On 3 October 2019, the CMA accepted commitments ending part of a two-year investigation into Aspen, a pharmaceutical producer. These commitments include an undertaking never previously employed by the CMA to compensate victims of the alleged anti-competitive conduct without the need for private enforcement. The investigation is ongoing in respect of market sharing agreements that the CMA alleges Aspen has entered into with Tiofarma and Amilco.
Aspen is the sole UK supplier of fludrocortisone acetate tablets used to treat primary or secondary adrenal insufficiency, which the CMA describes as “vital, life-saving drugs, on which thousands of patients depend.”
In November 2015, Tiofarma obtained a marketing authorisation to supply an ‘ambient storage’ version of the tablets as an alternative to Aspen’s ‘cold storage’ tablets. The CMA found that the ‘cold storage’ and ‘ambient storage’ versions of the tablets were substitutable and that Tiofarma represented “a significant competitive threat to Aspen … as it presented a route to market for a new entrant.”
In October 2016, Aspen acquired the worldwide rights over Tiofarma’s product and withdrew Aspen’s own ‘cold storage’ product from the market. The CMA provisionally concluded that the acquisition constituted an abuse of dominance, removing the only source of competitive threat to Aspen’s position as the sole UK supplier and preventing—or considerably delaying—the emergence of a rival.
As a result, so the CMA found, the acquisition “left Aspen free to price above competitive levels,” charging eight times more for the acquired ‘ambient storage’ product than the ‘cold storage’ product that had been withdrawn.
To address the CMA’s concerns, Aspen committed to divest UK rights over ‘ambient storage’ fludrocortisone tablets to an independent third party and reintroduce its own ‘cold storage’ version of the product.
These commitments have several unusual features. First, structural remedies are rarely used in behavioural cases; the last time structural remedies were imposed in the UK (outside of merger cases) was in 2013, following Ofwat’s investigation into an alleged abuse of dominance in the water sector. Second, acquisitions are typically reviewed under merger control rules rather than prohibitions on abuses of dominance or anti-competitive agreements. The European Commission has only rarely applied similar theories of harm in a handful of cases that pre-date the entry into force of the EU Merger Regulation in 1990. Third, the commitments require Aspen to reintroduce its cold storage tablets to the market, even though the CMA did not claim that Aspen was under a positive ‘duty to supply’ these products in the first place.
But the most unusual aspect of the commitments is Aspen’s undertaking to pay £8 million to UK healthcare authorities as compensation for the higher prices that Aspen was able to charge, compared with a counterfactual scenario in which Tiofarma entered the market independently. This is the first occasion on which CMA commitments have included a provision to compensate potential victims. The commitments were entered into even though the CMA had not reached a final decision on whether Aspen’s conduct violated competition rules, which would have enabled affected healthcare authorities to commence follow-on actions for damages. The only comparable case in the UK was the OFT’s investigation into price-fixing by independent schools, in which the participating schools agreed to make payments to a charitable trust that would benefit affected pupils.
The Compensation Provision
A compensation commitment has several potential benefits. As the CMA notes, it enables compensation without “the potential need for lengthy and costly litigation to seek damages following any final CMA decision” and contributes to deterrence against anti-competitive conduct, even without the CMA reaching an infringement decision.
Compensation commitments may also provide an alternative to ‘voluntary redress schemes’ which the CMA can approve as programs to pay victims ‘full and final’ settlements without the need for follow-on damages. The statutory framework for these schemes was introduced in 2015, but they have not been used in practice, possibly because of their complexity, cost, and the absence of any guarantee that setting up a redress scheme will lead to a fine reduction or remove the possibility of private damages actions. At most, the CMA “does not rule out reconsidering whether it would be appropriate for the party to retain its reduction in fine” if the infringing company agrees to set up a voluntary redress scheme. By contrast, agreeing compensation as part of a commitments package enables a company under investigation to avoid a fine altogether.
However, a compensation commitment may not be appropriate or feasible in all cases.
First, it requires cooperation from both the company under investigation and the victims of the potentially anti-competitive conduct. In the Aspen case, the UK health authorities were the only apparent victims and were willing to “provide an assurance that this payment will be taken into account in the event of any follow-on damage proceedings.” In other cases, victims may be unwilling to give such assurances (for example, if they believe the proposed compensation should be higher).
Second, in cases where the loss is dispersed among a large number of potential victims, it may be impractical for the CMA to gather similar assurances from each and every party that may be entitled to bring follow-on claims. For example, losses may be widely dispersed in cases concerning practices that affect consumer goods.
Third, there was no apparent dispute in the Aspen case about who were the victims of the alleged anti-competitive conduct and how damages should be apportioned between them. This assessment would be substantially more complex in cases where the victims have potentially competing claims. For example, in Reckitt Benckiser—another case concerning the anti-competitive withdrawal of a pharmaceutical product—claims were brought by both customers (i.e., health authorities) and competitors whose entry to the market was said to have been delayed.
Finally, agreeing to pay compensation may reduce the attractiveness of offering commitments in the first place. One of the perceived benefits of settling an investigation through commitments is that it avoids a finding of infringement that could then form the basis of follow-on damages actions. While a commitments decision could not form the basis for follow-on damages actions as a technical matter, a commitment to pay compensation could make it easier for other potential claimants to demonstrate loss in standalone actions.
Therefore, while there are advantages in resolving compensation claims in proceedings before the CMA, it may be used as an exceptional tool, rather than an ordinary course feature of commitments decisions.
 Case 50455, Aspen, CMA decision of 3 October 2019.
 Case 02/13, Severn Trent, Ofwat decision of January 2013.
 See, for example, Case IV/26811 Continental Can Company, Commission decision of 6 December 1971; and Cases IV/33.440 Warner- Lambert/Gillette and Others and No IV/33.486 BIC/Gillette and Others, Commission decision of 10 November 1992.
 Case CA98/05/2006, Exchange of information on future fees by certain independent fee-paying schools, OFT decision of 20 November 2006.
 Section 49C to 49E of the Competition Act 1998.
 In particular, applicants to set up a voluntary redress scheme have to put in place a Chairman and Board to oversee the scheme, and commit to operate it for at least 9 months. Moreover, potential beneficiaries who decide not to apply for redress under an approved scheme do not lose their right to seek compensation through follow-on litigation.
 CMA40, Guidance on the approval of voluntary redress schemes for infringements of competition law, 14 August 2015, paragraph 4.14.
 For example, in the Replica Football Shirts case (The Consumers’ Association v JJB Sports Plc, Competition Appeal Tribunal, Case 1078/7/9/07), JJB Sports and Which? reached a settlement whereby each affected consumer could be compensated £20.
 Case CE/8931/08, Reckitt Benckiser, OFT decision of 12 April 2011.