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OFT forces pharmaceutical group to pay a fine of over £370,000 for care home medicine cartel

27 Jan 2015

In early 2013, the Office of Fair Trading (OFT) launched an investigation into a suspected breach of competition law in relation to the supply of healthcare products. As a result of that investigation, the OFT issued a decision earlier this month finding that Hamsard 3149 Limited (Hamsard), its subsidiaries Quantum Pharmaceutical Limited (Quantum) and Total Medication Management Services Limited (trading as Tomms Pharmacy – ‘Tomms’), together with Celesio AG and its subsidiary Lloyds Pharmacy Limited (Lloyds) infringed competition law by entering into a market sharing agreement in relation to the supply of prescription medicines to care homes in England.

The parties had agreed that under this market sharing agreement, the companies would not supply prescription medicines to existing Lloyds’ care home customers between May 2011 and November 2011. In return, for at least some of the time, Lloyds also agreed not to supply prescription medicines to existing customers of that same subsidiary.

The case was brought to the OFT’s attention by Lloyds under the OFT’s leniency policy and it was therefore exempt from a fine. Hamsard agreed to pay a penalty of £387,856. The penalty was reduced from £646,426 to reflect Hamsard’s admission and agreement to co-operate under the OFT’s leniency policy and in light of the settlement. In the OFT’s final decision, the fine imposed on Hamsard was £370,226.

Market sharing is a breach of competition law which in this case reduced competition for the supply of prescription medicines to some care homes, denying customers the benefit of fair competition.

For further information, please contact Jonathan Waters on 0191 232 8345 or email: jonathan.waters@hay-kilner.co.uk.