Yesterday, the Court of Justice of the European Union (CJEU) handed down its judgment in respect of AstraZeneca's appeal against its €52.5 million fine imposed by the European Commission for abuse of a dominant position. The decision comes some thirteen years since the initial complaint in this matter.
In its decision of 15 June 2005, the European Commission held that AstraZeneca had acted in abuse of a dominant position in the market for proton pump inhibitors (PPIs) used in the treatment of gastro-intestinal conditions. It based its decision on:
- a pattern of 'misleading' representations to various patent offices in Belgium, Denmark, Germany, the Netherlands, Norway and the UK; and before German and Norwegian domestic courts. These misrepresentations were made in two series of applications for supplementary protection certificates (SPCs) for omeprazole, the active substance in AstraZeneca's 'blockbuster' drug Losec; and
- de-registering marketing authorisations with the intent of blocking market entry and restricting parallel importing of Losec.
The European Commission levied a fine of €60 million.
The General Court heard AstraZeneca's first appeal against the European Commission and on 1 July 2010, broadly upheld the decision of the European Commission. The General Court partially annulled the Commission's ruling - only as far as it related to the restriction of parallel importing of Losec. As such, it reduced the fine from €60 million to €52.5 million.
Yesterday, the European Union's highest court upheld the General Court's judgment by dismissing AstraZeneca's appeal. The CJEU stated that the abuses committed by AstraZeneca were serious infringements and that in the absence of any mitigating circumstances, no reduction in the fine was forthcoming.
This landmark case is the first (and only) instance in which the European Commission has found abuse of a dominant position in the pharmaceutical sector. The CJEU's judgment is the latest instalment in a long-running battle and has profound implications for the sector in relation to life cycle management and how to interact with patent and other regulatory authorities.
As seen in the UK with the Reckitt Benckiser settlement decision, national competition authorities may follow the Commission with their own 'local' enforcement activities in this area. The AstraZeneca case also confirms how easily a successful blockbuster product, enjoying patent protection and a first mover advantage, can be deemed to hold a dominant position and so come under enhanced regulatory scrutiny.
In terms of its practical implications, the case may in the long term be regarded as opening Pandora's box. It confirms the well established principle of EU competition law that a company in a dominant position will be deemed to hold a "special responsibility" not to unduly distort competition. There is also an additional leitmotif confirmed by the CJEU in its judgment, namely that this responsibility is negated where the company engages in competition which is not 'on the merits'.
We may be witnessing the first step in an evolution of case law/decisional practice as to what this all means. That said, a sceptical view is that given the current rate of development in this field, early clarification is unlikely to be forthcoming