Concordia challenges CMA's dawn raid rights in hydrocortisone probe

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3 November 2017. By Simon Zekaria.

Concordia International today challenged the UK antitrust regulator’s legal right to inspect the company's premises as part of a long-standing probe into suspected anticompetitive deals for hydrocortisone tablets.

The Competition and Markets Authority obtained a warrant to conduct a raid because it believed the Canada-based company could destroy documents related to the investigation, Concordia said at a hearing at the High Court in London.

Concordia said the CMA should be forced to reveal its reasons for the raid, which the regulator has declined to disclose on grounds of public interest.

In March this year, the CMA provisionally charged Concordia, along with the British unit of US rival Actavis, for breaching UK and EU competition law by entering into anticompetitive agreements over the supply of hydrocortisone tablets, which it said drove up prices.

The CMA said Actavis UK "incentivized" Concordia to delay the sale of its own competing version of the drug in the UK. The inquiry opened in April 2016.

It also accused Actavis UK of abusing its market clout by supplying Concordia with a fixed supply of its own tablets at a low price for resale to UK customers.

Actavis UK remained the sole supplier in the UK of the tablets — used to treat skin conditions such as allergies, eczema and rashes — during most of the period of the alleged infringement, between January 2013 and June 2016, when the cost of the drug to the UK’s state-funded healthcare service soared to 88 pounds ($115) a pack from 49 pounds, the CMA said.

The deals enabled Actavis UK to "prolong the high prices in the market, depriving the NHS of the significant price falls that would be expected to result from true competition," the CMA said.

The companies issued written and oral responses to the charges in April and May.

The CMA obtained a warrant to raid Concordia’s premises at a subsequent oral hearing, held when the parties weren't all present.

'Generalized approach'

On Friday, Mark Brealey, representing Concordia, told judge Marcus Smith that the CMA should justify why it wants to inspect the company. He said the authority’s "generalized approach" of using a public-interest test to avoid disclosing the reason for the raids flouts the company's rights.

Brealey also said the focus of the company’s challenge is on the CMA’s "jurisdiction" to conduct inspections and its "extent of powers" in antitrust investigations.

Brealey said Concordia wanted the undisclosed information to be provided in a confidentiality agreement.

Jason Beer, representing the CMA, called the matter a "balancing exercise" and that a company’s right to seek what information led to an inspection warrant is "compromised" if that information damages the public interest.

Beer said the law provides an "obvious and easy" argument for the CMA to withhold explanations for its enforcement actions.

Destruction of documents

Brealey cited competition rules that give the CMA powers to search premises by force if it has reasonable grounds to suspect documents would be destroyed. "You can knock down the door," said Brealey.

Concordia said that using such powers to raid a company would be a serious step. It said that it has cooperated fully with the CMA during the long-running probe and answered the regulator's questions.
As such, Concordia says there is no reasonable basis for the CMA to suspect it would destroy documents.

Smith said he would reserve judgment until a later date, without providing further details on timing.

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