pay-for-delay

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Advocate General Kokott issued her opinion last week in the preliminary ruling referral from the UK Competition Appeal Tribunal (CAT). The CAT proceeding is itself an appeal against an infringement finding against a number of companies (except one, IVAX, which is now part of TEVA, which received a ‘No Grounds for Action’ letter).

AG Kokott finds that an agreement to settle a patent dispute may constitute a restriction of competition by object or by effect and that entering into such an agreement may be an abuse of a dominant position. This is in line with the General Court’s recent judgments in Perindopril and Lundbeck, but her views diverge on market definition where she seems to side with the CAT on a narrow, molecule-level definition.Continue Reading Paroxetine: AG Rules on Reverse Payment Settlement Referral

This week, the EU General Court partially overturned the EU Commission’s decisions in Perindopril (Servier v Commission and Krka v Commission).

The judgment was handed down pretty much on the tenth anniversary of the original dawn raids in November 2008. The raids came as a follow-up from the European Commission’s pharma sector enquiry and led to a number of infringement decisions that have also found their way up to the General Court and to the Court of Justice of the EU. The key theory which the EU Commission advanced in the cohort of these so-called ‘pay-for-delay’ cases is, very broadly, that EU competition law can intervene in patent settlement cases in certain circumstances (both under the rules on abuse of dominance and restrictive agreements). These circumstances are (again, very broadly) where (i) the settlement proposal restricts entry by an actual or potential generic competitor—the delay element, and (ii) where the originator company makes a value transfer to the potential generic entrant – the payment element. This could be by way of a lump-sum payment or through some other way (e.g., through a beneficial distribution agreement). On abuse of dominance, the theory is that unilateral conduct aimed at “shutting out a competing technology and buying out a number of competitors” constitutes an abuse. These theories are now being tested in the European Courts.

In parallel, the UK’s Competition and Markets Authority (CMA)—or OFT, as it then was—investigated similar issues in Paroxetine, a case which the European Commission pushed to the CMA because of an EU limitation issue and which the CMA pursued as the UK does not have a limitation period for competition law infringements. That case is currently under appeal before the Competition Appeal Tribunal which in turn has referred a number of questions to the European Court of Justice.Continue Reading Perindopril: Pay-for-delay but not as you know it