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Focus on Regulation

UK Parliamentary Report Published on the Impact of Brexit on the Pharmaceutical Sector

The Business, Energy and Industrial Strategy Committee, a parliamentary select committee, has published a report on the consequences of Brexit on the UK pharmaceutical industry.

The report examines the impact of different outcomes of the UK/EU negotiations, including a “no deal” scenario, on tariff barriers, non-tariff barriers (e.g. border delays), regulatory alignment, trade opportunities, skilled workers, and research and development, as well as the proposed transitional arrangements. The key conclusions include:

  • To ensure the continued success of the UK pharmaceutical industry, the UK must seek the closest possibly regulatory cooperation and minimum border friction possible.
  • The UK should remain aligned with the regulatory standards in the EU.
  • Any potential benefits from Brexit such as quicker approval of medicines would be limited and “hugely outweighed” by the additional costs, loss of influence and loss of access to existing, successful markets and products.
  • The potential for weaker intellectual property regulation would be outweighed by the potential loss of investment in the UK and, conversely, the potential for stronger intellectual property protection would be outweighed by increased costs to the NHS and harm to the generic sector.
  • The UK is already a significant part of a global industry and there is no evidence of new trade routes that the UK could benefit from.
  • The best potential approach for the UK to grow as a world leader in the development, manufacture and regulation of pharmaceuticals is to maintain as close as possible a relationship with the EU.

The report also makes a number of recommendations that are intended to inform the Government’s negotiating position in the upcoming UK/EU trade negotiations, including that the Government should:

  • Seek regulatory alignment with the EU in relation to pharmaceuticals.
  • Prioritise a form of membership with the European Medicines Agency (EMA) that maintains cooperation and does not require replication of manufacturing sites, testing or roles.
  • Seek to retain a presence for EMA employees and facilities in the UK where beneficial to the EMA and MHRA.
  • Seek a trade agreement with the EU that includes all finished and component pharmaceutical products and at the same time work with the WTO to expand the list of pharmaceuticals and components that are currently subject to no or reduced tariffs.
  • Prioritise continued friction-free access to the EU market and the roll-over of existing free trade agreements with third countries.
  • Ensure that the UK does not diverge from current intellectual property rules.
  • Ensure continued access to workers to meet skills shortages and support personal and corporate development.
  • Ensure that UK companies can conduct clinical trials through continued cooperation with European institutions and mutual recognitions of results.
  • Take a pragmatic approach in relation to any potential continuing role of the ECJ in the pharmaceutical sector.
  • Reach a quick decision on the new relationship with the EU to minimise unnecessary contingency planning costs.

The recommendations echo previous calls from the UK health minister and business minister for close regulatory alignment between the UK and EU for medicines after Brexit and Prime Minister May’s statement that she would seek “associate membership” of the EMA. In support of this, the report cites examples of existing agreements in place between the EMA and a number of countries, including Switzerland, the US, Canada and Australia, which allow for cooperation such as sharing of confidential information, mutual recognition of good manufacturing practice (GMP) standards and batch testing.

The Committee report, published on 17 May 2018, is available here: https://publications.parliament.uk/pa/cm201719/cmselect/cmbeis/382/382.pdf

Hogan Lovells leads conversation with roundtable on the French duty of vigilance and corporate civil liability for human rights

On 17 May 2018, an unprecedented round table took place to discuss the “French duty of vigilance and civil liability in human rights matters” at our Paris office.

Alongside Julianne Hughes-Jennett, London Partner and Head of our Business and Human Rights group, this event gathered Horatia Muir Watt – Professor of international private law and comparative law at Sciences Po – and Gerald Pachoud – former Special Advisor to the UN Secretary General’s special representative on human rights and business and now managing partner of a boutique consultancy firm in Switzerland. The panel was moderated by Christelle Coslin, a Counsel in Hogan Lovells’ Paris litigation team.

The event, organized in partnership with Sciences Po Law School, was a chance to discuss the French law on the duty of vigilance (see our previous blog here) as well as recent international legal developments concerning corporations’ impact on human rights, in particular the due diligence increasingly required from companies and the associated risks of civil liability actions for not satisfying a duty of care.

The conference was opened by a short introduction by Christelle Coslin on the main features of the French statute. All speakers agreed that the statute is a clear implementation into hard law of the UN Guiding Principles adopted in 2011. Interesting exchanges followed regarding the scope of application of the French law and the circumstances under which it should be held applicable. There was consensus among the panellists that case law will be crucial in clarifying the scope of application and implementation of the statute, in particular to determine when a company’s vigilance plan will be deemed to include “reasonable measures” which can satisfy the legal requirement and avoid civil liability actions.

More generally, Pr. Horatia Muir Watt, Gerald Pachoud and Julianne Hughes-Jennett shared their insight on current international trends, such as the Jesner vs. Arab Bank ruling on the Alien Torts Act by the US Supreme Court (see our previous blog here), case law developments on parent company liability in the UK (for the latest news, see here) or draft bills in Switzerland (see our previous blog here). The current negotiations at the UN and the more general prospect of seeing an international treaty adopted in the future were also topics of discussion.

The debate moved on to cover how companies could adapt to this new environment and how they can better protect themselves by effectively identifying and preventing human rights risks before they occur. Speakers gave practical, effective and implementable recommendations on how to prepare the vigilance plan required of corporations that fall within the scope of the French law. For example, companies should focus on their operations rather than the actors in their supply chain when conducting their human rights risks mapping, and there is a balance to be struck between explaining the process for identifying human rights impact versus specifically identifying all instances of human rights risk.

We will continue to provide updates on developments and guidance on this topic. In the meantime, feel free to contact us with any questions. We are available to provide personalized and fine-tuned advice on specific situations wherever helpful.

Fair’s fair: Supreme Court clarifies law on unfairness and equal treatment in judicial review

In R (oao Gallaher and others) v CMA [2018] UKSC 25, handed down last week, the Supreme Court has clarified that substantive unfairness is not an established ground of judicial review and that likewise there is no “distinct principle” of equal treatment.

Case background

In March 2003, the Office of Fair Trading (“OFT“) (a predecessor of the Competition and Markets Authority) launched an investigation into alleged price-fixing arrangements in the tobacco industry. In April 2010, it issued a decision with a finding of infringement against 13 companies (manufacturers and retailers). Six of these companies appealed to the Competition Appeal Tribunal. Six had previously entered into so-called “early resolution agreements” (“ERAs“), admitting their infringement in return for a 20% reduction in penalty.   At that time, ERAs were not provided for in statute nor indeed described in any OFT document. TM Retail was one of the six parties who had entered into an ERA and was not party to the appeal.

In 2008, the OFT gave an assurance to TM Retail (who queried the point) that it would apply the same principles to TM Retail as those determined in the appeal being brought by the other six companies –  in effect, confirming that TM Retail would also get the benefit of the appeal.

In 2011, the Competition Appeal Tribunal upheld the appeals of all six appealing parties. The OFT subsequently released a statement announcing that, in light of the specific assurances given to TM Retail, it would be repaying the amount of its penalty and a contribution to interest and legal costs.

The respondents (Gallaher and Somerfield, who like TM Retail had entered into ERAs rather than appealing the OFT’s infringement decision) claimed that they should also have been given the benefit of the OFT’s assurances to TM Retail. They therefore brought judicial review proceedings against the OFT asking it to withdraw the decisions against them and refund their penalties, on the basis that the OFT had failed to uphold its duties of “fairness” and “equal treatment” by treating them differently from TM Retail.

The judgments

The judge at first instance held that, although the OFT’s powers were “subject to public law requirements of fairness and equal treatment” and that it was “essential that in negotiations in relation to ERAs one party is not given an advantage denied to another”, the specific assurance had been given in error and that “as a general rule a mistake should not be replicated where public funds are concerned.” The Court of Appeal, however, concluded that “the OFT must comply with the principle of equal treatment in all steps leading up to the imposition of a penalty” and that the failure to offer the assurance to the other parties was “stark and manifest”. The Court of Appeal therefore declared that the OFT had acted unlawfully by not making the assurance to the other parties in 2008, and not paying those parties’ penalties in 2012.

The Supreme Court departed from both approaches. It held that “[w]hatever the position in European Union law or under other constitutions or jurisdictions, the domestic law of this country does not recognise equal treatment as a distinct principle of administrative law.” Whilst it is a “generally desirable objective” or a “democratic principle”, it is “not an absolute rule” nor a “justiciable rule of law”.

Similarly, it held that “[f]airness, like equal treatment, can readily be seen as a fundamental principle of democratic society; but not necessarily one directly translatable into a justiciable rule of law.” (Procedural fairness, by contrast, has always been recognised as grounds for complaint – for example, if a bidder in a public procurement process has received a procedural advantage over another bidder.)

Instead, the Court held that these principles are instead considerations to be taken into account when considering ordinary principles of judicial review, such as irrationality and legitimate expectation.

Applying this conclusion to the present case, the Supreme Court held that it was reasonable for the OFT to honour the specific assurances given to TM Retail and not to the other ERA signatories, who had taken a risk that other parties would appeal and be successful.

The OFT had therefore not acted irrationally and its appeal was allowed.

Commentary

The judgment reflects the desire by the courts to provide for certainty and flexibility for public authorities by limiting the scope of judicial review, and, in the words of Lord Sumption in the judgment, to avoid undermining “the coherence of the law by generating a mass of disparate special rules distinct from those applying to public law generally or those which apply to neighbouring principles.”

This case also addresses the interesting question of whether mistakes by public bodies addressed at one person have to be replicated to cover all other persons in a similar situation. The assurance given to TM Retail was the result of a mistake. The OFT had the choice then either to renege on the assurance; honour it in relation to TM Retail only; or extend the assurance to any other party in a similar situation.  The OFT’s approach of honouring it only in relation to TM Retail did amount to unequal treatment, but was objectively justified.  The Court found that the OFT had made “a rational choice between unpalatable alternatives”, taking into account two important facts:

  • TM Retail would have been better off if the assurance were not honoured (as its appeal would be bound to succeed – and then there would have been a finding that TM Retail’s conduct was not unlawful).
  • The two respondents had not received or relied upon any similar assurance and the assurance given to TM Retail had in no way been given at their expense.

In practice, this will mean that applicants seeking judicial review of the decision of a public body may have to demonstrate more than a difference in treatment, even if this treatment appears unfair, because, as this case demonstrates,  substantive unfairness or lack of equal treatment are not, alone, sufficient grounds for a judicial review. Further, even where it is appropriate to consider fairness and equal treatment (e.g. in the context of legitimate expectations or irrationality), differential treatment may often be justified. The decision also clarifies that public bodies should not, as a general rule, replicate mistakes involving the use of public funds.

 

Cross-sector code of conduct for AI – a solution with substance?

On 16 April 2018 the House of Lords Select Committee on Artificial Intelligence published a wide-ranging report on the status of artificial intelligence (“AI”) in the UK.

The report, entitled “AI in the UK: ready, willing and able?” (available here), provides comprehensive coverage of critical issues relevant to the development and use of AI in the UK, such as the potential bias in AI systems; the need for AI systems to be intelligible; funding, education and training in the AI sector; and risk mitigation.

The Chairman of the Select Committee, Lord Clement-Jones, presented a summary of the report at a Law Society event entitled “AI and Ethics: plotting a path to unanswered questions” hosted by Hogan Lovells International LLP on 27 April 2018.

Amongst the many recommendations in the report is that a cross-sector ethical code of conduct for organisations developing and using AI should be drawn up and promoted.

AI risks

The report recognises the significant potential of AI to contribute to economic productivity and for the UK to be among the world leaders in the field of AI, but finds that there are areas of uncertainty which could dissuade investment and potentially hinder uptake of AI by the general population. The report identifies a number of critical risks presented by AI which would need to be mitigated in order to support development and growth of AI systems including:

  • the potential bias in AI systems and the need to ensure that the data used is truly reflective of diverse populations;
  • the security risks associated with the use of personal data;
  • the need for AI systems to be transparent and intelligible; and
  • the potential for AI to contribute to social inequality.

Regulation of AI

The report considers whether regulation of AI should be introduced as a mechanism to manage these (and other) risks, but concludes that blanket regulation of AI, at this stage, would be inappropriate given the rapid developments being made in AI, the risk of regulation inhibiting innovation, and the difficulties of successfully designing a one-size-fits-all solution. The report recommends that existing sector-specific regulators are at present best placed to consider the impact of AI on their sectors and any subsequent regulation that may be needed. In this respect, the report acknowledges that in some areas existing legislative frameworks may be sufficient, for example the Data Protection Bill and GDPR will go a long way to address the concerns associated with the handling of personal data.

However, the report acknowledges that there may be risks associated with AI which are not adequately covered by existing legislation.

Proposed solutions

One of the suggested solutions is an overarching code to control behaviours associated with the development and use of AI, presumably with the aim that major tech firms and other AI actors sign up to the code on a voluntary basis. The report suggests that, in time, the code could provide the basis for new statutory regulation, if deemed necessary.

As a starting point, the report sets out five overarching principles that would form the basis of the code:

  1. AI should be developed for the common good and benefit of humanity.
  2. AI should operate on the principles of intelligibility and fairness.
  3. AI should not be used to diminish the data rights or privacy of individuals, families or communities.
  4. All citizens have the right to be educated to enable them to flourish mentally, emotionally and economically alongside AI.
  5. The autonomous power to hurt, destroy or deceive human beings should never be vested in AI.

Comment

The introduction of a cross-sector AI code is likely to be welcomed by a public that is increasingly reliant on AI in many areas of life. As highlighted by Lord Clement-Jones, an effective code of ethics may be potential measure to improve public trust in AI and to equip the public to be prepared to challenge its misuse. However, whether such a code has any actual impact on the behaviour of the dominant tech firms and other key actors in the AI field will depend on firstly persuading them to sign-up, and secondly on their ongoing compliance.

There is no point introducing a voluntary code so onerous that no one is willing to comply. However, at the same time, such codes must have sufficient teeth to be meaningful. The first hurdle will therefore be for critical actors to agree a set of standards. This exercise will be a huge challenge given the range of relevant organisations and institutions involved in the AI space. The risk in emphasising collaboration is that the resulting code is too flimsy to have any effect, whilst a more forceful approach may risk alienating critical players.

Assuming a sensible set of standards is developed, a suitable body will need to be given the role of monitoring and enforcing the code, with sufficient gravitas to make their “seal of approval” for signatories worthwhile, and the power to ensure that signatories toe the line. The report has suggested that the Centre for Data Ethics and Innovation could be one such body.

Exactly how monitoring and enforcement of compliance with the code might be undertaken without statutory powers to investigate, and without the threat of criminal or civil sanctions, is the next challenge, and it will be interesting to see how far such voluntary measures are able to go. For example, would the enforcement body have the authority and resources necessary to scrutinise non-open source algorithms to assess whether those algorithms might be producing discriminatory results, or whether the institutions using them have been sufficiently transparent in how those algorithms determine outcomes? The threat of the introduction of regulation may in itself be sufficient to motivate key institutions to ensure the code has some weight, but at present it seems unlikely that the Government would act on that threat for all of the reasons outlined in the report, and the uncertainties surrounding Brexit.

We will watch with interest for responses to this report from both the Government and the dominant tech firms, to see whether the proposals are suitably ambitious to be effective at galvanising further action.

Further materials

Hogan Lovells: Global media, technology, and communications quarterly – Spring 2018

The European Commission Is Considering Opening an Antitrust Probe for Parallel Imports in the Pharmaceutical Sector

The European Commission is looking into several parallel imports cases, including in the life sciences industry, with a view to opening formal antitrust investigations, which may eventually lead to fines being imposed. The pharmaceutical sector is understood to be under scrutiny in at least one of the current informal investigations, according to a leak in the specialized press.

In the European internal market, pharmaceuticals and medical devices should move freely from one European Member State to the other. However, each Member State may regulate their price and/or reimbursement. This can lead to price differences between similar products in different Member States.  Distributors often seek to exploit these differences by importing products purchased in low price States into high price States. These are known as parallel imports.

Pharmaceutical or medical device companies may need to consider whether and how intellectual property rights (for example, a drug patent or trademark or a medical device trademark) and compliance with regulatory provisions (such as the European Directive and Regulation on Medicinal Products or the most recent Medical Device Regulations) affect the sales of products between Member States.

Parallel importers are subject to several regulatory requirements. In addition, when re-packaging medicinal products for parallel trade, the parallel importer should respect the trademark holder’s trademark rights.

For European antitrust/competition law, parallel trade restrictions may be illegal. This is because parallel imports are considered to bring about greater price competition and increase consumer welfare.[1]  Nonetheless, parallel import restrictions may be justified in some specific circumstances.

The European Commission has consistently found pharmaceutical companies to have infringed antitrust rules by restricting parallel trade. The EU courts have sometimes taken a more nuanced approach, which seeks to balance the competing interests of the pharmaceutical sector and national health systems. However, life science companies should pay attention to practices that impact parallel imports, such as:

  • Export bans
  • Stock management programmes
  • Dual pricing
  • Providing misleading information to the pharmaceutical regulators

Things may become even more problematic when the pharmaceutical company is dominant, which may be the case when the company’s market share is above 40% in the relevant market, which can be defined very narrowly based on the ATC (Anatomical Therapeutic Chemical) classification system. In such a case, even unilateral conduct can be problematic, such as a refusal to supply, the withdrawal of marketing authorisations, or the packaging of parallel traded pharmaceuticals or medical devices to make it harder to sell them across European states.

Antitrust infringements have attracted significant fines in Europe:

  • (2017) Fine of €5m on a pharmaceutical company for parallel import restrictions (and excessive prices) in Italy
  • (2011) Fine of ca. €2m on suppliers of prescription-only medicine and their distributors for restricting parallel imports in Romania
  • (2009) European Commission fined a company €44.5m for restricting parallel imports from the Netherlands to other Member States
  • (2005) European Commission fined a company €52m for regulatory abuses resulting in, amongst others, a parallel trade restriction

The European Commission continues scrutinizing business practices affecting parallel trade. It is currently looking at territorial restrictions in cross-border sales in several e-commerce cases, including probes into companies active in consumer electronics, video games and hotel bookings. The Commission has also sent a statement of objections to a leading brewery, accusing the company of hindering cheaper imports of its beer brands from the Netherlands and France into Belgium, where the product is more expensive.

More cases are in the pipeline, including in the life sciences industry. The press recently reported that the European Commission is looking at two or three parallel imports cases. The pharmaceutical sector is understood to be under scrutiny in at least one of the cases, in which the dual pricing of drugs sold both through the social security system and on the open market is of concern, according to a leak in the specialized press.[2]

Pharmaceutical or medical device companies should pay the utmost attention to this issue, especially at this point in time when the life sciences sector is amongst the highest priorities of antitrust agencies around the world and in Europe.[3]

________________________________________
[1] European Commission’s Competition Policy Newsletter, “Competition in Pharmaceuticals: the challenges ahead post AstraZeneca”, Spring 2007.  See also the European Commission’s Communication, “Parallel imports of proprietary medicinal products for which marketing authorisations have already been granted”, 20 December 2003.

[2] PaRR, “EC mulls opening parallel imports probe in pharmaceutical sector”, 9 May 2018.

[3] Amongst many examples, on 13 February 2018, the Dutch Antitrust Authority announced the pricing of prescription medicinal products as one of its key priorities for 2018-2019. On 6 April 2018, the Belgian Antitrust Authority stated that it will focus on the pharmaceutical sector as a priority in 2018, at all levels (labs, wholesalers and distributors, pharmacies).  The European Commission has a dedicated page for antitrust enforcement in the life sector. A roundtable on “Competition law issues in the Life Sciences sector” is being organized on 3 July in Brussels.

The UAE Competition Committee has finally become operational; merger control in the UAE and the GCC region

The UAE Competition Committee has become operational and therefore mergers and acquisitions may be subject to review in the near future.

The UAE Competition Committee held its first meeting of the year last month (on 26 March 2018) in which it discussed the development of guidelines and standards related to the implementation of UAE competition rules, including the UAE merger control regime. [1]

The UAE Competition Committee also recently joined the International Competition Network (ICN) and is likely to ramp up its competition law enforcement and review of mergers, both locally and vis-à-vis foreign companies and their International deals.

The UAE Competition Committee is open for business

In the UAE, the competent authority for competition law enforcement is the Ministry of Economy through its Competition Department, which is supported by the UAE Competition Committee.  The Committee is chaired by the UAE Undersecretary of Economic Matters in the Ministry of Economy, H.E. Mohammed bin Abdul Aziz Al Shehhi.

At its March meeting, the UAE Competition Committee discussed credit card company fees for retail transactions and a market study in the film industry, thus demonstrating its move towards regular enforcement of the country’s competition rules.[2]

A delegation from the UAE Competition Committee also participated at the ICN’s annual meeting in New Delhi earlier this year.  In particular, the Committees’ Director, Secretary and Consumer Disputes Manager were in attendance.  The ICN brings together over 130 competition agencies from around the world and provides a specialized venue for maintaining regular contacts and addressing practical competition concerns (through telephone, teleseminars and webinars as well as via live meetings with dedicated workshops and an annual meeting).

Participation in the ICN’s activities provides the UAE Competition Committee the opportunity to discuss working group projects and their implications for enforcement (and, in turn, to adopt ICN recommendations or best practices arising out of these projects).  In particular, the UAE Competition Committee will be able to participate in the ICN’s merger working group a very active forum for agencies to exchange experiences and best practice regarding the review of mergers and acquisitions.

The UAE merger control regime

The UAE’s merger control regime has technically been in force for a few years now. However, Cabinet Decision No. 13 of 2016 established the jurisdictional threshold triggering a mandatory notification requirement thereby dealing with an omission in Federal Law No. 4 of 2012 concerning the Regulation of Competition.[3]

A merger or acquisition must be notified if the overall market share of the involved parties in the relevant market exceeds 40% and the concentration may affect competition. It depends on the definition of the relevant market whether the relevant threshold is met (for example whether both online and offline sales should be considered as belonging to the relevant market).

Potentially qualifying mergers are referred to by the Competition Law as “economic concentrations”, covering transactions such as mergers, acquisitions of assets, proprietary rights, usufruct or shares (whether directly or indirectly), joint ventures and possibly minority shareholdings.

Where the threshold is met, a notification is technically required and the parties appear to have a deadline within which the notification must be filed.[4]  Notification is also suspensory meaning the parties, following notification, must not carry out any action or procedure to complete the deal before the concentration has been formally cleared (i.e., avoid “gun-jumping”).  Failure to comply with these requirements may lead to fines of up to 5% of annual sales in the UAE in the preceding year.

In its substantive assessment, the Ministry will focus on the level of competition in the relevant market, barriers to entry, the impact on prices, the possible creation of a dominant position, the creation of national champions and the impact on consumer interests.

As of today, it is unclear whether the UAE Competition Committee is prepared to consider merger control notifications as it has not released the relevant forms, nor has it published any decisions. The Competition Law states that a notification must be made “according to the form prescribed for this purpose”.  However, in its last meeting the Committee also discussed the development of guidelines and standards related to the implementation of the UAE Competition Law, including in relation to mergers and acquisitions.[5]

Importantly, foreign investment rules in the UAE are likely to create a far higher burden than is the case in most other jurisdictions.  In particular, the UAE contains specific regulations regarding certain industries.  As such, early legal advice should be sought to determine whether competition or other sector-specific rules are applicable in industries such as telecommunications, financial services, cultural activities, oil and gas, pharmaceutical, postal, electricity, water, sewage, and transport services.  Possible exemptions also apply to businesses that are at least 50% owned by federal or Emirate governments as well as certain small and medium-sized businesses.

Other merger regimes in the Gulf region

There are other competition law and merger control regimes in the Gulf Cooperation Council (GCC).

In particular the Council of Competition in the Kingdom of Saudi Arabia[6] has been operational since 2014, reviewing local and foreign-to-foreign mergers and acquisitions. The Saudi Council of Competition is active internationally through the ICN and social media (including by subtitling in English their competition law compliance videos on a YouTube channel).

The following regional countries  also have competition regimes and their competition agencies are members of the ICN: the Kuwait Competition Protection Authority,[7] the Qatar Committee for the Protection of Competition and Prohibition of Monopolistic Practice,[8] the Yemen Public Administration to Promote Competition and Prevent Monopoly and Commercial Fraud.[9]  The Oman Public Authority for Consumer Protection is not a member of the ICN but its competition law contains provisions similar to those in Kuwait.[10]

Conclusion

While there are some similarities with other foreign merger regimes, overall the UAE merger regime is different.  The Competition Committee operates within the Government ministry and the applicable substantive rules often include public interest aspects.  In particular, the UAE will look at how the deal can “contribute to investment promotion, export promotion or supporting the capacity of national establishments to compete on an international level”.

Going forward, companies doing deals (regionally or internationally) that may affect the UAE (and that result in significant market shares) will need to consider carefully whether to make a notification to the UAE Competition Committee.  Careful and coordinated cross-practice and locally-aware advice will be pivotal for determining whether the competition rules and/or other sector-specific rules apply.


[1] See the UAE Ministry of Economy’s calendar, available here.

[2] See press articles in Arabic, available here, here and here.

[3] The UAE Competition Law is available here.

[4] It is unclear whether there is a deadline for notification. Under the 2012 Competition Law, a concentration must be notified to the Ministry a minimum of 30 days before the date of completion.  However, the Cabinet Decision No. 37 of 2014 provides that a relevant concentration must be notified at least 30 days from the date of concluding the draft contract.

[5] See press article in Arabic, available here, which translates as follows: “… The Committee has confirmed that it will continue its efforts … to clarify the dominant position, economic concentration, merger, and other subjects related to competition …”.

[6] The Saudi Council of Competition website is available here.

[7] In Kuwait, a competition law was introduced in 2007.  A merger filing is required where a market share of more than 35% is acquired or strengthened.

[8] The Qatar Competition Protection and Anti-Monopoly Committee has an active website, and is at the Ministry of Economy and Commerce.  The competition law was introduced in 2006. For merger filings, the Law says that companies should request a decision from the Committee when a corporate deal occurs “in such a way as to control or dominate the market”.

[9] The Yemen competition law is available here.

[10] The Oman Public Authority for Consumer Protection has an active website here.  The competition law was introduced in 2014.  A filing is required if an entity has a possibility to control or influence 35% or more of a relevant market.

The Italian Supreme Court rules on the liability of broadcasters for unlawful advertising of medical devices

By decision No. 10892 published on 7 May 2018, the Italian Supreme Court ruled on an appeal brought by the Ministry of Health against a decision of the appellate Court of Padua in a case concerning the administrative sanctions imposed by the Ministry of Health on the manufacturer and the editorial director of a TV broadcaster for the breach of the law on the advertising of medical devices. The manufacturer offered for sale a fitness device, a balance board, in a teleshopping broadcast that was addressed to the public at large. While the first instance decision confirmed the sanctions of the Ministry of Health in their entirety, the appellate Court lifted the sanction imposed on the broadcaster due to a lack of legal ground for an extension of the liability.

The appeal before the Supreme Court concerned only the point of the appellate decision that excluded the liability of the broadcaster, as the Ministry of Health was successful in the other points and no appeal was filed by the losing parties.

The qualification of a balance board as a medical device on the basis of the manufacturer’s advertising claims

The Supreme Court based its assessment on the appellate Court’s finding that the balance board, irrespective of the manufacturer’s classification, was a medical device in consideration of the promotional claims put forward by the manufacturer. The product was indeed advertised for the use in the physiotherapy rehabilitation, and as beneficial for the skeletal and respiratory systems.

Advertising of a non-prescription medical device

According to Article 21 of the Legislative Decree No. 46 of 24 February 1997 (the Italian law on medical devices), the advertising of non-prescription medical devices in Italy requires the prior authorisation of the Ministry of Health. The sanctions that may be imposed in case of breach of Article 21 are to be found in Article 201 of the Royal Decree No. 1265 of 27 July 1934 (consolidated text of the laws of the healthcare sector), as amended.

According to that provision, the advertising of a non-prescription medical device without the required ministerial authorisation may be sanctioned by the Ministry of Health with an administrative fine ranging from Euro 2,582.28 to Euro 15,493.71. The fine may be imposed for any breach of Article 21 of the law on medical devices.

The appellate Court found that the offer for sale of the balance board in the teleshopping program was a promotion of a medical device to the public at large that required the prior authorisation by the Ministry of Health. As the advertisement was not authorised, the administrative fine imposed on the manufacturer was legitimate. Although the manufacturer argued in the first instance that the sanction had to be lifted, as the relevant provision would have been repealed by subsequent legislative amendments, the appellate Court dismissed such argument and confirmed the applicability of Article 201 of the Royal Decree No. 1265 of 27 July 1934 in case of any breach of the law on the advertising of medical devices. That finding of the appellate Court’s decision was not further appealed before the Supreme Court.

The liability of the TV broadcaster

Although the breach does not amount anymore to a criminal offence as it was in the past, the Supreme Court observed that the administrative fine still has a similar purpose as it is intended to ensure the protection of the public with regard to the general interest of the consumers’ health. As also the broadcaster may put at risk that general interest by disseminating an unauthorised advertising, the Supreme Court found that there are no reasons for restricting the applicability of the sanctions only to the manufacturer. The Supreme Court further noted, in the light of the Legislative Decree no 177 of 31 July 2005 (the Italian Audiovisual Media Service Law), as applicable at the time of the relevant circumstances, that a teleshopping service should be considered a promotional activity. As a consequence, the person having the responsibility for the editorial contents and for the elaboration of television or radio programs, having included the advertising in the broadcaster’s programs, may be held liable for the breach of the law on the advertising of medical devices. The Supreme Court added also that its conclusions had not changed, had it to decide according to the law as amended in 2010, which identified the “provider of media services” as the natural person or entity that is responsible for the selection of the audio-visual contents of the audio-visual service.

Comment

The decision of the Supreme Court applies the Italian Audiovisual Media Service Law, which provides for the liability of the editorial director of the broadcaster in relation to the transmitted content. By contrast, the reasoning of the Supreme Court does not seem to be applicable to internet service providers as defined by the Directive 2000/31/EC (Directive on electronic commerce), since those subjects do not have editorial responsibility over content users create and publish via their platforms.

FCC Seeks to Refresh the TCPA Record

Now that the dust has settled from the D.C. Circuit’s highly anticipated Telephone Consumer Protection Act decision in ACA International, et al, v. FCC, the Federal Communications Commission is going back to the drawing board in a new Public Notice that seeks comment on foundational TCPA issues.

In March, the D.C. Circuit struck down the FCC’s 2015 interpretation of the definition of “automatic telephone dialing system” (autodialer) as overly broad, arbitrarily vague, and “utterly unreasonable.”  The court also threw out the FCC’s rules regarding calls to reassigned wireless numbers, finding that exempting callers for liability for only the first call to a reassigned number was arbitrary and capricious.  See our earlier post for more information about the decision.

In the Public Notice, the FCC seeks comment on the following issues:

  • What is an autodialer?
  • How should calls to reassigned numbers be treated and how should the term “called party” be interpreted?
  • How should a called party be able to revoke prior express consent to receive robocalls?
  • Should contractors acting on behalf of the federal government be considered “persons” under the TCPA?
  • Should the FCC reconsider its rules regarding calls to collect federal debts?

Comments are due June 13 and reply comments are due June 28.

Our TCPA Working Group brings together more than 25 attorneys in our litigation, communications, commercial, and privacy practice areas.  We provide regular TCPA counseling to clients from a broad range of industries, including technology, healthcare, communications, transportation, and financial services.  We have secured dismissals and nominal settlements for clients in TCPA actions and have worked with the FCC to clarify rules addressing a number of key TCPA issues.  We also have significant experience in TCPA appeals.

Hunting unicorns: German and Austrian Competition Authorities publish draft Guidance Note on Transaction Value Thresholds

Since 2017, new merger control thresholds have been in effect in Germany and Austria which do not depend on the revenues generated by the parties but, rather, on the value of the transaction. It is now also the case that the acquisition of target companies generating no revenues, such as start-ups, may require a notification under the new rules where: (i) the value of consideration exceeds € 400 million (Germany) or € 200 million (Austria); and (ii) the target has ‘substantial domestic activity’ (for an explanation on this point, see our recent blog article here).

However, assessing the value of consideration or determining domestic activity can, in practice, often cause considerable problems. For example, would earn-out clauses for biotech companies form part of the consideration? Would a company be adjudged to have substantial domestic activity even if it generates annual revenues of less than € 5 million? Continue Reading

New version of EMA’s pre-authorisation procedural advice for the centralised procedure released

On 4 May 2018, the European Medicines Agency (“EMA”) published another updated version of the guidance document on pre-authorisation for users of the centralised procedure. The document contains revisions regarding the EMA marketing authorisation application numbers. It also includes changes related to oral explanations during the assessment procedure of the marketing authorisation application.

Background

The EMA’s guidance document helps applicants for marketing authorisations in the European Union (“EU”) to prepare correct and timely pre-authorisation submissions within the centralised procedure.

The document provides guidance concerning a number of issues have within the centralised procedure related to pre-authorisation applications which the applicants may face.

The guide is structured into Question & Answers. It is reviewed regularly to reflect new developments and the implementation of new EU legislation. The document should be read in conjunction with The rules governing medicinal products in the European Union, Volume 2A, Notice to Applicants.

The revised topics

Updated topics in the guidance document are marked as “NEW” or “Rev.” with the relevant date of publication.

The recent version of the guidance includes changes referring to the marketing authorisation application numbers for the submissions concerning applications for:

  • Committee for Medicinal Products for Human Use (CHMP) Opinions under Article 58 of Regulation (EC) No 726/2004. In accordance with this provision, the EMA may provide a scientific opinion in cooperation with the World Health Organisation when evaluating certain medicinal products for human use intended exclusively for markets outside the EU;
  • EMA consultation procedures concerning an ancillary medicinal substance or an ancillary human blood derivative incorporated as an integral part in a medical device;
  • Type-IA variations which must be submitted immediately to the EMA following implementation.
  • Guidance concerning oral explanations has also been reviewed. Oral explanations are intended to give the applicants the opportunity to explain their position and arguments within the assessment procedure. The current version provides that the EMA Committees will plan and organise an oral explanation when there are still major objections at Day 180 of the assessment procedure preventing the relevant EMA Committee from adopting a positive opinion concerning the application. However, the need for an oral explanation would be finally decided after the applicant has submitted responses to the Day 180 List Outstanding Issues. The applicant themselves still has the possibility to make a request for an oral explanation.