Supreme Court hears appeal in alleged medicine price-fixing case
NaCC battles on behalf of consumers
The Namibian Competition Commission (NaCC) is appealing a High Court ruling in the Supreme Court, arguing that the lower court overlooked critical evidence allegedly implicating more than 200 pharmacies in colluding to inflate medicine prices.
The NaCC has claimed that prices were sometimes increased by as much as 50% above the original cost.
The High Court ruling did not determine whether price-fixing had occurred, but instead focused on procedural flaws in the NaCC’s decision-making process.
Last Friday, the parties formally submitted their arguments in the Supreme Court. Sisa Namandje and Vincent Maleka SC represented the NaCC, while Michael Fitzgerald SC and Geoffrey Dicks appeared for the respondents.
According to the NaCC, this alleged practice amounts to price-fixing, which undermines fair competition in the pharmaceutical market and unfairly inflates the cost of essential medicines for Namibian consumers.
The commission contends that the High Court failed to properly consider evidence demonstrating how this alleged scheme harms both patients and the healthcare system at large.
“The reason for the above prohibition is not hard to find. Price-fixing of commodities, be it goods or services, has the artificial effect of excluding competition and limiting choices open to consumers to procure such commodities at reasonable and affordable prices that are competitive,” NaCC court documents read.
Defence
Meanwhile, the Pharmaceutical Society of Namibia (PSN), representing the accused pharmacies, vehemently denies any wrongdoing.
The society further argues that there is no mandatory pricing rule enforced by PSN, and that any mark-ups or discounts applied are at the discretion of individual pharmacies.
PSN is also challenging the commission’s procedures, alleging that their right to a fair hearing was violated after critical information was withheld, preventing them from properly responding to the allegations.
"As for the procedure, it is again clear that all the complainants were invited to listen to the oral presentations made by PSN's legal team, but that it and its legal team were then excluded when the complainants presented their oral presentations," the court was informed.
"They were even granted the opportunity to make further written presentations, which were also not disclosed to PSN and its members”.
Commission's findings
Despite the PSN’s protests, the commission maintains that it uncovered evidence pointing to a systematic price-fixing scheme they claim was engineered by PSN.
Central to the case are statements from ENS Africa, a law firm representing certain pharmacies, alleging that PSN pressured members to impose a 50% markup and threatened sanctions against those who deviated.
The commission also points to a failure by PSN to cooperate fully, including withholding critical information and refusing to disclose relevant internal documents.
They further highlight admissions, reportedly from some PSN members, who do not follow any markup rules.
For instance, PAMM Pharmacy reportedly “unilaterally determines its own pricing policies” and does not recognise any binding PSN pricing rule.
Further evidence presented to the court includes the commission’s recommendation to exclude 17 PSN members from allegations of contravention due to their non-compliance with the alleged 50% markup rule.
"This refers to a letter dated 15 November 2018 from ENS stating that 'PAMM Pharmacy (a member of PSN) has ‘since its inception in February 2017, unilaterally determined its own pricing/discounting policies and practices and does not: 9.2.1 accept as binding any rule of the PSN regarding the imposition of a ‘standard 50% mark-up on the dispensing of medicines’; and, importantly, 9.2.2 does not adhere to any such rule.'"
The same document adds: “The four pharmacies that made oral representations did not adhere to the requirement to implement the 50% markup pricing structure. Following this, seventeen PSN members were recommended to be excluded from the finding that there was a contravention of sections 23(1), 23(2)(a) and 23(3)(a)."
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The NaCC has claimed that prices were sometimes increased by as much as 50% above the original cost.
The High Court ruling did not determine whether price-fixing had occurred, but instead focused on procedural flaws in the NaCC’s decision-making process.
Last Friday, the parties formally submitted their arguments in the Supreme Court. Sisa Namandje and Vincent Maleka SC represented the NaCC, while Michael Fitzgerald SC and Geoffrey Dicks appeared for the respondents.
According to the NaCC, this alleged practice amounts to price-fixing, which undermines fair competition in the pharmaceutical market and unfairly inflates the cost of essential medicines for Namibian consumers.
The commission contends that the High Court failed to properly consider evidence demonstrating how this alleged scheme harms both patients and the healthcare system at large.
“The reason for the above prohibition is not hard to find. Price-fixing of commodities, be it goods or services, has the artificial effect of excluding competition and limiting choices open to consumers to procure such commodities at reasonable and affordable prices that are competitive,” NaCC court documents read.
Defence
Meanwhile, the Pharmaceutical Society of Namibia (PSN), representing the accused pharmacies, vehemently denies any wrongdoing.
The society further argues that there is no mandatory pricing rule enforced by PSN, and that any mark-ups or discounts applied are at the discretion of individual pharmacies.
PSN is also challenging the commission’s procedures, alleging that their right to a fair hearing was violated after critical information was withheld, preventing them from properly responding to the allegations.
"As for the procedure, it is again clear that all the complainants were invited to listen to the oral presentations made by PSN's legal team, but that it and its legal team were then excluded when the complainants presented their oral presentations," the court was informed.
"They were even granted the opportunity to make further written presentations, which were also not disclosed to PSN and its members”.
Commission's findings
Despite the PSN’s protests, the commission maintains that it uncovered evidence pointing to a systematic price-fixing scheme they claim was engineered by PSN.
Central to the case are statements from ENS Africa, a law firm representing certain pharmacies, alleging that PSN pressured members to impose a 50% markup and threatened sanctions against those who deviated.
The commission also points to a failure by PSN to cooperate fully, including withholding critical information and refusing to disclose relevant internal documents.
They further highlight admissions, reportedly from some PSN members, who do not follow any markup rules.
For instance, PAMM Pharmacy reportedly “unilaterally determines its own pricing policies” and does not recognise any binding PSN pricing rule.
Further evidence presented to the court includes the commission’s recommendation to exclude 17 PSN members from allegations of contravention due to their non-compliance with the alleged 50% markup rule.
"This refers to a letter dated 15 November 2018 from ENS stating that 'PAMM Pharmacy (a member of PSN) has ‘since its inception in February 2017, unilaterally determined its own pricing/discounting policies and practices and does not: 9.2.1 accept as binding any rule of the PSN regarding the imposition of a ‘standard 50% mark-up on the dispensing of medicines’; and, importantly, 9.2.2 does not adhere to any such rule.'"
The same document adds: “The four pharmacies that made oral representations did not adhere to the requirement to implement the 50% markup pricing structure. Following this, seventeen PSN members were recommended to be excluded from the finding that there was a contravention of sections 23(1), 23(2)(a) and 23(3)(a)."
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