Pfizer fine shows companies must take information requests from competition authorities seriously, says expert

On Tuesday the UK's Competition and Markets Authority (CMA) confirmed that it had served Pfizer with a £10,000 fine for failing to comply with an information request it had sent earlier this year.

Under the Competition Act the CMA has the power to require companies to disclose any "specified document" or "specified information" that it "considers relates to any matter relevant" to an investigation it is conducting.

The CMA is carrying out an investigation into the alleged excessive and unfair prices for phenytoin sodium capsules, an anti-epilepsy drug. Last summer the CMA issued a statement of objections in the case which expressed the authority's provisional view that Pfizer may have abused a dominant market position in breach of competition laws in respect of the pricing of phenytoin sodium capsules.

As part of its investigations the CMA asked Pfizer to provide information to it to "substantiate" comments the company had made during an oral hearing in January in response to the statement of objections the authority had issued.

The CMA gave Pfizer 15 days to disclose the information. It rejected a request from Pfizer to extend that deadline. The CMA said that Pfizer submitted its response to its request five days after the end of the 15 day deadline. It concluded that the company had "failed to comply with a requirement imposed on it" under the Competition Act "without reasonable excuse". A £10,000 fine for the breach was "appropriate and proportionate", the CMA said.

"The purpose of [the information request] was to obtain the evidence supporting a pre-prepared representation Pfizer made at the oral hearing," the CMA said in its penalty notice (17-page / 444KB PDF). "Given this, the CMA considers ... that the factual information underpinning its own representation was readily available to Pfizer, or should have been, and consequently that Pfizer was in a position to provide it to the CMA in short order, and certainly within 15 calendar days."

The authority said Pfizer had not provided it with reasoning why it needed more time to meet its information request, despite asking the company to do so.

"At no point in time in the run up to the expiry of the deadline on 26 February 2016 – or … at any time since then – and despite being directly asked by the CMA on more than one occasion to give an explanation, did Pfizer present any reasons as to why it was unable to provide this response within the 15 day deadline," the CMA said.

Competition law specialist Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said: "The CMA’s ability to impose administrative penalties is a new power which it has only enjoyed since 1 April 2014," Lougher said. "This is the first case in which that power has been exercised, but it will not be the last." 

"The case highlights two key points. First, businesses interacting with the CMA, whether as part of a merger, antitrust or market investigation, must take seriously the CMA’s requirements about the timetable, format and scope of any request to provide information and documents. Secondly, businesses may be required by the CMA to verify and substantiate in a specified timescale, in this case, the period was 15 calendar days, any factual statements which they make, or which their advisors make on the business’ behalf, in written or oral representations to the CMA," he said.

Lougher said that other companies could face stiffer penalties than that which was imposed on Pfizer in other cases where information requests are not adhered to.

"In this case, which concerned an antitrust investigation that does not operate to a statutory timetable, the administrative penalty imposed was a fixed amount of £10,000 although the maximum amount of an administrative penalty is a fixed penalty of up to £30,000 and/or a daily penalty of £15,000," Lougher said. "It is possible that administrative penalties will be higher in merger and market investigations which operate to statutory timetables, because there may be a greater adverse impact on the CMA’s investigation if a business fails to comply with the CMA’s requirements."