Competition: General Court dismisses Lundbeck's appeal against Commission decision concerning pay-for-delay agreements

On 8 September 2016, the General Court ("GC") gave six judgments dismissing appeals by Lundbeck, a Danish pharmaceutical company, and several generic drug producers against the Commission's decision to impose a fine. The Commission had fined the companies EUR 150 million for breaching competition rules by agreeing to prevent the market entry of a generic antidepressant medicine. According to the Commission, Lundbeck paid generic producers to stay out of the citalopram market after Lundbeck's basic patent for the citalopram molecule had expired. As a result, Lundbeck was able to maintain artificially high prices for its flagship product for an extended period.

The GC noted that Lundbeck paid significant lump sums to certain generic producers, purchased their stocks of generic products for the sole purpose of destroying them, and offered guaranteed profits in a distribution agreement, which gave Lundbeck the certainty that the generic undertakings would stay out of the market for the duration of the agreements. The GC also confirmed the Commission's finding that Lundbeck and the generic producers were potential competitors at the time the agreements were made. In addition, the GC held that the generic producers had concrete possibilities of entering the citalopram market with cheaper generic versions. Further, the GC held that the Commission was entitled to conclude that the agreements at issue constituted restrictions of competition by object, and that Lundbeck was unable to demonstrate that the agreements were necessary to protect its intellectual property rights or to preserve its incentive to innovate.

The Court also dismissed arguments concerning alleged breaches of rights of defense and alleged errors in the imposition and calculation of the fines. Consequently, the GC dismissed the appeals by Lundbeck and the generic drug producers in their entirety. Source: Commission Press Release 8/9/2016 and General Court of the European Union Press Release 8/9/2016

Competition: General Court dismisses appeal by Goldfish and Heiploeg against Commission decision concerning North Sea shrimp traders cartel

On 8 September 2016, the General Court ("GC") gave a judgment dismissing the appeal by Goldfish BV, Heiploeg BV, Heiploeg Beheer BV and Heiploeg Holding BV ("the appellants") against a Commission decision to impose a EUR 28.7 million fine on the North Sea shrimp trader price-fixing cartel. Klaas Puul received full immunity from the fines because it was the first to provide information about the cartel.

The Commission's investigation started in March 2009, when the Commission conducted unannounced inspections at the premises of several undertakings active in the North Sea shrimp industry. Later, in July 2012, the Commission sent a Statement of Objection to four of these traders. In November 2013, the Commission held that these four traders had participated in an illegal price-fixing and volume-sharing cartel with the purpose of freezing the market by stabilizing the suppliers' market shares. This was meant to facilitate price increases and stimulate profitability. In January 2014, the appellants lodged an action with the GC.

In support of their appeal, the appellants argued that the Commission had infringed EU law by using secretly made audio recordings as evidence of the competition law infringement. The GC noted that the prevailing principle in EU law is that of the unfettered evaluation of evidence. This means, first, that where evidence has been obtained lawfully, its admissibility cannot be contested before the GC and, second, that the only relevant criterion for assessing the probative value of lawfully gathered evidence is its credibility. In addition, the GC noted that the European Court of Human Rights repeatedly confirms that the use of unlawfully obtained recordings is not in itself a breach of a fundamental right. In this case the recordings were made by a private party, not by the Commission, and the recordings had been obtained legally during an unannounced inspection. Further, the recordings were not the only, nor were they the deciding, factor in the Commission's decision. Consequently, the GC held that even if the recordings were made illegally by a competitor, the Commission had not committed any infringement in using the audio recordings as evidence for its price-fixing cartel decision. Therefore, the GC dismissed this plea.               The GC also held that the Commission had not erred by relying on the transcripts/notes of the secret recordings as evidence, because the Commission had been aware that the notes were not an exact transcript of the recordings and because the Commission had, where possible, attempted to corroborate the notes with the records taken.

The GC also dismissed the appellants' argument that the Commission had not considered their inability to pay. According to the GC, the undertakings' evidence of their weak financial situation did not show that they would have avoided bankruptcy in the absence of the fine. Therefore, the GC concluded that the undertakings were unable to fulfil the required conditions for reducing their fines. Consequently, the GC dismissed the appeal in its entirety as unfounded. Source: Case T-54/14, Goldfish BV, Heiploeg BV, Heiploeg Beheer BV, Heiploeg Holding BV v. Commission, 8 September 2016 (not yet available in English)

Competition (Finland): Finnish Competition and Consumer Authority comments on its involvement in the prevention of underground economy and financial crime

On 12 September 2016, the Finnish Competition and Consumer Authority ("FCCA") published a newsletter in which Juhani Jokinen, the Director General of the FCCA, comments on the Ministry of the Interior's ("MoI") new strategy regarding the prevention of underground economy and financial crime. The MoI prepared its strategy during spring 2016, and it consists of 20 financial crime prevention projects. The FCCA participates in three of these projects. In addition to the prevention of underground economy and financial crime, the FCCA is also involved in a project that aims to improve information exchange between authorities and in a project that aims to prevent corruption.

Jokinen explains that the FCCA is involved in combating underground economy and financial crime, because markets do not function properly if companies try to achieve a competitive advantage by neglecting social commitments. In Jokinen's opinion, the most apparent market distortions come from companies neglecting their obligations relating to taxation and employers' responsibilities. While the tax administration, labour protection officials and the police are in the best position to intervene, Jokinen states that financial crime also disturbs the FCCA's monitoring activities.

According to Jokinen, the downside of financial crime prevention is the regulatory burden that companies and citizens bear. Following the new strategy on financial crime prevention, the FCCA will study the possibilities to reduce said regulatory burden by improving information exchange between authorities and by creating certificates for companies that prove that they have fulfilled their statutory obligations. Source: Finnish Competition and Consumer Authority Press Release (in Finnish) and Newsletter 4/2016