COVID-19: Commission publishes Comfort Letter sent to Medicines for Europe
On 29 April, the European Commission (“Commission”) published its Comfort Letter to Medicines for Europe, dated 8 April (“the MfE Comfort Letter”), facilitating and authorising cooperation between pharmaceutical companies, through Medicines for Europe, to respond to and prevent shortages in drugs essential to the treatment of COVID-19 in intensive care (such as deep sedatives, neuromuscular blockers, strong analgesics, vasopressors, antibiotics and adjuvants).
As a brief reminder, up to the adoption of Regulation 1/2003 on 16 December 2002, undertakings and groups of undertakings notified their cooperation agreements to the Commission who issued guidance letters and comfort letters to undertakings and groups of undertakings as to the conformity of these agreements with the exemption provided by then Article 85(3), renumbered to Article 81(3), now renumbered to Article 101(3) TFEU. Since the adoption of Regulation 1/2003, undertakings and groups of undertakings have been responsible for self-assessing their cooperation agreements (with their Counsels) guided, notably, by the Commission’s Guidelines on the application of Article 81(3) and horizontal cooperation agreements and vertical restraints – the burden is on the undertaking/undertakings to work within competition rules rather than on the Commission to assess, and potentially modify, every agreement and, by issuing a comfort letter, tie its hands as to future competition enforcement.
The COVID-19 pandemic, however, has lead the Commission to evolve its thinking somewhat in order to encourage undertakings to cooperate, within the exemption already provided by Article 101(3), and, for this reason, the Commission published its Communication setting out the “Temporary Framework for assessing antitrust issues related to business cooperation in response to situations of urgency stemming from the current COVID-19 outbreak”. The Communication derogates from the self-assessment regime, still in place, in that, for “essential products and services” the Commission will give guidance on the exemptability of a given cooperation agreement and, in its discretion, issue comfort letters authorising a particular form of cooperation. The MfE Comfort Letter is adopted under this Communication which remains in force until such time as the Commission withdraws it.
The MfE Comfort Letter applies the four rules for an exemption under Article 101(3) TFEU (applied for self-assessment): a cooperation must
- Contribute to improving the production or distribution of goods – the goal of this cooperation;
- Allow consumers – patients – a fair share of the resulting benefits – necessary treatments and over the whole EU territory;
- Not impose “restrictions which are not indispensable to the attainment of these objectives” – notably, the MfE Comfort Letter specifically excludes all possible coordination on prices; and
- Not give participating undertakings “the possibility of eliminating competition in respect of a substantial part of the products in question” – notably because the MfE Comfort Letter sets out four conditions for the cooperation – that
a. It is open to any pharmaceutical manufacturer (by this stage in pandemic, the Commission expects that all European pharmaceutical manufacturers are taking part),
b. All meetings are recorded and any agreements are in writing with copies kept for the Commission to examine at a later date,
c. The platform for information exchanges is provided by the Commission, and
d. The Commission will inform Medicines for Europe when the cooperation must end, notably after a possible second wave in the pandemic.
It is, however, important to note that the MfE Comfort Letter authorises a form of cooperation that goes quite significantly beyond what was and remains possible under Article 101(3) TFEU: it authorises pharmaceutical companies, through Medicines for Europe, to coordinate the production and supply of drugs necessary in the treatment of COVID-19. Hence, as the Commission itself has said, the need for a Comfort Letter and not simply guidance on self-assessment.
Given that the Communication remains in force until further notice, we may well see more comfort letters in the fullness of time. However, it is interesting to note that the Commission has not announced the issuing of a second comfort letter (whereas they did announce the issuing of the MfE Comfort Letter, two weeks prior to its publication). And, given the specificity and importance of the products concerned by the MfE Comfort Letter, and the depth of the cooperation necessary, it may be that this comfort letter remains unique: it seems, for the moment, that any possible cooperation concerning ventilation or protective equipment, hydro alcoholic gel and testing facilities, also essential in the treatment and prevention of COVID-19, has not required a comfort letter perhaps because these products and services, while regulated, are less regulated than medicines.
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