Seven clinical labs targeted in competition watchdog investigation

Portugal’s Competition Authority accused on Thursday seven leading laboratories and a business association in the sector of acting in a cartel to fix prices for Covid-19 tests and clinical analyses between 2016 and 2022.

“The concertation between the targeted laboratories allowed them to increase their bargaining power with the public and private entities with which they negotiated the supply of clinical analysis and Covid-19 tests, leading to the setting of potentially higher prices than those that would result from individual negotiations under the normal operation of the market, preventing or delaying the review and reduction of prices,” the competition authority said in a statement.

An accusation that the National Association of Clinical Laboratories (ANL) has refuted, claiming that prices of acts and services provided by its members to the Portuguese health service or other funding bodies “were set unilaterally and autonomously by the payers.

In a statement, the competition authority said it adopted a notice of illegality against the laboratories and the business association “for involvement in a cartel”, which does not, however, determine the outcome of the investigation.

“At this stage of the process, the companies, which enjoy the presumption of innocence, are allowed to exercise their right to be heard and to defend themselves about the unlawful conduct detected by the competition authority, the evidence gathered, and the sanction or sanctions they may incur,” the authority explained.

The prosecution said there was a “reasonable probability that the association and the targeted laboratories will be sanctioned” for having agreed on a strategy to be adopted in negotiations with the health service and private entities.

“The cartel established between the targeted laboratories through their participation in the board of the association aimed to fix the prices applicable to the provision of clinical analysis and the supply of Covid-19 tests, as well as the sharing of the market and supply sources, including the commitment not to recruit and hire workers from competing laboratory groups (a practice known as ‘no-poach’),” the competition authority said.

According to the authority, more than 40 million screening tests for the virus that causes Covid-19 were carried out in Portugal until March 30, 2022.

This investigation was opened on February 24, this year following the presentation of a leniency application. The competition authority subsequently received a second leniency application.

In March 2022, the competition authority conducted search and seizure operations at the headquarters of the companies in question, in Lisbon and Porto, to investigate the evidence in the case.

In its reaction, the ANL confirms in a statement that it was notified today but “firmly refutes the conclusions contained in the preliminary note” of the competition authority.

“We have contributed, at the request of the Portuguese state, in a decisive way to help overcome the fragilities and constraints that beset the health service during a period of special fragility,” the association said, stressing that it “has always adopted a conduct of transparency with all the authorities”.

The ANL also said that, without prejudice to a more careful analysis of the notification, the competition authority’s accusation would be “at the appropriate time and place, subject to contradiction and refutation,” as well as, “if necessary, scrutiny by the judicial authorities.

“We can only regret that the competition authority, throughout an investigation that began in February 2022, has not, at any time, sought clarification from the ANL about the facts in question,” he said.