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Rare Abuse of Dominance Resolution Reinforces Competition Bureau’s Commitment to the Healthcare Sector

On March 24, 2023, the Competition Bureau (the “Bureau”) entered into a Consent Agreement with Isologic Innovative Radiopharmaceuticals, Ltd., (“Isologic”) committing the company to changing a number of its contractual clauses that the Bureau concluded were anticompetitive. McCarthy Tétrault was proud to have acted for confidential complainants to assist the Bureau to bring about these important changes regarding radiopharmaceuticals, which are isotopes used as critical inputs for diagnostic imaging.

The Consent Agreement comes after a Bureau inquiry under the abuse of dominance provisions of the Competition Act. Abuse cases are very rarely seen through to a remedy by the Bureau. This represents the Bureau’s first successful public resolution of an abuse matter since the Softvoyage consent agreement in 2018. Prior to that, the next most recent public abuse case was the failed challenge the Bureau commenced in 2016 in the Vancouver Airport Authority case.

The Consent Agreement is meant to provide for more flexible and competitive options for hospitals, clinics, and hospital buying groups alike. It includes, among other things:

  • Restrictions on New Contracts. Except with respect to hospital buying groups, Isologic may not enter into new contracts that:
    • (a) contain any term that requires or induces the customer to purchase certain specified products from Isologic on a sole or exclusive basis;
    • (b) contain any term that requires that the customer purchase a minimum quantity of certain specified products from Isologic on the basis of a percentage of its total purchases of those products; or
    • (c) contain certain restrictive auto-renewals.
  • Restrictions on Renewals. Isologic may not renew (including failing to prevent auto-renewal) contracts that contain the clauses detailed above; and
  • Restrictions on Negotiations with Hospital Buying Groups. While hospital buying groups are allowed to specify the clauses detailed above in their requests for proposals, Isologic is barred from inducing such groups to include these terms.

The Consent Agreement will remain in effect for the next 10 years. For more details about the Bureau’s conclusions and the remedies it obtained, see the Consent Agreement, here.

The investigation and Consent Agreement provide two primary takeaways:

  • The Impact of Complaints. For motivated parties willing to retain experienced competition counsel, well-thought-out complaints and a commitment to assist the Bureau can produce real results.
  • The Health Sector Remains a Key Bureau Priority. In resolving this by way of a publicly registered Consent Agreement, the Bureau is reaffirming its commitment to ensuring competition in the healthcare sector. Indeed, in its press release, the Bureau stated: “Promoting and protecting competition and innovation in the Canadian health care sector is a key priority for the Competition Bureau.”

For more information, please consult our Competition/Antitrust & Foreign Investment Group.

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