On 19 June 2013, the European Commission (EC) imposed a fine of €93.8 million on Danish pharmaceutical company Lundbeck and fines totalling €52.2 million on several producers of generic medicines for infringing EU competition law.

According to the EC, after Lundbeck's basic patent for its branded citalopram molecule (a blockbuster antidepressant) had expired, it only held some related process patents which provided a more limited protection. However, instead of taking advantage of this situation by starting to compete, the generic producers agreed with Lundbeck not to enter the market in return for substantial payments and other inducements from Lundbeck. This gave them, in the EC’s view, the “equivalent of what they would have earned if they had entered the market” and the parties therefore “shared the monopoly rents among themselves”. The EC saw this arrangement as a type of cartel and fined it accordingly.

The EC was careful to point out in its announcement that the overwhelming majority of patent settlement agreements are entirely legitimate because they do not involve any payments by originators to exclude generic companies. Nevertheless, originator and generic companies must continue to be very careful in this area. In addition, in principle, there is no reason why settlement agreements of this nature in other industries would not also raise similar issues.