NMa Suspects Pharmacies in Breda of Restricting Competition

The Netherlands Competition Authority (NMa) suspects fourteen pharmacies in Breda and surroundings of restricting competition. They did so by refusing, on the basis of non-objective criteria, to give a pharmacy in Breda access to the electronic network connecting pharmacies and general practitioners.

The fourteen pharmacies have entered into a joint-venture with the local general practitioners for the management and maintenance of an electronic file containing data relating to patients and medication. As a result, the pharmacies that participate in this joint venture have complete and up-to-date patient data at their disposal to ensure optimal monitoring of medication. In addition, this system plays a crucial role in the electronic exchange of prescriptions between general practitioners and pharmacies. Participation in the system is therefore an important economic advantage to pharmacies, which cannot be achieved independently by other means. For consumers the advantage is a shorter waiting period and adequate information on medication. The government therefore expects such electronic networks to play an important role in future in the healthcare sector.

Of the twenty pharmacies in the relevant market (the Breda region), fourteen are connected to the system. Together these pharmacies have considerable market power in this region. This means that access to the system may not be refused except on the basis of objective criteria, since otherwise competition may be restricted by excluding newcomers.

In Breda an application for access to the system is decided by a vote amongst all the participating pharmacies. The members may refuse access to a new pharmacy on the basis of non-objective criteria, such as fear of competition or distrust. In addition, the system is not transparent because no reasons are given for refusing access and there is no procedure for objecting to the decision. As a result, the system can be abused to restrict competition.

NMa has established that the Competition Act has been infringed as a result. The infringement took place at least in the period from 1 January 1998 onwards.

The pharmacies and the joint venture can now respond to the contents of the report. After this, NMa will take a final decision on whether an infringement has been committed and, if so, whether it will impose a sanction.

This report falls within the framework of the investigation into the healthcare sector which will be carried out by NMa in 2003, as announced earlier in NMa Agenda 2003. In this sector, a shift is taking place from supply-driven to demand-driven healthcare. The point of departure of government policy is that the operation of market forces can help bring about a better match between supply and demand. More competition in the healthcare sector may also result in efficiency improvements, which may rein in the sharp cost increases.

If demand-driven management is to be realised, it is essential that the entry of new competitors onto the market is not impeded and that competition between existing market players is not restricted. NMa takes action against such prohibited practices that limit competition. NMa investigates both the supply and the demand side of the market.