Posted by Social Science Research Network
Antitrust Developments in Food and Pharma
By John M. Connor
Closing the loopholes of downstream application of the Capper-Volstead exemption in the food system and pay for delay in pharmaceuticals is an important advance in US and EU antitrust norms. First, pay-for-delay conduct has been harmful for pharmaceuticals customers. After ten years of litigation that divided circuit courts, the Supreme Court decreed that payments to generic drug sellers by the patent holders of the brand equivalent that are aimed at delaying entry are illegal, but did so under a structured rule-of-reason approach. EU competition authorities treat such payments as per se civil infractions. Second, until court decisions made in 2011–2014, the reach of the Capper-Volstead Act and the legality of pay-for-delay conduct in the drug industry were in doubt. In 2015, most federal circuits now clearly agree that, at a minimum, acreage restrictions by marketing cooperatives are per se illegal. Moreover, any manipulation by farmers’ cooperatives of upstream supply is also likely to be illegal.
