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Competition Council accepts commitments from Denmark’s largest purchasing association for pharmacists

26. juni 2013

On 26 June 2013 the Danish Competition Council accepted commitments from A-apoteket – a purchasing association for pharmacists – on the basis of concerns that a decision taken by the association in 2011 to expel a member of the association could restrict competition on the pharmaceutical markets.

The commitments means that the association is now obliged to offer to the expelled member, Uldum Apotek, a cooperation agreement, which ensures that Uldum Apotek is entitled to all the financial benefits that come with a regular membership, e.g. access to (I) significant discounts on non-pharmaceutical products (lotions, shampoo etc.), (II) marketing initiatives and (III) staff courses.

The case concerns Uldum Apotek, a pharmacist selling both pharmaceuticals and non-pharmaceuticals (lotions, shampoo etc.) to consumers. Uldum Apotek is a former member of A-apoteket, Denmark’s largest purchasing association for pharmacists. A-apoteket’s purchasing activities are limited to non-pharmaceuticals.

The regulation of the pharmacy sector results in a very limited degree of competition on the pharmaceutical markets. Among other things, a given pharmacy is only allowed to establish itself within a specific geographic area designated by the health authorities. All other pharmacies are prevented from establishing themselves within that area, and thus competition between pharmacies is severely hampered.

Against that background, and specifically with a view to induce competition in the sector, the health authorities decided to allow pharmacies to freely establish so-called “medicine delivery points” all over the country in 2011. A medicine delivery point is typically established in cooperation with a different company, e.g. a supermarket, as a “shop-in-shop” concept.

Uldum Apotek took immediate advantage of this regulatory change and started a nationwide partnership with Matas, a major chemist chain.

However, A-apoteket decided to expel Uldum Apotek because of the partnership with Matas – even though A-apoteket is only involved in negotiating discount deals on non-pharmaceuticals and the partnership with Matas was limited to pharmaceuticals, i.e. the partnership concerned a different product market.

The Danish Competition Authority expressed concerns that a decision to prohibit a member to establish medicine delivery points in Matas’ shops, and to expel the member for refusing to comply with the prohibition, could significantly restrict competition on the pharmaceutical markets. Especially taken into account that (I) the establishment of medicine delivery points are the only real way for pharmacists to compete, (II) Matas is one of the most obvious partners for such an enterprise and (III) the partnership with Matas did not appear to negatively influence A-apoteket’s work, and thus the decision made by A-apoteket could not be considered ancillary to the operation of A-apoteket.

For more information please contact Head of Division, Søren Bo Rasmussen, phone +45 41 71 52 76, e-mail sbr@kfst.dk.