Drug firm fined for care homes deal
A pharmaceuticals company is to be fined more than £380,000 over a cartel arrangement in which it carved up a multimillion-pound market in prescription drugs for care homes with a rival.
Tomms Pharmacy owner Quantum Pharmaceutical made a deal with Lloyds that neither would poach the other's customers - a breach of competition law - the Office of Fair Trading (OFT) said today.
The cartel was understood to have operated across care homes in the North, the Midlands and the South of England. The probe related to a period from May to November 2011.
Such arrangements are banned because they may stifle competition and result in higher costs for customers. Cartels involving care homes could ultimately mean higher costs passed on in fees for elderly or vulnerable residents.
OFT senior director Ann Pope said: "These two companies have admitted to entering into a cartel to reduce competition for supplies to care homes, which look after some of the most vulnerable members of society.
"We consider this type of market sharing to be a serious breach of competition law."
The OFT said that, under the agreement, the companies agreed that Tomms would not supply prescription medicines to existing Lloyds care home customers.
In return, for at least some of the time, Lloyds also agreed not to supply prescription medicines to existing Tomms care home customers.
Lloyds brought the case to the attention of the OFT. Because of this, it is not expected to pay a fine.
Hamsard, owner of Quantum and Tomms, has agreed to pay a penalty of £387,856, which was reduced from £646,426 to reflect its admission and agreement to co-operate.
Hamsard said: "The investigation related to a brief, isolated and historic incident of anti-competitive behaviour in relation to a small, non-core subsidiary (Tomms), at the time of its acquisition, which was brought to an end in under six months and dates back more than two years.
"The infringement did not affect the pricing or quality of prescription services supplied to care homes.
"Whilst the behaviour in question was in no way a deliberate attempt to distort the market, the group accepts liability for infringement of the Competition Act and has made full admissions of its adherence to the arrangements."
Hamsard said it had co-operated fully with the OFT investigation and had taken action to prevent such practices happening again, including additional competition law training for relevant employees.
Tomms had since undergone a significant structural, operational and management overhaul, it said.
Earlier this year, in June, Quantum suspended an employee pending an internal review following entirely separate allegations arising from a Daily Telegraph investigation into claims of collusion between drugs companies and pharmacists to overcharge the NHS.
Lloyds owner Celesio UK said: "We became aware of the existence of a market- sharing arrangement in our care homes business in November 2011. We took immediate action and stopped it.
"Our own comprehensive investigation showed that the arrangement lasted for a period of seven months and was largely confined to care homes in areas of the northwest and southwest of England.
"A very small number of staff were involved and they have since all left the company.
"The arrangement was discovered by our internal compliance function and the activity was stopped within 48 hours."
It said Lloyds and Celesio took a "zero-tolerance approach" to breaches of the law.
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