The Italian Competition Authority, at its meeting on 3 August 2007, decided to impose fines totalling Euro 3,995,820 on the companies BRISTOL-MYERS SQUIBB S.r.l., B. BRAUN MILANO S.p.A., HOLLISTER S.p.A. and COLOPLAST S.p.A. which were found to have entered into an anti-competitive arrangement.

The arrangement in question had to do with the supply of ostomy devices (used by patients who have undergone operations on the urinary and digestive tracts) to the Ferrara USL [Local Health Authority], coordinator of the buying consortium for the health authorities in the Provinces of Bologna and Ferrara. These four companies, which together cover practically the whole of the national market, did not present tenders - despite being pre-qualified - in the call for private bids by the Ferrara Local Health Authority in August 2003. In the same way, they did not present tenders in the subsequent private negotiation in June 2004, when invited to do so. This coordination practised by the four companies had the effect of reducing the already limited room for competition on price.

The agreement also had a more general impact because it discouraged, throughout the country, the use of single-supplier tender procedures: the Ferrara USL’s tenders were the first of their kind of any significant size and their negative outcome sent a ‘signal’ to other health authorities in the country that this purchasing method was substantially impracticable.

In the Authority’s view, the offence is very serious considering the types of product, for which supply to the health authorities obviously cannot be interrupted, since the devices are essential for the lives of ostomy patients. Furthermore, the arrangement concerned products paid for by the National Health System with detrimental consequences for the State.

The Antitrust Authority’s investigation began on 20 July 2006 following a complaint from the Ferrara USL which had attempted to introduce a new purchasing mechanism for ostomy devices, moving from a private negotiation system for direct distribution (under which practically the whole range of products sold was available) to a single-supplier tendering system: under the new method, the winner would instead supply a single product type with characteristics that would satisfy most of the post-hospital requirements. The tender terms exempted the supply of specific products for special requirements and the continuing supply to patients who had already undergone operations and were using other devices.

Contrary to what the companies maintained, claiming their non-participation in the bidding process was to protect the interests of the patient, the investigation demonstrated that the patient’s freedom of choice can be fully guaranteed under a single-supplier tendering system as well. Rather, the mechanism proposed by the USL of Ferrara would have obliged the companies to compete on price, leading to cost savings for the Health Authorities.

Precisely in order to avoid competition, according to the Authority’s reconstruction, the parties agreed amongst themselves not to respond, twice running, to requests for bids. The USL of Ferrara was then obliged to go back to purchasing procedures that no longer stipulated a single winner but accepted all suppliers’ pricelists.

The arrangement involved all the main suppliers of ostomy devices whose joint share of the Italian market is approximately 95%.

The fines imposed are as follows:

BRISTOL-MYERS SQUIBB S.r.l.                2,345,200 euros
B.BRAUN MILANO S.p.A.                           269,940 euros
COLOPLAST S.p.A.                           910,080 euros
HOLLISTER S.p.A.                           470,600 euros

Rome, 8 August 2007