On 20 March 2014, the Office of Fair Trading (“OFT”) closed its investigation into the supply of prescription medication to care homes in England and confirmed the fines leveled on a pharmacist. The decision by the OFT is important as a case study to illustrate how settlement and compliance with the competition authorities can substantially reduce regulatory fines.
The fines relate to conduct from May 2011 to November 2011 between Quantum Pharmaceutical Limited (“Quantum“) and Lloyds Pharmacy Limited (“Lloyds“). Under a market sharing agreement, the two pharmacies agreed for a limited time not to supply prescription medicine to certain care home customers and effectively divided a market between themselves.
Lloyds bought the cartel to the OFT’s attention and under the OFT’s leniency programme, was spared a fine. The company that owns Quantum, Hamsard 3149 Limited (“Hamsard“) was conversely fined £646,426 for their participation in the cartel. Whilst they could not benefit from the complete leniency from fines that Lloyds enjoyed, Hamsard significantly reduced their fine to £387,546 by co-operating with the OFT once the wrongdoing was discovered and admitting their liability.
The Competition and Markets Authority (“CMA“) takes over the OFT’s and Competition Commission’s role as the central competition regulator on 1 April 2014. It is expected that like the OFT before it, the CMA will continue to make full use of its leniency and settlement programmes to reward whistleblowers and encourage admissions of liability. The present case like many others before it will continue to act as a reminder to companies and their advisors of the benefits of complying with the authorities and being the first to come clean about anti-competitive behaviour.