Introduction

On 13 February 2025, the District Court of Rotterdam ruled on two cases relating to the behaviour and complaint of a multinational pharmaceutical company – Leadiant Biosciences. The first judgment relates to the fine imposed by the ‘Dutch Competition Authority’ (Autoriteit Consument en Markt, ACM) for abuse of dominance by excessive pricing. The second judgment relates to the ACM’s refusal of Leadiant’s request to take enforcement measures against alleged anti-competitive behaviour of health insurers. 

This article examines both rulings by the District Court of Rotterdam. It provides an overview of the legal proceedings, the court’s reasoning, and the broader implications regarding excessive pricing and addressing market failures in the pharmaceutical sector.

Procedure 

Fining Leadiant

In the fining decision of 1 July 2021, the ACM imposed a fine of EUR 19.569.500 on Leadiant for abusing its dominant position within the meaning of Article 102 TFEU/Article 24(1) of the Dutch Competition Act (Mededingingswet, Mw) by applying exploitative pricing practices for the orphan drug (CDCA-Leadiant). Following Leadiant’s objection, the ACM reduced the fine to EUR 17.044.000, accepting that Leadiant did not have a dominant position for approximately 4 months in 2018 due to the temporary availability of an alternative drug.[1]

Refusal of Leadiant’s enforcement request

Parallel to the ACM’s investigation into alleged abuse of dominance, Leadiant filed an enforcement request with the ACM in 2021. In short, Leadiant requested enforcement of Article 101 TFEU by the ACM for alleged anti-competitive behaviour by health insurers resulting from a collective boycott that excluded Leadiant from the market. The health insurers allegedly coordinated their refusal of entering into negotiations with Leadiant as well as funding development of an alternative drug and applied other anti-competitive conduct (i.e. bad press etc.). After an initial investigation, the ACM refused to further investigate Leadiant’s complaint with reference to its prioritisation policy as it did not see any indication of a violation of competition law. A further investigation was therefore deemed to be ineffective and inefficient, together with enforcement against the alleged conduct not having major societal importance and the conduct likely not harming consumer welfare but actually improving it.

Background of the medicine

The ACM had found Leadiant guilty of abusing its dominant position by charging excessive prices for ‘chenodeoxycholic acid’ (CDCA), a drug used in the treatment of a rare disease, ‘cerebrotendinous xanthomatosis’ (CTX). In 2008, Leadiant acquired the rights to CDCA under the name Chenofalk from another producer, who already used it for CTX treatment. The price at the time was 46 euros per package of 100 capsules. By the end of 2009, Leadiant had changed the name of the medicine to Xenbolix and raised the price to 885 euros.

Leadiant’s Orphan drug & market exclusivity

In 2014, Leadiant requested for Xenbilox to be recognised as an orphan drug (i.e. a specific status protecting the orphan drug from competition from similar medicines with similar indications, which cannot be marketed during the exclusivity period in order to ensure a return of investments) and also requested a trade license for it. Simultaneously, Leadiant raised the price from 885 to 3103 euros. By the end of 2014, Xenbilox was recognised as an orphan drug under the ‘Orphan Medicinal Products Regulation 141/2000’ (OMPR). Subsequently, the trading license was granted to Leadiant in 2017, granting it also market exclusivity. This meant Leadiant held the sole rights on CDCA-based medicine for CTX in the EU for at least 10 years. Shortly thereafter, in June of 2018, Leadiant removed Xenbilox from the Dutch market and introduced CDCA-Leadiant. Aside from a change in name, no material changes were made to the medicine itself. No extra costs were incurred in the creation of this “new” medicine aside from the administrative costs associated with the requests for market exclusivity and the orphan drug status. Leadiant simultaneously chose to raise the cost of its medicine to 14.000 euros.

The development of alternative medicine

Leadiant maintained this price until 2020, when the Amsterdam University Medical Centre (AUMC) developed an alternative medicine for a significantly lower price using compounding (preparing customised medications by combining ingredients to meet a patient's specific needs). Before that, during a short period of 4 months in 2018, the AUMC had produced another alternative drug using the same technique. This drug was taken off the market for impurity of the base material after the ‘Health and Youth Care Inspectorate’ (Inspectie Gezondheidszorgs en Jeugd, IGJ) investigated following a complaint made by Leadiant. While health insurers and the State normally prefer patented medication, they openly supported the compounding in response to excessive pricing. Leadiant argued that this custom medication was made possible by a large-scale collaboration of health insurers and that they sought to lock Leadiant out of the market by providing an alternative medicine, alongside systematically refusing to negotiate on prices and attempting to mobilise the public and the government against Leadiant.

Confirmation of the fine by the District Court of Rotterdam

On 3 August 2023, Leadiant launched an appeal against the ACM’s decision on objections to uphold the imposed fine. In its decision, the District Court of Rotterdam confirmed most of the ACM’s findings, concluding that Leadiant had abused its dominant position by charging excessive prices for its medicine. 

Firstly, Leadiant brought forward the following grounds for appeal on procedural mistakes made by the ACM. Leadiant argued that the ACM:

1. Violated the rights of the defendant by claiming too many documents as confidential and denying Leadiant access to them;
2. Had unfairly denied access to correspondence within the ‘European Competition Network’ (ECN);
3. Should have refunded translation costs for the ‘penalty report’ (boeterapport);
4. Had violated the functional separation rules between the ACM’s legal service (Directie Juridische Zaken, DJZ) and the investigations directorate by allowing the legal service to formulate highly specific inquiry requests.

According to the District Court of Rotterdam, no major procedural mistakes had been made by the ACM because:

1. The limited access to the documents had been sufficient for Leadiant’s defence;
2. The interest of the ACM to be able to cooperate in a network of competition authorities and coordinate the oversight of competition outweighed the Leadiant’s interest of merely gaining access to this information, particularly given the circumstances that the ECN documents contained no evidence related to the actions taken by Leadiant;
3. The right to have free translation in case of punitive sanctions (criminal charge) and obligation to the courts to provide free assistance of a translator for the translation of all written documents and statements is not absolute.[2] Consequently, the District Court of Rotterdam ruled that by giving Leadiant an English translation of their decision, the ACM provided sufficient translation. Moreover, the District Court of Rotterdam even held that Leadiant took on its own risk by spending money prematurely on translation before even requesting a translation from the ACM.
4. The court concludes that the DJZ did not steer or control the investigation. The DJZ, responsible for imposing sanctions, concluded that the facts and circumstances mentioned in the report are insufficient to conclude objectively and impartially that a violation has been committed. The DJZ has the right to do further research and issue a supplementary report.[3]

Secondly, Leadiant argued that there were major omissions in the factual background of the case as presented by the ACM. Primarily, the long-lasting conspiracy by health insurers to use the compounding by AUMC to force Leadiant out of the market and leading the ACM to the wrong conclusions. The court dismissed this argument stating that the actions of the health insurers are irrelevant in the assessment of Leadiant’s conduct.

Thirdly, Leadiant argued that the ACM applied an incorrect legal framework and should have assessed the case based on anti-competitive behaviour intended to exclude competitors. However, the case did not concern the manufacturer's exploitation rights or the market exclusivity it obtained by designating the drug as an orphan drug. Instead, it focused on whether the exercise of that right complied with competition law. The practice of setting unfairly high prices—meaning prices that are not reasonably proportionate to the economic value of the service provided—constitutes an abuse of that right. Additionally, Leadiant claimed that the ACM had not demonstrated that it could act independently of competitors and customers, particularly in response to the potential—and later actual—competitive threat posed by compounding, combined with the purchasing power of health insurers.

The District Court of Rotterdam clarified that, regardless of health insurers seeking to boycott negotiations, showing a preference, or engaging in other actions, Leadiant always retained factual control over its pricing. This means that, despite competitive pressure or the perceived boycott, Leadiant had the ability to lower its price but chose not to. The Court emphasized that Leadiant’s behaviour and the actions of health insurers are two entirely separate matters and should not be conflated in assessing the case.

Furthermore, the District Court of Rotterdam determined that Leadiant held a dominant position because its market share in the relevant product market was 100%. The only period in which Leadiant did not have a dominant position was from April 1, 2018, to July 26, 2018, when compounded CDCA was available on the market. The court asserted that, according to established case law from the Court of Justice[4] and the Competition Appeal Tribunal[5], pricing behaviour is a relevant factor in assessing dominance. Even if compounded drugs created actual competitive pressure, Leadiant did not adjust its pricing strategy and instead maintained its high prices.

Leadiant further argued that, despite its pricing, consumer welfare was not directly harmed, as the medicine remained available to patients. However, the court agreed with the ACM’s argument that while Leadiant’s actions did not deprive patients of medicine, health insurers were forced to pay exorbitant prices for 2.5 years, with little benefit to the goals of the orphan drug programme. Leadiant had no research costs to recover, and any administrative costs had long been covered by its profits and could have been absorbed under a lower listing price. Although the total expenses may have been relatively small due to the limited number of CTX patients, such costs create a financial strain on the healthcare system. Given its limited resources, the healthcare sector might struggle to fund other necessary treatments. This, in turn, creates uncertainty for consumers and patients, ultimately harming consumer welfare. 

This means that the court agreed that 1) the ACM made no procedural errors in its investigation 2) Leadiant held a position of market dominance 3) there was not sufficient reason to justify said high prices 4) by imposing high prices, Leadiant harmed consumers. The court went as far as to say that Leadiant’s conduct was a ‘textbook example of excessive pricing.’

The court’s decision on the ACM’s refusal to investigate leadiant’s complaint 

The ACM’s prioritisation policy (i.e. the ACM’s policy to ensure the ACMs limited time and resources are used as effectively as possible, allowing them to stop investigations if they are unlikely to yield results) is based on three primary metrics, which are not necessarily cumulative. 

1. How effective and efficient will enforcement be;
2. How harmful is the behaviour to consumer welfare;
3. How large is the societal importance in the ACM using enforcement measures.

Leadiant complained that throughout the years, health insurers and foundations collaborated by financing, networking and acquiring materials to create the compounded drug by the AUMC. Foundations like Stichting Cbusinez and Pharmagister provided legal, organisational and communication aid to the health insurers and functioned as a linchpin between the parties. Alongside this, they collectively discussed excluding Leadiant from the market by no longer subsidising their medicine while subsidizing the AUMC alternative, even going as far as using the same procedures and contracts with patients when using the alternative.

The ACM’s response to Leadiant’s appeal grounds

1. The ACM argued that nearly all the grounds on which Leadiant bases its enforcement request have already been sufficiently addressed in Leadiant’s sanction decision and therefore require no further discussion. It states that the preliminary investigation into whether health insurers collaborated to promote AUMC’s medicine and boycott Leadiant’s treatment found no indication of anti-competitive conduct. Furthermore, the ACM asserts that a more in-depth investigation would be unlikely to yield a different conclusion and would therefore be neither effective nor efficient.
2. To the extent that health insurers collaborated, their decisions on how to navigate the high prices were not coordinated in a collective manner. According to the ACM, negotiations often failed due to Leadiant’s own actions, including its demand for NDAs, excessive pricing, and repeated price increases. As a result, most insurers independently sought ways to reduce costs. The fact that health insurers collectively discussed Leadiant’s pricing does not change this assessment.
3. The ACM emphasises that pricing was a pressing concern for all insurers, prompting them to seek alternatives. Additionally, the broader societal debate about overpriced medicines further encouraged insurers to engage in discussions both among themselves and with external stakeholders, such as the Ministry of Health, to determine the best course of action. The ACM also argues that the insurers’ actions ultimately promoted consumer welfare by providing a cheaper alternative that reduced strain on the healthcare system while maintaining the high-quality standards required by law. Moreover, the societal debate— and the public interest it reflects — generally perceives the availability of lower-cost medication as a positive development.

Based on these considerations, the ACM applied its prioritisation policy and chose not to investigate the health insurers further. However, the court took a different view:

Interpretation of the court

1. Effective & Efficient: Investigating a case in which the factual circumstances are already investigated is likely to require relatively little additional investigation. Simultaneously, the effectiveness of such an investigation may be greater, as the previous investigation allows for a better estimation of whether a new violation will be discovered. This is also reflected in the updated version of the prioritisation policy of the ACM. Additionally, the ACM argued that the alternative medicine would increase competition rather than decrease it. However, this raises the question of whether this behaviour constitutes a violation of competition law, but is justified, or whether no violation of competition has occurred at all. Since this is left unexplained by the ACM, the court finds the ACM’s decision to be insufficiently substantiated.
2. Consumer welfare: The court begins by clarifying that both actions must be treated completely independently. One party harming competition does not mean that behaviour in response to this inherently benefits consumer welfare. One party's unjustified actions do not always justify the other’s. This means that, when judging the case, Leadiant’s abuses must be separated from the actions of the health insurers. The stance of the ACM seems to indicate a “the goal justifies the means” approach, whereas the court holds that this is only true when the means have been carefully investigated to determine if they were justifiable in achieving the stated goal. Part of this assessment is whether alternative measures were possible to achieve similar results. The court clarifies that they are not assuming the behaviour of the health insurers did, in fact, constitute abuse, but only that the ACM insufficiently motivated that no damage to consumer welfare was caused by these actions.
3. Societal importance: The court begins by emphasising the importance of a well-functioning orphan drug industry for both consumers and health insurers. For the ACM to exclusively investigate the actions of one side, but not the other, even though there are indications of harmful behaviour, makes it unclear why societal importance would only justify the investigation of one side, creating an impression of arbitrary application. As Leadiant argued, if health insurers are always allowed to make compounded medicines when they find the orphan drug to be too expensive, it could lead to a lack of investment in the industry. This would result in these specialty medicines no longer entering the market, which would be detrimental to both consumer welfare and society’s stake. The court argues that the ACM fails to explicitly explain these factors in its decision, making the decision insufficiently clear and substantiated.

In conclusion, the District Court of Rotterdam ruled that the ACM insufficiently substantiated their choice to opt for their priority policy, but as the court is unable to make their own judgement on the content of the case, the ACM is ordered to revise its decision whether to investigate or not.

Conclusion

One day, one case, two impactful decisions. Firstly, while the court's upholding of the ACM’s fine for abuse of dominance through imposing excessive prices could be seen as progress towards addressing extreme overpricing, the loophole enabling to apply for an orphan drug status and, subsequently, charging significant prices, remains an issue yet to be resolved at the EU level. Nevertheless, this judgment demonstrates that obvious examples of excessive pricing by dominant undertakings can be remediated through EU competition law.

Secondly, the ACM is being held accountable for using its prioritisation policy without considerable substantiation. Consequently, the ACM must provide more transparency and clarity on applying its prioritisation criteria to prevent arbitrary use, or at least the perception of it being used arbitrarily. Importantly, the judgment outlines that the fact that harmful anti-competitive behaviour in one situation might not justify counteracting this behaviour with also anti-competitive behaviour. In other words, two wrongs do not—automatically—make a right, and not all ends justify the means.

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[1] Rechtbank Rotterdam 13 februari 2025, ECLI:NL:RBROT:2025:1811 r.o. 14.1 (Dutch).

[2] According to the ‘Dutch Trade and Industry Appeals Tribunal’ (College voor Beroep van het bedrijfsleven, CBb), this right only extends to what is necessary for a sufficient understanding of the process to mount an effective defenc, see: CBb 12 February 2010, ECLI:NL:CBB:2010:BM1689, Point 2.1 (in Dutch).

[3] College van Beroep voor het bedrijfsleven 30 augustus 2011, ECLI:NL:CBB:2011:BR6737 (in Dutch).

[4] CJEU 14 February 1978, C-27/76, ECLI:EU:C:1978:22 (United Brands); General Court 12 December 1991, ECLI:EU:T:91:70 (Hilti).

[5] Competition Appeal Tribunal 18 September 2023, [2023] CAT 56, Hydrocortisone, point 291.