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The Treaty Provisions on Competition and Health Care

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Health Care and EU Law

Part of the book series: Legal Issues of Services of General Interest ((LEGAL))

Abstract

A couple of years ago the Dutch Ministry of Health Care organised an international workshop on competition law in health care. At the end of this workshop, one of the speakers, a specialist in health care issues, compared competition law with a ‘fat cat’. The health care sector has had a difficult time in welcoming competition law because the ‘fat cat’ seemed to be mainly interested in competition issues and not in the special features of health care. But after a certain elapse of time the sector has developed some skills to cope with the presence of this cat and has even managed to like it from time to time, as this ‘fat cat’ is capable of enhancing efficiency.

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Notes

  1. 1.

    On 1 December 2009 the Treaty of Lisbon entered into force. As a result, the EC Treaty is renamed the Treaty on the Functioning of the European Union (hereafter: TFEU) and the provisions on competition are renumbered. The cartel prohibition is contained in Article 101 TFEU (former Article 81 EC) and the prohibition on the abuse of dominance is laid down in Article 102 TFEU (former Article 82 EC). As virtually all important case law (so far) is based on the old Treaty provisions, this chapter will refer to both the new and old numbers of these provisions.

  2. 2.

    So far, no significant case law on mergers between hospitals or other health care operators is available. The cases handled by the Commission mainly concern mergers between pharmaceutical companies. In these cases the Commission’s investigations concentrate on the consequences of the mergers for competition between original and generic medicines and for the Research and Development. See, e.g., Decision of the Commission of 27 May 2005 in Case No. COMP/M.3751—Novartis/Hexal, available at: http://ec.europa.eu/competition/mergers/cases/decisions/m3751_20050527_20212_en_OnlinePDF.pdf and the Decision of the Commission of 28 February 1995 in Case No. IV/M.555—Glaxo/Wellcome, available at: http://ec.europa.eu/competition/mergers/cases/decisions/m555_en_OnlinePDF.pdf. Further, a couple of hospital mergers and mergers of companies that offer hospital related products or services were notified to the Commission. Given the low markets shares and the limited overlap of the activities of the parties concerned, the Commission cleared these mergers. See, e.g., Case COMP/M.4788—Rozier/BHS, available at: http://ec.europa.eu/competition/mergers/cases/decisions/m4788_20070821_20310_en_OnlinePDF.pdf; Case COMP/M.4418—Nycomed Group/Altana Pharma, available at: http://ec.europa.eu/competition/mergers/cases/decisions/m4418_20061213_20310_en_OnlinePDF.pdf, http://ec.europa.eu/competition/mergers/cases/decisions/m4418_20061213_20310_en_OnlinePDF.pdf; and the Press Release of the Commission of 9 December 2005 on the merger between Helios and Fresenius, IP/05/1553.

  3. 3.

    Hervey and McHale (2004), p. 14.

  4. 4.

    ECJ, Case C-158/96 Kohll [1998] ECR I-1931.

  5. 5.

    ECJ, Case C-120/95 Decker [1998] ECR I-1831.

  6. 6.

    ECJ, Case C-157/99 Smits en Peerbooms [2001] ECR I-5473.

  7. 7.

    ECJ, Case C-385/99 Müller-Fauré [2003] ECR I-4509.

  8. 8.

    ECJ, Case C-372/04 Watts [2006] ECR I-4325.

  9. 9.

    At issue in these cases was the application of the free movement rules to health care. See the chapter by Baquero Cruz in this book.

  10. 10.

    OJ 2003 C 303/1.

  11. 11.

    See Article 6(1) of the TEU, as amended by the Treaty of Lisbon 2009, OJ 2007 C 306/1.

  12. 12.

    See para 74 of Smits–Peerbooms.

  13. 13.

    See para 73 of Smits–Peerbooms. See also para 67 of Müller-Fauré and para 104 of Watts.

  14. 14.

    CFI, Case T-289/03 British United Provident Association [2008] ECR II-81.

  15. 15.

    The BUPA case is discussed in the chapters by Neergaard and De Vries in this book.

  16. 16.

    At the time of writing of this chapter no case law on the new Treaty provisions on health care was available.

  17. 17.

    See ECJ, Case C-108/96 Mac Quen [2001] ECR I-837, especially para 30.

  18. 18.

    See para 79 of Müller-Fauré.

  19. 19.

    COM(2008) 414 final.

  20. 20.

    This draft is discussed in the contributions of Szyszczak and Hervey to the present volume.

  21. 21.

    See Article 5 of this draft.

  22. 22.

    See for example the next Internet site: http://www.se2009.eu/en/meetings_news/2009/12/22/we_have_succeeded_in_putting_focus_on_patients.

  23. 23.

    See for example, ECJ, Case C-41/90 Höfner [1991] ECR I-1979.

  24. 24.

    See for instance ECJ, Case 118/85 Commission v. Italy [1987] ECR 2599.

  25. 25.

    See for instance Hervey and McHale (2004), p. 21.

  26. 26.

    See for a discussion of this system: Hamilton (2005), p. 8 et seq.

  27. 27.

    See van de Gronden (2008), p. 743 et seq.

  28. 28.

    ECJ, Joined Cases C-159/91 and C-160/91 Poucet et Pistre [1993] ECR I-637.

  29. 29.

    ECJ, Case C-218/00 Cisal [2002] ECR I-691.

  30. 30.

    ECJ, Case C-350/07 Kattner Stahlbau v. Maschinenbau-und Metall-Berufsgenossenschaft, 5 March 2009, ECR I-0000 (n.y.r.).

  31. 31.

    See para 43 of Kattner Stahlbau. State supervision must ensure that bodies managing the schemes concerned observe the principle of solidarity.

  32. 32.

    ECJ, Case C-244/94 FFSA [1995] ECR I-4015.

  33. 33.

    See ECJ, Case C-67/96 Albany [1999] ECR I-5751; ECJ, Joined Cases C-115/97, C-116/97 and C-117/97 Brentjens [1999] ECR I-6025 and ECJ, Case C-219/97 Drijvende bokken [1999] ECR I-6121.

  34. 34.

    ECJ, Joined Cases C-264/01, C-306/01, C-351/01 and C-355/01 AOK [2004] ECR I-2493. See the chapter by Welti in this book.

  35. 35.

    See para 52 of the AOK judgement.

  36. 36.

    Ibid., para 51.

  37. 37.

    Ibid., para 53.

  38. 38.

    ECJ, Joined Cases C-159/91 and C-160/91 Poucet and Pistre [1993] ECR I-637.

  39. 39.

    ECJ, Case C-244/94 FFSA [1995] ECR I-4015.

  40. 40.

    See CFI, Case T-319/99 FENIN [2003] ECR I-357 and ECJ, Case C-205/03P FENIN [2006] ECR I-6295.

  41. 41.

    See para 39 of the CFI judgement in FENIN.

  42. 42.

    See para 56 of AOK.

  43. 43.

    It has been put forward that the ECJ’s view on price competition in AOK does not match legal doctrine as enhancing efficiency is at the heart of the objectives of competition law, which implies that the possibility of price competition would amount to an economic activity. See Belhay and van de Gronden (2004), pp. 684 and 685.

  44. 44.

    See for example, ECJ, Joined Cases C-180 & C-184/98 Pavlov [2000] ECR I-6451 and ECJ, Case C-475/99 Glöckner [2002] ECR I-8089.

  45. 45.

    See, e.g., Vedder (2004), p. 5 et seq.

  46. 46.

    Regulation 1217/2010 of 14 December on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements, OJ 2010 L 335/36.

  47. 47.

    Regulation 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements, OJ 2010 L 335/43.

  48. 48.

    See the Commission Guidelines on the applicability ofArticle 101 TFEU to horizontal cooperation agreements, OJ 2001 C 11/1.

  49. 49.

    Commission Regulation No 267/2010 of 24 March 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of agreements, decisions and concerted practices in the insurance sector, OJ 2010 L 83/1.

  50. 50.

    See paras 28–31 of the Commission’s Guidelines on the application of Article 81(3) of the Treaty, OJ 2004 C 101/97 and CFI, Case T-112/99 Métropole Télévision [2001] ECR II-2459, especially para 124.

  51. 51.

    See para 31 of the Guidelines Article 81(3) EC (now Article 101(3) TFEU).

  52. 52.

    See Regulation 330/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, OJ 2010 L 102/1 (The former block exemption was laid down in Regulation 2790/1999 on vertical agreements, OJ 1999 L 336/21).

  53. 53.

    See the Commission Guidelines on Vertical Restraints, OJ 2010 C 130/1.

  54. 54.

    ECJ, Case C-309/99 Wouters [2002] ECR I-1577.

  55. 55.

    See Faull and Nikpay (2007), p. 234.

  56. 56.

    See para 97 of Wouters.

  57. 57.

    Ibid.

  58. 58.

    See paras 98–110 of the Wouters case.

  59. 59.

    See para 109 of the Wouters case.

  60. 60.

    Appeldoorn and Vedder (2010), p. 59.

  61. 61.

    See Townley (2009), p. 130.

  62. 62.

    See, e.g., Hovenkamp (2005), p. 116 et seq.

  63. 63.

    CFI, Case T-112/99 Métropole Télévision [2001] ECR II-2459.

  64. 64.

    Cf., also Faull and Nikpay (2007), p. 186.

  65. 65.

    ECJ, Case C-519/04P Meca-Medina [2006] ECR I-6991.

  66. 66.

    See para 45 of the Meca-Medina case.

  67. 67.

    Ibid.

  68. 68.

    See paras 47–55 of the Meca-Medina case.

  69. 69.

    On this issue, see also Faull and Nikpay (2007), p. 238 and 239.

  70. 70.

    See the Decision of the Commission on the EPI Code [1999] OJ L 106/14 and the Commission Press Release on the case of the UEFA multi-ownership rule, IP/02/942 (27/06/2002). See also Faull and Nikpay (2007), p. 237 and 238.

  71. 71.

    See paras 50–55 of Meca-Medina.

  72. 72.

    See also Houdijk (2009), p. 543 et seq.

  73. 73.

    Odudu argues that policy-linking clauses may not play a role in a competition law analysis, as these clauses are incapable of direct effect. See Odudu (2006), p. 166 and 167. However, he ignores the fact that in European law general principles that do not have direct effect give guidance as to how to interpret provisions of EU law that do have such effect. Townley rightly points to the role that the precautionary principle plays in interpreting EU law. See Townley (2009), pp. 96–98. Furthermore, the ECJ based the ‘useful effect rule’ (which precludes Member States from deriving the useful effect of the Treaty provisions on competition) on a general principle: Community loyalty contained in Article 10 EC, now Article 4(3) TEU. It is settled case law that this rule has direct effect, as it must even be applied by the national competition authorities. See ECJ, Case C-198/01 Consorzio Industrie Fiammiferi (CIF) [2003] ECR I-8055.

  74. 74.

    See also Townley (2009), p. 54, 94 and 95.

  75. 75.

    On pharmaceuticals and competition law see, e.g., Dawes (2006), p. 269 et seq.; Pautke (2005), p. 24 et seq. and Rey and Venit (2004), p. 153 et seq.

  76. 76.

    See the Decision of the Commission of 8 May 2001 in Cases: IV/36.957/F3 Glaxo Wellcome (notification); IV/36.997/F3 Aseprofar and Fedifar (complaint); IV/37.121/F3 Spain Pharma (complaint); IV/37.138/F3 BAI (complaint); IV/37.380/F3 EAEPC (complaint), OJ 2001 L 302/1.

  77. 77.

    CFI, Case T-168/01GlaxoSmithKline [2006] ECR II-2969.

  78. 78.

    See para 171 of the CFI judgement in GlaxoSmithKline.

  79. 79.

    This is the outcome of the famous ECJ judgement in ECJ, Joined Cases 56 and 58–64 Grundig/Consten [1966] ECR 299. The point of departure of this judgement is that agreements aiming at restricting parallel trade are hard core restrictions in European competition law.

  80. 80.

    See paras 124–147 of the CFI judgement in GlaxoSmithKline.

  81. 81.

    Ibid., para 131.

  82. 82.

    Ibid., paras 118, 135 and 147.

  83. 83.

    Ibid., paras 148–192.

  84. 84.

    See the Case Comment of Eccles (2007), p. 137.

  85. 85.

    In academic legal writing the CFI judgement in GlaxoSmithKline was not well received. See for example, Whish (2009), p. 121 and 122 and Jones and Sufrin (2008), p. 232 and 233.

  86. 86.

    In his Opinion the Advocate General firmly argued that the CFI erred in law by deciding that the agreements concluded by GlaxoSmithKline did not have the object of restricting competition. In his view the notion of restriction of competition by object focuses on the impact of competition and not on overall assessment of the harmfulness to consumers. See paras 102–118 of the Opinion of Advocate General in Joined Cases C-501/06 P, C-513/06 P, C-515/06 P and C-519/06 P GlaxoSmithKline, 30 June 2009, ECR I-0000 (n.y.r.).

  87. 87.

    See para 55 of the ECJ ruling in GlaxoSmithKline.

  88. 88.

    Ibid., para 62.

  89. 89.

    ECJ, Case C-8/08 T-Mobile Netherlands BV, KPN Mobile NV, Orange Nederland NV, Vodafone Libertel NV v. Raad van bestuur van de Nederlandse Mededingingsautoriteit, 4 June 2009, ECR I-0000 (n.y.r.).

  90. 90.

    See para 63 of the ECJ Ruling in GlaxoSmithKline.

  91. 91.

    See para 38 of the judgement in T-Mobile.

  92. 92.

    See para 91 of Pavlov.

  93. 93.

    Ibid., paras 94, 95 and 97.

  94. 94.

    Ibid., para 96.

  95. 95.

    See the Communication of 8 July 2009 from the Commission. Final Report of the Pharmaceutical Sector Inquiry Report at: http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/index.html.

  96. 96.

    See Press Release of 12 January 2010 (Commission launches monitoring of patent settlements concluded between pharmaceutical companies), IP/10/12.

  97. 97.

    See the Press Release of 7 January 2010 (Commission opens formal proceedings against pharmaceutical company Lundbeck), IP/10/8.

  98. 98.

    See para 42 of the Commission’s Guidelines on the application of Article 81(3) of the Treaty, OJ 2004 C 101/97. This passage reads as follows: ‘Goals pursued by other Treaty provisions can be taken into account to the extent that they can be subsumed under the four conditions of Article 81(3)’.

  99. 99.

    See paras 179–198 of the Commission Guidelines on the applicability of Article 81 of the EC Treaty to horizontal cooperation agreements, OJ 2001 C 3/2.

  100. 100.

    See the Commission Decision 2000/475 in Case IV.F.1/36.718, CECED OJ 2000 L 187/47.

  101. 101.

    See also Monti (2002), p. 1090 et seq.

  102. 102.

    Townley argues that non-competition goals should be balanced under Article 101(3) TFEU, as the application of the cartel prohibition contained in Article 101(1) TFEU should solely be based on a consumer welfare test. See Townley (2009), p. 251 et seq. To my mind, however, it makes more sense to incorporate health care objectives in the analysis carried out under the cartel prohibition, as long as the ECJ has not changed its Wouters and Meca-Medina case law and the Commission has not sorted out the problems caused by its confusing points of view on the place of non-competition goals in Article 101(3) TFEU. After all, what matters is that a reliable solution that will not expose the realisation of health care objectives to great risks of uncertainty is developed. Furthermore, in the already mentioned case GlaxoSmithKline and Pavlov the ECJ explicitly rejected the view that the application of the cartel prohibition should only be based on a consumer welfare test.

  103. 103.

    ECJ, Joined Cases C-468/06 to C-478/06 Sot.Lelos kai Sia EE, 16 September 2008, ECR I-0000 (n.y.r).

  104. 104.

    ECJ, Case C-475/99 Ambulanz Glöckner [2002] ECR I-8089.

  105. 105.

    ECJ, Case C-53/03 Syfait [2005] ECR I-4609.

  106. 106.

    See the Conclusion of Advocate General Jacobs in Syfait, ibid., most notably paras 89–104.

  107. 107.

    See paras 106–115 of the Conclusion of Advocate General Ruiz-Jarabo Colomer in Sot.Lelos kai Sia EE.

  108. 108.

    Ibid., para 119.

  109. 109.

    Ibid., para 49.

  110. 110.

    Ibid., para 51.

  111. 111.

    Ibid., paras 66 and 67.

  112. 112.

    Ibid., paras 71, 72 and 76.

  113. 113.

    However, Turner-Kerr has rightly pointed out that this is not the end of the debate, since it is not clear from the outset how to determine that orders are out of the ordinary. See Turner-Kerr (2009). p. 59.

  114. 114.

    See para 75 of Sot.Lelos kai Sia EE.

  115. 115.

    See the case comment of Turner-Kerr (2009).

  116. 116.

    Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings (Communication from the Commission), OJ 2008 C 45/7.

  117. 117.

    See para 29 of the Guidance.

  118. 118.

    However, in legal doctrine it is pointed out that in Sot.Lelos the ECJ has made clear that as long as the purpose of a dominant firm is to abuse its position by restricting parallel trade, it must be assumed that Article 102 TFEU is infringed. See Lovdahl Gormsen (2010), p. 48.

  119. 119.

    The ECJ has developed a flexible approach and in the words of Neergaard has accepted that privileged undertakings may offset profitable sectors against less profitable sectors. See Neergaard (2009), pp. 212–217. As a result, it may be argued that the application of Article 106(2) TFEU is mainly deployed to solve problems of cherry picking. See van de Gronden (2006), p. 125.

  120. 120.

    See para 58 of Ambulanz Glöckner.

  121. 121.

    Ibid., para 60.

  122. 122.

    See Sauter (2008), p. 187. In this regard it must be noted that in Neergaard’s view the proportionality test and the assessment based on the criterion of the economically acceptable circumstances are different tests. However, she points out that in the present stage of the developments related to Article 106(2) TFEU the ‘separate proportionality test’ is not clearly defined. See Neergaard (2009), pp. 217–219.

  123. 123.

    See Buendia Sierra (2007), p. 638.

  124. 124.

    Regulation 1/2003 of the Council 16 December 2002 regarding the execution of the competition rules of Articles 81 and 82 of the Treaty, OJ 2003 L 1/1.

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  1. Faculty of Law, Radbouw University, Nijmegen, The Netherlands

    Johan W. van de Gronden

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  1. , Faculty of Law, Radboud University, Comeniuslaan 4, Nijmegen, 6525 HP, The Netherlands

    Johan Willem van de Gronden

  2. , School of Law, University of Leicester, University Road, Leicester, LE1 7RH, United Kingdom

    Erika Szyszczak

  3. , Faculty of Law, University of Copenhagen, Studiestræde 6, Copenhagen K, 1455, Denmark

    Ulla Neergaard

  4. , Fachbereich Rechtswissenschaft, Universität Erlangen-Nürnberg, Schillerstraße 1, Erlangen, 91054, Germany

    Markus Krajewski

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van de Gronden, J.W. (2011). The Treaty Provisions on Competition and Health Care. In: van de Gronden, J., Szyszczak, E., Neergaard, U., Krajewski, M. (eds) Health Care and EU Law. Legal Issues of Services of General Interest. T.M.C. Asser Press, The Hague. https://doi.org/10.1007/978-90-6704-728-9_11

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