The Commission For Protection Of Competition of the Republic of Serbia (“Commission“) recently announced that it will conduct a sectoral analysis of the pharmaceutical industry, specifically examining market conditions and competition in the human drug market in Serbia. This decision comes in light of increasing regulatory oversight and the need to assess competitive conditions in this key sector.
The announced sectoral analysis commenced with the distribution of questionnaires to pharmacy institutions operating a larger number of retail outlets, aimed at gathering essential data for the analysis.
Throughout the sectoral analysis, the Commission will review medicines listed under the reimbursement scheme of mandatory health insurance, as well as pricing formation, market shares, competition conditions, potential barriers to market entry, vertical relationships between wholesalers and pharmacies, and other relevant factors.
What Does a Sectoral Analysis Entail?
A sectoral analysis involves the examination and monitoring of a specific industry to identify potential distortions of competition. Unlike procedures focused on specific market participants and individual cases, a sectoral analysis provides a broader overview of market conditions. These analyses may result in recommendations for regulatory changes or the initiation of proceedings against entities that violate competition rules.
The primary objective of this analysis is to define potential measures and activities that the Commission, in the form of opinions and recommendations, would present to the relevant authorities and market participants. The goal is to enhance the competitive landscape of the industry under review.
Legal Basis for Conducting Sectoral Analysis
The authority of the Commission to conduct sectoral analyses is regulated by Article 47 of the Law on Protection of Competition (Official Gazette of the Republic of Serbia No. 51/2009 and 95/2013). Specifically, in cases where price trends or other circumstances indicate the possibility of restricting, distorting, or preventing competition, the Commission may analyze the state of competition within a specific industry or certain categories of agreements across different industries.
In this regard, for the purpose of conducting sectoral analyses, the Commission may request market participants to provide all necessary data or documents, particularly concerning concerted practices, and may carry out any required investigations.
The Commission is obligated to publish a report on the conducted sectoral analyses in an appropriate manner, primarily on its official website, and may invite market participants to submit their comments on the report.
Reasons for Analyzing the Pharmaceutical Industry
The pharmaceutical industry is unique due to its complex structure and critical importance to public health. Factors such as drug pricing, distribution channels, and potential abuses of dominant market positions are among the key reasons why the Commission pays special attention to this sector.
In recent years, many countries have uncovered anti-competitive practices, including cartel agreements, artificial restrictions on drug supply, and unfair competition. The Commission’s goal in Serbia is to use the sectoral analysis to identify potential risks and ensure a level playing field for all market participants.
If the Commission detects irregularities, it may initiate proceedings for competition law violations, which could lead to enforcement measures, including significant financial penalties. On the other hand, sectoral analysis can also drive positive changes, such as improved drug availability and better conditions for patients and consumers.
This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.
By Marija Muzevic, Counsel, PR Legal
