delay rival multiple sclerosis medicine”

[10] European Court of Justice, File C-179/16 Hoffman-La Roche, 23.01.2018

[11]https://www.belgiancompetition.be/sites/default/files/content/download/files/20230124_Press_release_3_BCA.pdf

[12] Decision of the French Supreme Court numbered T-19-20.999 and dated 01.06.2022

[13] Decision of the French Competition Authority numbered 13-D-21 and dated 18.12.2013

[14] Competition Board's preliminary investigation decision dated 13.12.1994 and numbered 20-46/618-270, decision dated 27.12.2007 and numbered 07-92/1175-459, decision dated 22.12.2005 and numbered 05-87/1199-348, and preliminary investigation decision dated 13.10.2016 and numbered 16-33/586-257.

[15] The decision of the Competition Board dated 12.01.2023 numbered 23-03 / 39-16

[16] The decision of the Competition Board dated 12.01.2023 and numbered 23-03/39-16, para 63

[17] The decision of the Competition Board dated 12.01.2023 and numbered 23-03/39-16, para 63

[18] The decision of the Competition Board dated 21.01.2021 and numbered 21-04/52-21

[19] The decision of the Competition Board dated 21.01.2021 and numbered 21-04/52-21, para 164

[20] The decision of the Competition Board dated 21.01.2021 and numbered 21-04/52-21, para 175

[21] Ankara 13th Administrative Court's decision numbered 2022/2274 E. and 2022/2912 K. and dated 30.12.2022

First published by Gün + Partners in Dec 17, 2024.