The European Commission has issued a Statement of Objections (SO) to Alchem International Pvt. Ltd. and its subsidiary Alchem International (H.K.) Limited (together 'Alchem'), alleging that they participated in a cartel concerning an active pharmaceutical ingredient (API) used to produce a widely prescribed drug. This is the first cartel case in the EU involving the pharmaceutical sector.
The SO is a formal step in the Commission's investigation into suspected violations of EU antitrust rules, and does not prejudge the outcome of the case. Alchem has the opportunity to respond to the Commission's allegations and to request an oral hearing.
Background of the case
The Commission's investigation concerns the API N-Butylbromide Scopolamine/Hyoscine (SNBB), which is an important input material to produce the abdominal antispasmodic drugs, Buscopan and its generic versions.
In October 2023, the Commission adopted a settlement decision in relation to the same cartel and concerning six other companies: Alkaloids of Australia, Alkaloids Corporation, Boehringer, Linnea, Transo-Pharm and C2 PHARMA. The Commission fined the first five companies a total of €13.4 million for their involvement in the cartel, while C2 PHARMA was not fined as it revealed the cartel to the Commission under the leniency programme. All six companies admitted their involvement in the cartel and agreed to settle the case.
Alchem was not covered by the October 2023 settlement decision, and therefore the investigation concerning this company continued.
The Commission has concerns that Alchem may have co-ordinated and agreed with the other cartel participants to fix the minimum sales price of SNBB to customers (ie, distributors and generic drug manufacturers) and to allocate quotas and exchanged commercially sensitive information with competitors.
If the Commission's preliminary view were confirmed, such behaviour would violate EU rules that prohibit anti-competitive business practices such as collusion on prices and market sharing.
The Commission can impose a fine of up to 10% of a company's annual worldwide turnover for breaching EU antitrust rules.
Key takeaways for clients
- The Commission's SO to Alchem is a reminder that the pharmaceutical sector is not immune from antitrust scrutiny, and that the Commission is willing to pursue cartel cases in this sector, even if they involve complex and technical products.
- The Commission's investigation also illustrates the benefits of co-operating with the Commission under the leniency or settlement programmes, which can result in immunity from or reduction of fines, as well as a faster and more efficient resolution of the case.
- The Commission's investigation may also trigger follow-on actions by national competition authorities or private claimants, who can rely on the Commission's findings of infringement to seek damages or injunctions in national courts.
- Clients who are active in the pharmaceutical sector, or who purchase or use pharmaceutical products, should be aware of the potential antitrust risks and ensure that they have effective compliance programmes and policies in place to prevent, detect and report any possible cartel conduct.
