Judgment

Judgment of the Tribunal in relation to an appeal against a decision of the Competition and Markets Authority (“CMA”) entitled “Unfair pricing in respect of the supply of phenytoin sodium capsules in the UK”, issued on 20 November 2024 and addressed to Pfizer Limited and Pfizer Inc. (together, “Pfizer”), and Flynn Pharma Limited and Flynn Pharma (Holdings) (together, “Flynn”) (the “Decision”).

The Decision was a remittal decision made following the Tribunal’s judgment in Flynn and Pfizer v Competition and Markets Authority [2018] CAT 11, and the Court of Appeal’s judgment in CMA v Flynn Pharma Ltd and others (2020) EWCA Civ 339.

The CMA’s Decision found, inter alia, that:

• Pfizer had abused its dominant position in the market for the manufacture of Pfizer-manufactured phenytoin sodium capsules that are distributed in the UK by charging Flynn unfairly high selling prices in respect of each of 25mg, 50mg, 100mg and 300mg strength capsules, thereby infringing the Chapter II prohibition.
• Flynn had abused its dominant position in the market for the distribution of capsules in the UK by charging its customers (wholesalers and pharmacies) unfairly high selling prices in respect of each of 25mg, 50mg, 100mg and 300mg strength capsules, thereby infringing the Chapter II prohibition.
• As Pfizer and Flynn had each charged different prices and incurred different costs for each of the different strengths of the Capsules, the CMA found that the Appellants had each engaged in four separate abuses of dominance, making a total of eight findings of infringement.

The CMA imposed a penalty of £63,300,000 on Pfizer and £6,704,422 on Flynn.

Pfizer and Flynn brought separate appeals. In summary, they argued that:

• The CMA’s Cost-Plus approach was in error and erroneously applied.
• The CMA had failed to consider real world facts and matters in their decision, choosing instead to follow a theoretically over-rigid approach.
• The Decision was not a proper re-consideration of the CMA’s initial decision, as was required by the Remittal Order.
• The CMA erred in ascribing no economic value to Capsules beyond that already captured in its Cost-Plus analysis.
• The penalties should be set aside or substantially reduced.   

The Tribunal reached the following conclusions on the main issues in the appeals:

1. The Decision was set aside on the basis of the material errors identified in the Pfizer and Flynn Grounds of Appeal.
2. The Tribunal exercised its jurisdiction to remake the Decision and found that all four infringements alleged against Flynn were made out, and that three of the four infringements alleged against Pfizer were made out.
3. The Tribunal found that Pfizer’s prices for the 25mg Capsules did not infringe the Chapter II prohibition.
4. The Tribunal imposed a fine of £62,370,000 on Pfizer and a fine of £6,704,422 on Flynn.   

The Judgment was unanimous.