The EC constantly flags the pharmaceutical sector as being high on its competition law target list. The EC wants to ensure that EU consumers benefit from generic pharmaceutical products entering the market and it is particularly focused on activities which restrict this. Other sectors should take heed, since the EC’s analysis of such activities has general application.
In its latest pharmaceutical case, on 9 July 2014 the EC imposed fines totalling €427.7 million on Servier and five producers of generic medicines for concluding a series of deals all aimed at protecting Servier’s perindopril product from price competition by generics in the EU. This followed the expiry of Servier’s principal patent for the perindopril molecule in 2003. Certain secondary patents had remained in force.
The particular actions condemned by the EC were a technology acquisition by Servier (designed to stop access by generic competitors to non-patented alternatives to the secondary patents) and a series of patent settlements with these generic rivals, which followed challenges to the secondary patents. Under these settlements, the generic companies agreed to abstain from competing in exchange for payments from Servier.
The EC sees such patent settlements as being a type of cartel. Making this point, the EC indicated that one of the generic companies acknowledged that it was being “bought out of perindopril”. In addition, according to the EC, Servier offered one of the generic companies a licence for seven national markets; in return, the generic company agreed to “sacrifice” all other EU markets and stop efforts to launch its perindopril there.
Although this was a pharmaceutical sector case, similar issues would apply in any other sector. Companies are of course able to apply for patents, to enforce them, to transfer technologies and to settle litigation. However, competition law concerns may arise where such tools are misused. The EC stated that “engaging in an exclusionary strategy to foreclose important competing technologies and buying [a] close competitor … is blatantly abusive.”