The ICA Fines Bayer for a refusal to deal in the market for the production and commercialization of fosetyl-based fungicide

Abstract

On 28 June 2011, following a complaint submitted by competitor companies (the so called fosetyl aluminium Task Force), the Italian Competition Authority (ICA) sanctioned Bayer Cropscience SRL (together with Bayer Cropscience AG, parent company of the Bayer Crop Protection division, hereinafter referred to as Bayer) for over 5,124 million Euros for an alleged infringement of art. 102 TFEU, consisting in an abuse of its dominant position in the Italian market for the production and commercialization of fosetylbased fungicides, which protect grapevines from peronospora. The first issue, in the ICA’s analysis, was related to the definition of the relevant market, crucial matter when a company is considered in a dominant position in the relevant market especially as a result of the power it is conferred by an intellectual property right. On the basis of a specific evaluation of the market’s complex economic assessment, the ICA assumed as relevant market the one of production of fosetyl-based fungicides. Bayer’s dominant position in the Italian fosetylbased fungicide market was demonstrated in several ways: the company's high market share (in 2007, approximately 46% in direct sales alone); the fact that in the Italian market, Bayer was the only producer of the finished products and supplier of its own competitors with pure fosetyl as active ingredient and fosetyl-based formulas; the high degree of pricing policy independence showed by Bayer in the 20072010 period. According to the ICA, Bayer undermined negotiation with competitors by denying access to certain studies in its possession which are required -i.e. necessaryso as to acquire market authorization by the competent Italian Authority for the production of fosetyl-based products. The studies were essential for obtaining market authorization renewals, especially because the current legislation prohibits their replication due to the involvement of animal testing on vertebrates. The result of such a behaviour was that competitor companies were forced out of the market because of their inability to renew their authorizations for the production and commercialization of the alleged products.