NMa Suspects Pharmacies in Tilburg of Restricting Competition

The Netherlands Competition Authority (NMa) suspects twenty seven pharmacies in Tilburg and surroundings of restricting competition. They have done so by setting up and managing a polyclinic pharmacy (a public pharmacy on the premises of a hospital in Tilburg). The pharmacies have restricted competition amongst themselves which, in any event, is limited amongst pharmacies. NMa is also of the opinion that the joint venture of the pharmacies, involving the setting up and managing of this polyclinic pharmacy, raises a barrier to entry for newcomers to the market for the distribution of medicines. NMa has therefore drawn up a report on these pharmacies.

The setting up of polyclinic pharmacies is promoted by the government with the aim of the breaking the market power (monopoly formation) of pharmacies and stimulating competition between pharmacies. The initiative of the majority of the pharmacies (27 of the 36) in Tilburg and surroundings impedes the emergence of such competition promoted by the government. NMa suspects that the aim and effect of the joint pharmacy is precisely to prevent competition by a potential newcomer and to freeze existing relationships. In addition, the joint venture offers pharmacies the opportunity to discuss their business operations and to coordinate their individual behaviour with each other.

The parties involved may 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 a sanction will be imposed.

This report fits within the framework of the investigation carried out by NMa into the healthcare sector in 2003, as announced earlier in NMa Agenda 2003. This sector is undergoing a transition from a supply-driven to a more demand-driven healthcare system. The assumption underlying government policy is that market forces can contribute to a better match between supply and demand. An increase in the operation of market forces in the healthcare sector may also result in efficiency improvements, which will restrain the sharp increase in costs. If a demand-driven healthcare sector is to emerge, it is crucial that the entry of new competitors onto the market is not impeded and that competition between current market players is not restricted. NMa takes action against such prohibited competitive practices. NMa investigates both the supply and the demand side of the market.