Lies, damn lies and denigration: misleading statements as a competition law infringement

This article is part of our Biotech Review of the Year - Issue 12 publication.

Introduction

Denigration – false or misleading statements about a competitor or their products – is having a moment with competition law enforcers in Europe. Starting in 2013, with a series of decisions by the national competition authority (NCA) in France,¹ national authorities in Italy (2014),² Denmark (2019),³ Belgium (2023),⁴ the UK (2024) and Greece (2024) have jumped on the denigration bandwagon.⁵ In 2024, the European Commission (EC) also got in on the act, taking a commitments decision against Vifor in July,⁶ and imposing fines of €463m on Teva (for denigration and other behaviour that the EC considers to be unlawful) in October (EC Press Release, IP/24/5581).

This, then, is an expanding and developing area of competition law – and healthcare markets are the main focus of interest. However, the idea that misrepresenting a healthcare product’s qualities (your own or a competitor’s) creates legal risk is already a well-established principle in a regulatory context.⁷ So what does competition law risk add? 

One answer is the gravity of the potential consequences. Competition law infringements can attract fines of up to 10% of worldwide group annual turnover. As the €463m fine imposed by the EC on Teva shows, the amounts involved can be very large indeed. Added to that, is liability in damages to any third parties that suffer loss as a result. In so-called ‘follow-on’ claims, based on a pre-existing infringement finding by a competition authority, third parties need only show loss and causation in order to recover: liability is established by the infringement decision. Even a commitments decision that does not involve penalties or a formal finding of infringement may impose significant burdens on the company giving the commitments in terms of its future freedom of action, in addition to the costs of dealing with a long-running competition authority investigation.⁸

Why is denigration a competition law issue?

An obvious question is why should misleading statements about competitor products be a competition law concern. The answer given by Advocate General (AG) Saugmandsgaard, and endorsed by the CJEU, is that:

“communication of misleading allegations…is, by its very nature, harmful to the proper functioning of normal competition.”⁹

As AG Saugmandsgaard goes on to explain, the wide dissemination of misleading information impairs the quality of information available on a market and, as a consequence, can harm the decision-making process of those who create demand.¹⁰ Where the relevant information concerns a competitor product, the result can be to reduce demand for that product and the competitive pressure on your own products.¹¹

Healthcare markets are considered particularly vulnerable in this regard, due to the cautious and conservative approach of healthcare professionals and the fact that prescribing practices are driven primarily by therapeutic efficacy and safety.¹² Note, however, that the disparagement can constitute a competition law infringement in markets other than those for prescription medications. The decision of the Danish NCA in Falck concerned the market for the provision of ambulance services in Denmark (in which Falck was dominant) and the communications included allegations concerning an alternative provider’s quality as an employer (of ambulance drivers). 

When does a competition law risk arise?

Misleading information about a competitor or competing product can become a competition law concern in two situations. 

The first situation is where the undertaking making the misleading statements is dominant in the relevant market. This may be the case where, for example, the statements are made by the producer of a blockbuster treatment whose patents are expiring and the target is a potential generic or biosimilar entrant. This was the fact pattern in Janssen-Cilag.¹³ The French NCA found that Johnson & Johnson’s Janssen-Cilag held a dominant position in relation to its opioid pain killer, Durogesic. A generic alternative to Durogesic had been launched by generic company Ratiopharm and had already obtained a MA. Jannsen-Cilag was found to have made statements casting doubt on the bioequivalence of Ratiopharm’s product namely via:

• repeated submissions to the French regulatory authorities opposing the grant of a French MA, which were characterised as frivolous and without merit; and
• mass communications to hospitals, doctors and pharmacists in France. 

As a result, the FCA imposed a fine of €25m on Jannsen-Cilag for abuse of dominance.

Dominance issues may also arise well before patent expiry and the threat of generic entry. The EC’s decision in Vifor concerned competition between two alternative originator products: Vifor’s flagship intravenous iron medicine, Ferinject, and the closest (and potentially only) competitor product, Monofer.¹⁴ It was held that Vifor planned and executed a 12-year campaign that methodically targeted key healthcare professionals with misleading claims regarding Monofer’s safety or efficacy. 

The second situation is where the misleading statements are made pursuant to an agreement between competitors as identified by the Italian Competition Authority (ICA) in Roche Novartis.¹⁵ That case arose out of the Avastin/Lucentis saga (as did a number of the other disparagement cases around Europe).¹⁶ Roche and Novartis were both licensees of the US company Genentech, but each in relation to a different product (Avastin for Roche and Lucentis for Novartis). The two products were intended as treatments for very different conditions – cancer and eye disease respectively – but were based on similar chemistries. In Italy, some doctors started prescribing Avastin to patients with eye disease, initially because Lucentis has not yet been granted a MA, but later because Avastin was cheaper. The parties agreed to collaborate on the use of Avastin to treat eye disease. In doing so they were held to have created barriers to the use of Avastin in treating eye disease through a communications strategy aimed at pharmaceutical regulatory authorities, medical practitioners and the general public that stressed alleged safety concerns with the use of Avastin to treat eye disease. The ICA found those communications to be misleading and imposed fines of upwards of €90m on each company. That finding was upheld in principle by the CJEU on a preliminary reference from the Italian courts.¹⁷

As suggested by the two examples above, the majority of cases to date have – whether based on abuse of dominance or an anticompetitive agreement between competitors – involved misleading statements made in the context of: 

• submissions to public authorities intended to result in action being taken against the competitor product; and/or 
• widespread communications to key decision-makers (for product selection), be that hospitals, doctors, pharmacists or patients/the general public.
• In these scenarios, no proof of an adverse impact on competition is required for an infringement to arise.¹⁸ In principle, however, there is no requirement for either condition to apply. In Vifor, the EC identified three requirements for the dissemination of information to be potentially infringing:¹⁹
• the information is objectively misleading (inaccurate or incomplete and capable of confusing the addressee);
• the communications are capable of producing exclusionary effects; and
• the communications are not objectively justified. 

Plus factors

That being the case, a number of ‘plus factors’ have been highlighted by NCAs in the case law that are likely to increase the risk of an infringement finding. These include:

• the fact that the relevant communications were widespread and/or repeated;²⁰
• the existence of a written plan (of which the denigration forms part) to foreclose competition and/or that the communications were centrally organised;²¹ 
• communication timings being linked to potential entry by the competitor product;²² 
• the fact that the information is known by the undertaking communicating it to be false, misleading or incomplete; and/or²³
• in the case of submissions to a public authority, the lack of a legal basis for the submission and/or a legitimate interest in making it.²⁴

Misleading information

Information does not have to be false to be misleading for the purposes of competition law (although this is unlikely to be a surprise to readers familiar with similar rules in other areas). AG Saugmandsgaard in F. Hoffmann-La Roche was particularly clear on this point:

“the communication of misleading allegations includes the dissemination of information which is in itself correct but is presented selectively or incompletely.”²⁵

Selective, incomplete or biased presentation of otherwise accurate information has been found to be misleading in a number of cases, and the threshold is not particularly high. Examples include:

• accurately quoting the outcome of studies that were, however, not sufficiently robust scientific evidence to support the claim being made;²⁶
• referencing a regulatory warning about the risk of switching patients to the competitor product, without also noting that the regulator had stated those risks could be managed by monitoring patients appropriately;²⁷
• noting that a regulator had, for the first time, issued an ‘exceptional’ warning in relation to a competitor product, without also noting that the power to issue such warnings had only just been introduced;²⁸
• emphasising that a generic entrant was not indicated for one of the four conditions for which the original product was indicated (this difference in fact being due to the existence of patent protection on the fourth indication); and
• continuing to warn medical professionals, hospitals and a regulator about the risks of off-label use of a treatment, without appropriate caveats, after the publication of studies that increased the scientific uncertainty in relation to potential risks. 

There are also a number of other situations in which potentially true information has been found to be misleading. They include, first, the presentation of that information in alarmist or exaggerated terms.²⁹ Examples include:

• making reference to the “suffering” of patients while focusing on potential risks to the elderly, frail and/or children;³⁰ and
• emphasising the potential exposure of healthcare professionals to criminal and/or professional sanctions if a competitor product is selected.³¹

A second situation is where irrelevant information is presented as relevant, such as highlighting in communications to:

• a national regulator that a generic product, which has been authorised at the EU level, was manufactured outside the national jurisdiction;³²
• a national regulator that a generic product contained a different component (salt) or excipient when this had no impact on bioequivalence; and
• doctors that the generic version of the product contained less active ingredient.³³

A third situation appears to be where the source of information is deliberately misrepresented. In Falck, the Danish NCA held the fact that some of the stories circulated about its competitor – via anonymously planted press stories and social media posts that appeared to be from a third party – were factually accurate did not prevent its communications strategy being misleading. The circulation of those stories ‘at arm’s length’ in this way was, itself, misleading and manipulative.³⁴

Directly questioning the bioequivalence of an authorised generic alternative, or making statements inconsistent with a product’s SmPC, is also considered misleading. 

At the same time, the assessment of whether or not a communication is misleading is context specific – it should be based on the available evidence – and potentially uncertain.³⁵ In annulling the €444m fine imposed by the FCA decision in Roche Novartis, the Paris Court of Appeal found that, in the context of great scientific uncertainty at the relevant time, the supposedly disparaging statements represented an accurate summary of state of knowledge and were neither alarmist nor misleading.³⁶ The relevant product differences had in fact been highlighted in a neutral tone and on the basis of objective elements. The different conclusions reached by the FCA and the Paris Court in relation to the same communications appear to reflect not so much a difference as to the applicable legal standards as a difference in the application of those standards. However, this may not represent the last word on the matter, since the Paris Court’s judgment is currently under appeal by the FCA before the French Supreme Court.

Is there scope for justifying misleading communications?

In Vifor, the EC suggests that it may be possible to avoid an infringement finding by establishing that a misleading statement is objectively justified.³⁷ As noted, merely establishing that the statements are true is not necessarily sufficient in this regard. However, in Roche Novartis, a further reason given by the Paris Court for overturning the FCA’s infringement finding in relation to certain communications was that they had been made in response to a specific request from the authority to which they were made for the information requested (a scientific report).³⁸ The Court also noted that the parties’ failure to specifically highlight methodological limitations with the report when submitting it to the authority could not be considered alarmist since the relevant authority’s role included the assessment of such scientific evidence.³⁹

Conclusions and a checklist for safer communications

It is clear that competition law infringements based on denigration of a competitor or its products are an increasing focus of enforcement by an increasing number of competition law enforcers in Europe. Healthcare markets are a particular focus. 

One plausible explanation for this wave of new enforcement is that the consequences of competition law infringement – in terms of fines and liability in damages – are draconian. It may well be that existing sanctions in other areas of law are seen as insufficient to discourage problematic behaviour in markets where the commercial rewards may be very high. If so, increased enforcement is likely to continue.

Risk and uncertainty are increased by the fact that the scope of infringing activity is neither settled nor clearly defined. In particular, there appears to be some tension between competition enforcement authorities and the courts – at least in France – as to the stringency of the standard to be applied in determining whether or not a communication is misleading.

How can risk be managed? Below is a brief guide, based on current case law, to minimising competition law risk due to careless external communications.

Footnotes

_{^{1 French Competition Authority (FCA), Decision No. 13-D-11 of 14 May 2013 (Sanofi Aventis) upheld on appeal in Paris Court of Appeal (Case No 13/12370) judgment of 18 December 2014; FCA, Decision No. 13-D-21 of 18 December 2013 (Schering-Plough); FCA, Decision No. 17-D-25, December 20, 2017 (Janssen-Cilag) upheld on appeal in Paris Court of Appeal (Case No 18/01945) judgment of 11 July 2019; FCA Decision 20-D-11 of 9 September 2020 (Novartis Roche Genentech)}}

_{^{2 Italian Competition Authority (ICA) Decision of 27 February 2014, No. 24823,  Case I760 (Roche-Novartis) upheld in principle on a preliminary reference to the Court of Justice of the European Union in F. Hoffmann-La Roche (Case C-179/16) EU:C:2018:25 (F. Hoffmann-La Roche, CJEU)}}

_{^{3 Danish Competition Authority (DCA) Decision of 30 January 2019 (Falck)}}

_{^{4 Belgian Competition Authority (BCA) Decision No. ABC-2023-P/K-02 of 23 January 2023 (Novartis Roche (Belgium))}}

_{^{5 See, eg, Turkish Competition Authority (TCA) Decision 21-04/52-21 of 20 January 2021 (Novartis Roche (Turkey))}}

_{^{6 Vifor (IV iron products) (Case AT.40577) EC Decision of 22 July 2024 (Vifor)}}

_{^{7 See, eg, Articles 86 to 100 of Directive (EC) 2001/83 on medicinal products for human use on advertising}}

_{^{8 In Vifor, supra., for example, Vifor committed to providing a comprehensive communication campaign to undo its previously misleading messages, and was prohibited from making certain communications about its products safety profile for 10 years}}

_{^{9 Opinion of Advocate General Saugmandsgaard in F. Hoffmann-La Roche (Case C-179/16) EU:C:2017:714 (F. Hoffmann-La Roche, AG’s Op), at para 156; see also F. Hoffmann-La Roche, CJEU, supra, at para 95}}

_{^{10 F. Hoffmann-La Roche, AG’s Op, supra, at para 157}}

_{^{11 F. Hoffmann-La Roche, CJEU, supra, at para 95, and Vifor, supra, paras 87 and 143}}

_{^{12 Sanofi-Aventis, supra, paras 375 and 376, and Vifor, supra, para 88. However, see also Falck, supra, which does not concern a traditional healthcare market or product selection by doctors or pharmacists}}

_{^{13 Supra, note 1}}

_{^{14 Vifor, supra, para 83}}

_{^{15 Supra, note 2}}

_{^{16 Other cases include Novartis Roche Genentech in France, Novartis Roche (Belgium), Novartis Roche (Turkey) and the ongoing investigation in Greece (Global Competition Review “Greece focuses on naked restrictions and denigration claims in Novartis chargesheet” 30 August 2024), supra notes 1 to 5}}

_{^{17 F. Hoffmann-La Roche, CJEU, supra}}

_{^{18 Vifor, supra, at para 86, and Novartis Roche Genentech, supra, at para 779 (in relation to abuse of dominance); and F. Hoffmann-La Roche, CJEU, supra, paras 94 and 95 (in relation to agreements between competitors)}}

_{^{19 Vifor, supra, para 83}}

_{^{20 Janssen-Cilag, supra, and Vifor, supra, at para 87}}

_{^{21 Novartis Roche Genentech, Schering-Plough and Janssen-Cilag, supra}}

_{^{22 Sanofi Aventis, and Janssen-Cilag, both supra}}

_{^{23 Vifor, supra, paras 130 and 132}}

_{^{24  Janssen-Cilag, and Novartis Roche Genentech, supra}} 

_{^{25 F. Hoffmann-La Roche, AG’s Op, para 158; see also F. Hoffmann-La Roche, CJEU, para 89}}

_{^{26 Vifor, supra, para 150 (something that Vifor was fully aware of, see para 163)}}

_{^{27 Janssen-Cilag, supra}}

_{^{28 Janssen-Cilag, supra}}

_{^{29 F. Hoffmann-La Roche,CJEU, para 89}} 

_{^{30 Janssen-Cilag, supra}}

_{^{31 Novartis Roche Genentech, supra}}

_{^{32 Janssen-Cilag, supra}}

_{^{33 Janssen-Cilag, supra}}

_{^{34 Falck, supra, at para 490}}

_{^{35 Vifor, supra, para 85}}

_{^{36 Paris Court of Appeals (Case No 20/14632) judgment of 16 February 2023}}

_{^{37 Vifor, supra, para 83}}

_{^{38 Paris Court of Appeals (Case No 20/14632) judgment of 16 February 2023}} 

_{^{39 There is also support for the extent to which the relevant public authority has the  power and/or expertise to review submissions being relevant in the CJEU  judgment in AstraZeneca (Case C-457/10) EU:C:2012:770,  at para 99.  Note, however, that in Janssen-Cilag, supra, the fact that the relevant authority was charged with examining bioequivalence in the context of national MA applications did not prevent submissions on bioequivalence in the context of mutual recognition proceeding being misleading}}