Overview
I. Introduction
On July 4, 2025, the European Commission (the Commission) fined Alchem International Pvt. Ltd. and its subsidiary, Alchem International (H.K.) Limited (together “Alchem”) €489,000 for participating in a cartel involving the active pharmaceutical ingredient (API) N-Butylbromide Scopolamine (SNBB). This decision comes at a time when competition authorities are intensifying their scrutiny of the pharmaceutical sector, after what appeared to be a lull following the Commission’s broad pharma sector inquiry and its prosecution of individual pharma companies for pay-for-delay arrangements with some generic companies. It also marks a milestone as the Commission’s first cartel case focused on an API, highlighting the Commission’s expanding focus on the pharmaceutical sector’s upstream components.
Factors may be of broader interest to business include:
- Companies do not have to participate in settlements with the Commission where they feel they have good defenses to an infringement investigation. The Commission may continue with bi-lateral discussions with the settling cartelists and separately prosecute its case against the defending party under the normal procedure. This is called a hybrid procedure, and this decision is the 12thsuch hybrid case since the introduction of the settlement procedure.
- The challenge for the Commission is to ensure that the rights of defense of the non-settling party are fully respected. This requires that no reference is made or used in the settlements, of evidence which may affect the non-settling party.
- The procedure against the non-settling party takes longer – here nearly two years – then the settlement procedure.
- If a party is not sure to receive a significant leniency reduction under the Commission’s leniency programme, it may choose to fight the case, rather than participate in the settlement process. Here, it is noteworthy that Alchem’s ultimate fine was only €489,000 in relation to a multi-year cartel which involved price-fixing, imposition of quotas and exchange of confidential price information.
II. Background: The SNBB Cartel
The Commission’s investigation concluded that (by price-fixing, imposing quotas and exchanging confidential information) from 2005 to 2018, Alchem and several other producers of SNBB, which is the active ingredient of the abdominal antispasmodic drug Buscopan and its generic versions, engaged in a coordinated scheme across the entire European Economic Area (EEA). The targeted companies agreed to fix minimum sales prices for SNBB, (ii) allocated annual sales quotas for SNBB and (iii) exchanged commercially sensitive information affecting pricing decisions. The Commission held that this collusive conduct undermined effective competition, likely resulting in inflated prices and reduced market choice for downstream customers.
On October 19, 2023, six other cartel participants, Alkaloids of Australia, Alkaloids Corporation, Boehringer, Transo-Pharm, Linnea, and C2 PHARMA, settled with the Commission. Alkaloids of Australia, Alkaloids Corporation, Boehringer, Linnea and Transo-Pharm were fined a total of €13,4 million for participating in a cartel concerning an important pharmaceutical ingredient. C2 PHARMA was not fined as it revealed the cartel to the Commission as the immunity applicant under the leniency program. All six companies admitted their involvement in the cartel and agreed to settle the case. By acknowledging their involvement and accepting liability, they received an additional 10% reduction in their fines under the Settlement Procedure. Alchem, however, declined to settle, prompting the Commission to proceed under the ordinary enforcement procedure. This involved issuing a statement of objections on June 13, 2024 and ultimately now adopting a full infringement decision imposing a fine on Alchem.
The case is notable as the first case involving an API in the pharmaceutical sector, demonstrating that enforcement attention now reaches beyond finished medicinal products to the raw materials and ingredients essential to their manufacture. Although not the first cartel case involving components or inputs, this perhaps echoes the investigation by the Commission into the fragrance industry where cartel-like behavior continues to be investigated, and in which International Flavors & Fragrances was fined for deleting WhatsApp messages during an inspection.
III. The Commission’s Enforcement Approach
This case exemplifies the Commission’s continued hybrid enforcement strategy, where settlement and non-settlement procedures are pursued concurrently. More specifically, the settlement procedure for cartel proceedings before the Commission was initiated with the 2008 Settlement Notice and has become the most common procedural route for undertakings involved in cartel infringement investigations. Nonetheless, both the Commission and the parties are still grappling with the less common route of “hybrid” settlements, where one or more parties either choose not to engage with settlement negotiations from the start or later leave the settlement process, leaving the Commission to deal with settling and non-settling parties in parallel. This can create challenges of preserving the rights of defense and presumption of innocence in respect of the non-settling party. Whilst this issue has been subject to intense case law scrutiny in recent years, commencing with the General Court’s Icap judgment in November 2017 (in which the General Court criticized the Commission for not giving ICAP – which had withdrawn from the settlement process - the opportunity to outline its views prior to the adoption of the decision with the settling defendants), it continues to be relevant even to the Commission’s most recent cartel enforcement practice, such as the FOREX or Ethanol benchmarks cases.
As a result, the Commission’s enforcement strategy in hybrid settlement cases remains a significant topic of debate. Moreover, while the core objectives of the settlement procedure, as outlined in the Commission’s 2008 Settlement Notice, were initially clear and well-defined, their relevance and effectiveness may be waning. The importance of the general principle of presumption of innocence means that where, for example, the settlement process cannot be completed under a hybrid scenario, without referring to the non-settling party’s involvement, it may be necessary to delay the adoption of the settlement decision until the procedure with the non-settling party has been concluded and to publish the two decisions at the same time. This shift may raise concerns about the long-term viability and consistency of the settlement framework (as a more efficient and faster enforcement process), prompting further scrutiny and discussion among stakeholders. While settlements should help speed up investigations and reduce litigation costs, the Commission remains prepared to carry out full investigations and decisions against parties that do not settle. This Alchem decision represents the 12thsuch decision which has been applied in multiple sectors including agriculture, trucks, finance, shipping and manufacturing since 2017.
IV. Legal Considerations for Non-Settling Parties
Non-settling companies such as Alchem face additional scrutiny but retain fundamental procedural safeguards. The European Courts have highlighted the importance of the presumption of innocence and the right to a fair trial, requiring that settlement decisions avoid prejudicing non-settling parties. Past rulings in cases such as Icap and Pometon have clarified thar references to non-settling parties must be limited and carefully worded.
Additionally, the principle of good administration requires the Commission to maintain impartiality and transparency throughout investigations. Furthermore, companies must be granted full rights of defense, as guaranteed by Article 48(2) of the EU Charter of Fundamental Rights, enabling them to respond effectively to allegations. Fines must be reasoned and proportionate, respecting the principle of equal treatment.
V. Outlook for Businesses
The Alchem decision sends a strong message to the life sciences and pharmaceutical sectors. It confirms that antitrust enforcement extends beyond finished drugs to encompass upstream inputs like APIs, which are vital components in drug production. For companies operating in the life sciences sector, this decision is a clear signal to enhance vigilance over all aspects of the supply chain. Companies must be alert to the risks posed by price coordination, quota sharing, or exchanging commercially sensitive information.
The Commission’s hybrid enforcement model adds complexity for companies under investigation. While settling may offer reduced fines and quicker closure, refusing to settle carries the risk of prolonged investigations. Therefore, firms must carefully consider their strategic responses to enforcement actions or higher penalties. However, while the decision is not publicly available yet, it will be interesting to see why the fine imposed on Alchem is significantly low, compared to the ones imposed on the rest of the cartel members.
VI. Conclusion
The European Commission’s fine against Alchem International for the SNBB cartel represents a pivotal development in pharmaceutical competition enforcement. It highlights the Commission’s expanded focus on upstream pharmaceutical inputs and demonstrates its readiness to combine settlement and full investigative procedures to maximize enforcement effectiveness. For life sciences companies, this decision underscores the importance of comprehensive compliance efforts across their entire supply chains and the need to be vigilant in all competitive dealings. Preparing for potential investigations and responding strategically, whether through settlement or defense, will be key to managing enforcement risks in this evolving regulatory landscape.
Please turn to the authors, Charles Whiddington and Maira Aivalioti, or to other members of Steptoe's antitrust team if you wish to discuss any of these developments and their potential impact on your business.
