Badmouthing your competitor’s products: Commission investigation indicates that so-called disparagement claims in the market could be considered stand-alone abuses of dominance

On June 20 2022, the European Commission (“Commission”) published the opening of an investigation into a possible anticompetitive disparagement campaign by a Swiss based manufacturer of products for treatment of iron deficiency (case AT.40577).

The Commission is investigating allegations that the manufacturer has spread misleading information about its closest competitor in Europe on the market for intravenous iron treatment. In particular, the Commission is concerned that the manufacturer may have pursued a misleading communication campaign, primarily targeting healthcare professionals. Executive Vice-President Vestager commented on the investigations: “The dissemination of misleading information regarding the safety of [the competitor’s] iron deficiency treatment […] may have delayed its uptake.”

This development is notable, as the Commission, by initiating the investigation, will likely contribute to the interpretation of the boundaries and understanding of the ever-evolving body of case-law regarding the abuse of dominance doctrine in relation to undertakings pursuing a disparaging strategy. It is the first pure disparagement-only abuse case investigated by the Commission. The recently initiated investigation in another case in 2021 in the pharma sector concerns several alleged infringements, including disparagement (case AT.40588).

Our lawyers, Partner Morten Nissen and Associate Frederik Haugsted, have previously explored and discussed the evolvement of denigration abuse in their award-winning article ‘Badmouthing Your Competitor’s Products: When Does Denigration Become an Antitrust Issue?’.

Prior to this investigation by the Commission, the development of case-law on disparagement had been driven locally by national authorities. This rather backwards development has resulted in the abuse type being subject to differing legal standards across Europe. With this in mind, the Commission’s most recent investigation of 22 June 2022 may confirm the development of a “new” stand-alone type of abuse of dominance and provide European-wide guidance on the concept.

The previous cases across Europe have all centred around the disparagement strategy’s ability to influence the customer’s decision-making process by instilling fears or concerns in decision-makers and stakeholders by a systematic and consistent disparagement campaign. Additionally, the existing body of case-law has involved and concerned products in sectors where non-price competition parameters are more relevant than price. In essence, the more important a given non-price competition parameter is, the more effective it is when a dominant company tries to exclude competitors through false or misleading information.

This is also the case in the current investigation in the pharmaceutical sector where the decision of which drug to use in each case is taken by a healthcare professional at the point of administration of the drug and where patient safety concerns weigh heavily. This makes the non-price competition parameters, in this case safety and efficacy, more relevant than price for the healthcare professionals administering the drugs.

The Commission’s investigation and the development of the abuse of dominance doctrine in relation to denigration or disparagement strategies confirms a shift in the focus of competition authorities. In our view, the Commission’s investigation seems to fit into the broader category of antitrust cases that is becoming more prevalent when it comes to abuse cases, i.e., cases based on companies exploiting non-price related decision points – seen for example in the self-preferencing strategy in the GoogleShopping-case.

For more information, please reach out to Morten Nissen or Frederik Haugsted.