(News from RISI) – The Spanish National Market and Competition Commission, Comisión Nacional de los Mercados y la Competencia (CNMC), has imposed fines of Euro 128.8 million ($142.6 million) on seven manufacturers of absorbent adult incontinence products and the Spanish Federation of Healthcare Technology Companies, Federación Española de Empresas de Tecnología Sanitaria (FENIN), for the single and continuous infringement of competition laws.
The competition watchdog considers it proven that Arbora & Ausonia (succeeded by Procter & Gamble Spain), Laboratorios Indas, SCA Hygiene Products, Laboratorios Hartmann, Ontex, Barna Import Médica, Textil Planas Oliveras and Algodones del Bages, with the collaboration of FENIN, reached agreements and fixed selling prices to wholesale distributors of adult incontinence products sold through pharmacies from at least December 1996 until January 2014, with the duration of the anti-competitive behavior varying from company to company.
The CNMC said: “With the corresponding prescriptions, diapers for non-hospitalized adults with severe incontinence issues can be obtained directly from pharmacies or through health or social care networks such as health care centres or nursing homes. In both cases the products are financed by social security.”
It added that for inpatients, the relevant authorities acquire the products through public tenders, which lowers prices considerably.
The fined cartel practices affected the distribution of heavy inco diapers funded by the National Health Service through the pharmacy channel. These are dispensed on prescription and payment is only assumed in part by the end user, as the remainder is reimbursed by public administrations.
According to the CNMC, the participating diaper manufacturers reached agreements to fix selling prices to wholesale distributors to pharmacies through a working group created by FENIN.
Moreover, the sanctioned entities reportedly fixed prices and closed agreements through negotiation and consultation with other agents of the distribution chain, such as pharmaceutical councils and associations of wholesale distributors of pharmaceuticals and medical devices, from at least December 1996 until June 2010.
Also, the cartel members used a strategy for bringing up administrative litigation against public tenders launched by the health authorities of different autonomous communities to acquire and deliver incontinence products directly to outpatients, trying to maintain the margins generated by marketing the products through the pharmacy channel, according to the CNMC.
“The scope of punishable conduct in this case is especially significant since the combined market share of the participating entities in the relevant market is 95%. Heavy urinary incontinence is […] a severe problem that affects some 2.5 million people and has important implications for the health and quality of life of elderly and disabled citizens,” the CNMC said in a statement.
The authority imposed the following fines on the cartel members: Euro 68.5 million for Arbora & Ausonia and its successor Procter & Gamble España, Euro 35.1 million for SCA Hygiene Products, Euro 13.2 million for Laboratorios Indas, Euro 5.1 million for Ontex Peninsular, Euro 4 million for Laboratorios Hartmann, Euro 1.4 million for Barna Import Medica, Euro 801,738 for Textil Planas Oliveras, Euro 251,456 for Algodones del Bages and Euro 200,000 for FENIN.
Moreover, and for the first time since its foundation, the CNMC fined legal representatives or people within the governing bodies of the entities involved in anti-competitive behavior. According to the authority, two representatives of Arbora & Ausonia and Indas will have to pay Euro 15,000 and Euro 4,000, respectively. Also, two directors of FENIN were fined Euro 6,000 and Euro 4,000.
However, Arbora & Ausonia, Procter & Gamble and the management of Arbora & Ausonia are exempt from the payment of the fines as they blew the whistle in June 2013.
Cartel members to appeal: Following the CNMC decision, several members of the alleged inco cartel announced plans to appeal the judgement.
“SCA does not agree with the CNMC’s decision and will submit an appeal to the Spanish courts,” the Swedish group said in a statement. Ontex also announced that it will explore all appeal possibilities.
“Ontex is committed to carry out its business activities in full compliance with all applicable laws and conducts a company-wide compliance program to that effect,” the Belgian group said.
FENIN issued a statement saying that it has not participated in any cartel nor has the ability to determine the dispensing and distribution routes of absorbent incontinence products.
“The Ministry of Health, social services as well as the departments of health of the autonomous communities promoted and signed agreements with all agents of the pharmaceutical chain that now are considered to have broken competition laws. FENIN will appeal the decision of the CNMC before the National Court as it believes it has acted in accordance with the law,” the association said, adding that it will continue to work with the authorities and hopes that the case is resolved satisfactorily.
The remaining alleged cartel members could not be reached for comment.