Select Competition Issues arising from changes in the Distribution of Pharmaceutical Products in South Africa

Significant changes have taken place in the distribution stage of the pharmaceutical supply chain in the South Africa during the past decade. These have led to a series of complaints and applications for interim relief to the competition authorities. The Competition Tribunal has delivered some judgements that have been in favour of the pharmaceutical manufacturers and others, in favour of the wholesalers.

The purpose of the paper is to reflect on the changes that have taken place in the distribution stage of the pharmaceutical supply chain, and to flag a selection of issues that arise in an assessment of the competition impact of these changes. As a case is currently in process at the Tribunal, it is important to skirt sub judice territory, and therefore this paper does not present a complete review of Tribunal decisions.

This paper starts with a brief review of recent developments in the pharmaceutical industry in South Africa. The changes within the distribution stage of the supply chain are particularly pertinent in the context of the series of competition cases that have been decided upon by the Competition Tribunal since 1993. We then flag select issues that are relevant to a consideration of the competition impact of the joint exclusive distribution ventures that have been established by groups of pharmaceutical manufacturers or the exclusive dealing arrangements that manufacturers have entered into with distribution enterprises. This exercise emphasises the complexity of such assessments, to which the ongoing rounds of cases before the Tribunal, are also testimony.