Pharmacare Ltd t/a Aspen Pharmacare v Eli Lilly (S.A.) (Pty) Ltd (LM086Sep23) [2023] ZACT 82 (1 December 2023)

Pharmacare Ltd t/a Aspen Pharmacare v Eli Lilly (S.A.) (Pty) Ltd (LM086Sep23) [2023] ZACT 82 (1 December 2023)

The Tribunal found that the merger would not result in a substantial prevention or lessening of competition in any relevant market. The parties' overlapping products in the antidepressant category (ATC3 N06A) are clinically substitutable but differ significantly in price, with Lilly's non-generics costing 300-400% more than Aspen's generics, undermining direct substitutability under the SSNIP test. In the antimetabolite category (ATC3 L01B), the parties' products are not substitutable due to different clinical uses. Market shares post-merger remain low, and numerous alternatives exist. No vertical overlap arises as Lilly retains manufacturing. Public interest concerns are addressed: no...

Citation
[2023] ZACT 82
Parties
Applicant: Pharmacare Ltd t/a Aspen Pharmacare; Respondent: Eli Lilly (S.A.) (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
1 December 2023
Case Number
LM086Sep23
Procedural Posture
Large Merger / Approval and Reasons
Outcome
The proposed merger is unconditionally approved.
Judges
Andreas Wessels, Geoff Budlender, Thando Vilakazi
Legal Topics
Large Merger Review, Market Definition, Public Interest, Single Exit Pricing, Horizontal Overlap
Competition Law Commercial and Corporate Large Merger Review Market Definition Public Interest Single Exit Pricing Horizontal Overlap

Case Brief

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Parties

Pharmacare Ltd t/a Aspen Pharmacare

Applicant

Eli Lilly (S.A.) (Pty) Ltd

Respondent

Procedural Posture

Large Merger / Approval and Reasons

Legal Issues

  1. 1 Whether the proposed merger will result in a substantial prevention or lessening of competition in any relevant market.
  2. 2 Whether the transaction raises any public interest concerns, including employment and ownership by historically disadvantaged persons.
  3. 3 Whether the price differential between generic and non-generic products affects substitutability and competition.

Ratio Decidendi

The Tribunal found that the merger would not result in a substantial prevention or lessening of competition in any relevant market. The parties' overlapping products in the antidepressant category (ATC3 N06A) are clinically substitutable but differ significantly in price, with Lilly's non-generics costing 300-400% more than Aspen's generics, undermining direct substitutability under the SSNIP test. In the antimetabolite category (ATC3 L01B), the parties' products are not substitutable due to different clinical uses. Market shares post-merger remain low, and numerous alternatives exist. No vertical overlap arises as Lilly retains manufacturing. Public interest concerns are addressed: no...

Court Disposition

The proposed merger is unconditionally approved.

Orders

  • The large merger between Pharmacare Ltd t/a Aspen Pharmacare and Eli Lilly (S.A.) (Pty) Ltd is approved without conditions.
  • No retrenchments or job losses will result from the transaction.