Competition law and enforcement in the pharmaceuticals sector in Bulgaria

No. The competition regulatory regime concerns all sectors of the economy including the pharmaceutical sector. The framework of the rules is set out in the Bulgarian Protection of Competition Act, promulgated in the State Gazette Issue N. 102/2008, as amended (the PCA).  

The Bulgarian Commission for the Protection of Competition (the “CPC”) is the authority responsible for enforcing the PCA. The CPC may interact with the health authorities when necessary to gather information on the relevant markets and market players.  

Generally, the CPC has the power to conduct investigations of alleged infringements of competition rules including to undertake unannounced inspections (dawn raids), to establish infringements and impose sanctions and corrective measures, or accept commitments by the concerned businesses.  

The sanctions and other negative consequences due to breaches of competition law may include:

• A fine of up to 10% of the aggregate annual turnover of the infringer in Bulgaria in the previous financial year. The exact amount of the fine will be determined considering the gravity and duration of the infringement, and the specific mitigating and aggravating circumstances on a case-by-case basis and in accordance with the CPC’s established Methodology for Setting Fines. Along with the fine the CPC would order the termination of the infringement and sometimes would render the adoption of behavioural or structural measures aimed at restoring effective competition on the market.  
• Individuals who have assisted in committing the infringement can be fined between BGN 500 (EUR 250) and BGN 50,000 (EUR 25,560). Fines between BGN 500 (EUR 250) and BGN 25,000 (EUR 12,780) can be imposed on individuals who do not present evidence requested by the CPC in due time or fail to submit complete, accurate, reliable information.  
• Third parties (e.g. competitors) that have suffered damage due to the infringement of the competition rules may bring damages claims before the civil courts. Please see the next question.  
• The infringer can suffer reputational damage/negative publicity (the CPC’s penalty decisions are published on the CPC’s website and are often reported in the national press) and increased scrutiny of its activities by the CPC and other regulatory authorities in the future.  

Yes. In 2018 the PCA was amended to include detailed rules concerning the actions for damages that resulted from an infringement of antitrust rules, i.e. anti-competitive agreements, decisions, or concerted practices and abuses of dominance. Damages suffered because of prohibited unfair competition, e.g. damaging the reputation of competitors; deceiving of customers, remained outside the scope of the detailed rules. Nevertheless, compensation for damages suffered from unfair competition can also be claimed, in accordance with the general rules of the PCA.  

Generally, all individuals and legal entities that incur damages due to infringement of competition rules are entitled to compensation, even if the breach was not aimed against them directly. The compensation should place the aggravated party in the position it would have been if the infringement had never been committed. The compensation should be proportionate to all damages suffered, lost profits and statutory interest due, but should not be excessive. The decision of the competition authority which has entered into force, will be binding on the civil court that deals with the case regarding the facts of the committed infringement and the perpetrator.  

Yes. The CPC has conducted two sector enquiries. The earlier one was in 2006 and it dealt generally with the markets for the production and trade with medicines. The more recent one was in 2016 and focused on the retail trade market with medicinal products, such that are wholly or partially reimbursed by the National Health Insurance Fund (NHIF).  

In 2006 the CPC made general recommendations to the Ministry of Health and the NHIF aimed at transparency on the market and ensuring fair competition between market players. The general recommendations to market payers included restriction of behaviours that can be seen as coordination and refraining from selling-below-cost practices. Market players involved in vertically integrated structures (e.g. manufacturer-wholesaler) were instructed not to restrict the access of competitors to their products and services.  

In its analysis in 2016, the CPC stated that there were normal competition conditions on the Bulgarian market of retail trade with medicinal products, despite a market leader accounting for around one-third of the market, and a certain level of vertical and horizontal integration. The CPC recommended improving the national system of pricing and reimbursement of medicines to the benefit of free competition and more incentives for market players, which would naturally lead to sufficient supplies of medicinal products in the country and to improved patient choice.  

The rate of enforcement of competition laws in the pharmaceutical sector in Bulgaria is low. There have not been any landmark decisions by the CPC establishing infringements in the sector in the last three years.  

Although there have not been any interesting decisions in the pharmaceutical sector recently, the sector has not fallen off the CPC’s radar. As typical for the sector in other EU Member States, also in Bulgaria the most common type of competition concerns are abuses of dominance, e.g. refusals to deal, unjustified discrimination, and the imposition of unfair trading terms or restrictive clauses on distributors.  

Of concern to pharma companies is that recent case law indicates that originators face a heightened risk that the CPC will take a narrow approach when defining the relevant market. If the market is defined narrowly, a company is more likely to have a dominant position and thus is more likely to face increased scrutiny of its commercial strategies.  

We consider worth mentioning the CPC’s decision dated 1 October 2020 in case № КЗК-881/25 October 2019. In this decision, the CPC opined on the compliance with competition rules of the Bill for the amendment of the Bulgarian Medicinal Products in Human Medicine Act (State Gazette Issue N. 31/2007, as amended), and the NHIF Budget for 2020 Act.  

Among others, the CPC stated its views that:

• The statutory prohibition restricting one person to hold permits for both wholesale and retail sales of medicines is compliant with competition rules.
• Health authorities should find the right balance between the goal of ensuring the sufficiency of the state budget and social interest protection, and protection of effective competition on the market of retail sale of 100% reimbursed by the NHIF medicinal products. Essential market incentives for market players in the distribution chain of medicinal products, such as profit margins, should be assessed as positive also for the stability of NHIF budget, and for the protection of patients’ rights.