On 21 February 2019, the Antimonopoly Committee of Ukraine (the "AMC") adopted the Recommendation clarifications on the application of the laws on the protection of economic competition by participants of pharma markets in vertical agreements as to supply and promotion of medicines (the "Recommendation Clarifications").
The Recommendation Clarifications summarize approaches and practices that AMC applies to legal relations between producers/importers and distributors of medicines as to the sale of medicines. In particular, the Recommendation Clarifications focus on practices related to promoting sales by granting discounts and bonuses. Below you will find a general overview of the Recommendation Clarifications and respective approaches applied by the AMC.
Determination of interchangeability of medicines and boundaries of the product market
The AMC applies the following approaches:
Use of discounts and anticompetitive effect
The AMC notes that discounts may have an anticompetitive effect. In particular, the introduction of non-transparent pricing mechanisms through providing discounts, bonuses, credit notes, which purpose or effect is to restrict, eliminate, and prevent competition. Under certain circumstances, the AMC may treat payments under marketing services agreements and non-refundable financial aid as granting discounts.
Assessment of the anticompetitive effectof granting discounts
The anticompetitive effect of granting discounts depends on several factors, in particular:
The risks of an anticompetitive effect also depend on the percentage of discount, time period and threshold being triggers for receiving a discount.
In addition, distributor’s obligations on submitting reports to producers/importers may bear additional antimonopoly risks (if the scope and frequency of information provided are not in conformity with the principle of reasonableness).
General recommendations on granting discounts
In order to prevent violations of the laws on the protection of economic competition, the AMC considers it appropriate:
We also consider reasonable to pay a particular attention to the percentage of discounts, time period and thresholds being triggers for granting discounts as well as to issues related to submitting reports by distributors to producers/importers.