Judgment

Neutral citation:

[2018] CAT 4

Published:

8 Mar 2018

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Summary:

Judgment of the Tribunal in relation to five appeals brought by six entities: GlaxoSmithKline PLC (“GSK”), Generics (UK) Ltd (“GUK”), Xellia Pharmaceuticals ApS and Alpharma LLC (“Xellia/ALLC”), Actavis UK Ltd (“Actavis”) and Merck KGaA (“Merck”) (together “the Appellants”).

The appeals concerned a decision of the Competition and Markets Authority (“CMA”) dated 12 February 2016 (“the Decision”) determining that: GSK had infringed both the Chapter I prohibition and Chapter II prohibition under the Competition Act 1998; the other appellants had all infringed Chapter I prohibition; and GSK, GUK and Merck had also infringed the Art 101 of the Treaty on the Functioning of the European Union (“TFEU”).

The infringements arise out of three agreements made in 2001-2002 concerning the pharmaceutical drug, paroxetine. Paroxetine is a prescription-only anti-depressant medicine that was marketed by GSK in the UK under the brand name “Seroxat”. Each of the agreements was made between GSK (or a predecessor company) and a generic supplier which had alleged that the relevant patents held by GSK over paroxetine were invalid and/or that the generic paroxetine which it intended to market in the UK did not infringe GSK’s patents.

There were significant overlaps between the five appeals so they were heard together and the Judgment concerns all five appeals. In summary the Tribunal reached the following conclusions on the various grounds:

Chapter I Prohibition / Art 101 TFEU (Section F of the Judgment):

1. Potential competition: the Appellants argued that the Decision erred in finding that the generic companies were potential competitors of GSK. The provisional view of the Tribunal was to dismiss these arguments, but it decided that it was necessary to refer a question to the Court of Justice of the European Union (“CJEU”) on this point for a preliminary ruling (a “Preliminary Reference”).

2. Restriction ‘by object’: the Appellants argued that the Decision erred in finding that the agreements restricted competition ‘by object’. The Tribunal decided that a Preliminary Reference was also necessary on this point.

3. Restriction ‘by effect’: the Appellants argued that the Decision erred in finding that the agreements restricted competition ‘by effect’. The Tribunal decided that a Preliminary Reference was also necessary on this point.

4. Exemption under the Competition Act 1998 (Land and Vertical Agreements Exclusion) Order 2000 (the “Exclusion Order”): the Tribunal dismissed GSK, GUK, Actavis and Xellia/ALLC’s argument that the Decision erred in finding that the agreements did not benefit from exemption under the Exclusion Order.

5. Block exemption or individual exemption: the Tribunal dismissed GSK’s argument that the Decision erred in finding that the agreements did not benefit from an exemption under Regulation (EC) No 2790/1999 (“the Vertical Block Exemption Regulation”) or from individual exemption.

Chapter II Prohibition (Section G of the Judgment):

1. Dominance: GSK argued that the Decision erred in finding that it held a dominant position. The provisional view of the Tribunal was to dismiss this argument, but it decided that a Preliminary Reference was also necessary on this point.

2. Abuse: GSK argued that the Decision erred in finding that it had abused a dominant position by entering into the agreements. The Tribunal decided that a Preliminary Reference was also necessary on this point.

The Tribunal went on to dismiss GUK, Merck and Actavis’s argument that their rights of defence had been infringed (Section H of the Judgment) and also dismissed Xellia/ALLC’s argument that the Decision erred in holding them jointly and severally liable with Actavis (Section I of the Judgment). The Tribunal decided that it would be inappropriate to decide the Appellants’ challenges to the penalties imposed upon them in advance of the judgment of the CJEU (Section J of the Judgment).

This is an unofficial summary prepared by the Registry of the Competition Appeal Tribunal.