Leniency in the Civil Aviation Authority’s Price Fixing Case: Will a Ringleader Ever Be Refused Immunity?

(by Andreas Stephan) On 20 December 2016, the UK’s Civil Aviation Authority (CCA) found that East Midlands International Airport Ltd (EMIA) and Prestige Parking had breached competition law, by agreeing that Prestige would not sell its car parking services at below a minimum price that was linked to the price of EMIA’s own parking services. No fine was imposed in the case because Prestige Parking is no longer trading and EMIA received immunity in return for revealing the arrangement to the Competition and Markets Authority (CMA), under its leniency programme. We do not yet have the full decision, but the Press Release states, in relation to the minimum pricing that, “EMIA imposed this requirement as a condition of allowing Prestige to access facilities at the airport…”. This appears to suggest EMIA was awarded immunity despite instigating the arrangement.

Pfizer and Flynn: How are ‘excessive’ prices for generic drugs possible and should competition authorities do more about exploitative pricing?

(by Farasat Bokhari & Bruce Lyons) Last week the UK Competition and Markets Authority (CMA) imposed a fine of approximately £90 million on Pfizer and a generic manufacturer Flynn Pharma, on the grounds that each abused a dominant position by charging excessive and unfair prices for phenytoin sodium capsules, an anti-epilepsy drug (brand name Epanutin). The price of a pack of 84 capsules of 100MG increased from £2.83 to £67.50 in October 2012.   This came about as part of a deal where Pfizer sold the distribution rights in the UK to Flynn Pharma, who in turn ‘de-branded’ the drug, and sold the generic at an inflated price.   The drug in question is not protected by any patents, so other generics are available and further generic entry is possible, yet the branded original drug was replaced by a higher priced generic.  The CMA’s case is a rare example of an abuse of dominance finding (under Art. 102 and/or Ch.2 of CA98) in relation to exploitative pricing. While we await the full published decision, it is worth looking at industry price and quantity data to contextualise the CMA’s case. We also try to understand how this price hike was possible and ask whether the CMA should pursue more exploitative pricing cases.

BT Separation: The end of a beautiful relationship?

(by Richard Cadman) Earlier this year Ofcom, the UK’s regulator for electronic communications markets, proposed that BT’s Openreach division should become a legally separate company within the BT Group, but this has been resisted by the company. In response, Ofcom have referred their proposal to the European Commission to force through the changes. Its proposal follows from its Strategic Review of Digital Communications (DCR) launched in March 2015. In that review it concluded that, although the current “functional separation” model worked well in deterring operational discrimination by BT against retail competitors that relied on its network, BT was still able to make strategic discrimination choices by designing the network to suit its own purposes. Ofcom was also concerned about the lack of fibre based broadband to residential customers. This blog argues that OfCom’s approach is unlikely to achieve anything more than BT’s own proposals.