Roche Diagnostics has agreed to supply the Dutch government and third parties with its covid-19 testing formula, ending an abuse of dominance probe by the country’s competition enforcer.
The Netherlands’ Authority for Consumers and Markets said on Friday that it investigated Roche Diagnostics, the diagnostics business of F Hoffman-La Roche, in connection with the expansion of testing capacity during the covid-19 crisis. Roche has a “key position” in the Dutch market for test equipment and materials, it said.
Following the enforcer’s week-long probe – in which it spoke with Roche, the Dutch government and industry players – Roche agreed to work with manufacturers and laboratories to scale up production of tests for the novel coronavirus, under the direction of the government.
Roche also agreed with the ACM that it will supply to the government and third parties its formula for lysis buffer, a reagent used to test for covid-19. The enforcer’s abuse of dominance probe was prompted by Dutch media reports during the last week of March that claimed Roche was withholding the formula for this necessary solution.
The company denied the reports in a press release on 27 March. It said it was working with the Dutch Ministry of Health’s diagnostics taskforce, alongside the National Institute of Public Health and the Environment and the Dutch Association of Medical Microbiologists.
Roche also claimed that its lysis buffer formula was available for microbiologists to use – but it warned that the company “cannot guarantee the safety and reliability of the quality and test results if the reagents required for this test are manufactured outside its own production network and qualified production sites”.
On Friday, however, the ACM said it had closed its investigation into Roche as the company had now committed to “doing everything it can” to ensure laboratories and hospitals can use Roche’s lysis buffer formula and related equipment to carry out as many covid-19 tests as possible.
“In times like these, it is vital that all parties involved work together in a constructive manner, and have the public interest in mind when doing so,” the ACM said.
The authority added that it worked closely with the European Commission as it investigated Roche. “After all, problems with test materials may occur in other European countries too,” it said. “The approach taken in the Netherlands may also be used by other member states in case of similar supply problems.”
The European Commission and Roche Diagnostics did not respond to requests for comment.
Floris ten Have, a partner at Stibbe in Amsterdam, noted that the enforcer’s press release refers to the allegedly significant market power of Roche on the Dutch market for testing machines and materials, which suggests the enforcer investigated the company under Dutch or EU refusal-to-supply law.
Such investigations are part of the authority’s “normal toolbox” and can end with an order to supply the relevant materials subject to periodic penalty payments, ten Have said. In the context of the novel coronavirus crisis, however, Roche “appears to have decided that it made sense to contribute to combatting the virus, rather than to have legal debate,” he said.
“Roche had been under pressure to do so from other directions as well – including politics and public opinion – so it is difficult to say if the end result can be entirely attributed to the ACM’s actions,” ten Have added.
Further, he noted a “trend across Europe” whereby companies and competition law enforcers are dealing with challenges concerning the crisis “pragmatically”. Companies want to contribute to the fight against the pandemic, ten Have said, so they may settle probes when they might otherwise have pushed back against certain allegations.
Bas Braeken, a partner at bureau Brandeis in Amsterdam, said that “Big Pharma is not used to giving in so speedily to the wishes of competition authorities”. But Roche was under “such tremendous public pressure” in the Netherlands that it made sense for it to make this “unique gesture”, he said – especially given the gravity of the crisis.