The Court handed down its judgment in Case C-23/14 Post Danmark today. The judgment itself is not particularly surprising, in that it largely follows previous judgments of the Court in earlier Art 102 cases. The main feature of note is what the Court didn’t do: it again declined an opportunity to either follow or discredit the so-called ‘more economic approach’ to the abuse of a dominant position. Read More…
The judgment by the General Court, on 12 June 2104, in the Case T-286/09 Intel (ECLI:EU:T:2014:547) has been one of the most controversial in recent years. It it part of the ongoing debate in EU competition law between those who seek to introduce a ‘more economic’ approach to Art 102 TFEU and break away from the formalism they perceive in the Court’s jurisprudence, and those who see the Court’s existing case law as well grounded and effective, and see the more to a ‘more economic’ approach as being a move towards unnecessary uncertainty.
The announcement that Microsoft are to drop the controversial Xbox One DRM policies that would restrict the renting, sharing or selling-on of Xbox One games, which I blogged about a few days ago, has been met with joy by many gamers. For those gamers with an interest in the legal issues in videogames the announcement was tinged with a little disappointment. We now won’t have a chance to have lots of interesting interesting legal questions discussed in the terms of a popular mass market product.
AstraZeneca AB v Commission (Case C-457/10 P)
The Court of Justice of the EU delivered its judgment on 6 December 2012 on the appeal against the General Court’s judgment in Case T-321/05.
This cases stems from a number of practices that AstraZeneca had adopted in the market for Proton Pump Inhibitors (‘PPIs’), a class of pharmaceutical products used to treat gastrointestinal conditions linked with hyperacidity. AZ’s product ‘Losec’ was the first PPI to market, but was nearing the end of its IP protection. Complaints were made in 1999 about behaviour which hampered the introduction of generic versions of the product to the market. The Commission adopted a Decision (C(2005) 1757 final) in June 2005 finding that AZ has committed two abuses: (1) making misleading representations to patent offices as part of a strategy to keep generic products away from the market by extending Supplementary Protection Certificates (‘SPCs’) for the product to which it was not entitled, and (2) deregistering Market Authorisations (‘Mas’) for Losec capsules and withdrawing the product from several markets to ensure the abridged registration route for generic products would not be available. The General Court partially annulled the Commission Decision in relation to the second abuse, but upheld the majority of the Decision.
The Court of Justice dismissed the appeal and upheld the findings of the General Court. All of AZ’s arguments, and those of the cross appeals, were rejected by the CJEU; who largely approved the reasoning of the General Court without the need for significant further comment. The Court’s approach highlights the fact the CJEU’s role is not to re-evaluate the evidence presented to, or supplement the findings of the GC; unless it finds real flaws in the approach adopted by the GC .
Points of Interest
The CJEU did have some interesting comments on market definition. PPIs were defined as being in a market of their own, due to their clinical efficacy, notwithstanding the fact that there were other drugs, known as ‘H2 blockers’, that could also be used to treat similar conditions. AZ had argued that the gradual uptake of PPIs, and the corresponding reduction in usage of H2 blockers, indicated that H2 blockers were acting as a constraint on the prescription of PPIs and they were therefore part of the same market. The GC and CJEU both rejected that proposition. The CJEU confirmed that while there was a gradual substitution of PPIs for H2 blockers this was not substitution within a market, but the gradual development of new market as clinicians’ natural conservatism about new treatments was overcome through greater experience with the new drug .
AZ argued that EU law specifically allows a drug company to withdraw a Market Authorisation, and that it should not be denied that ability by competition law. Maintenance of a MA imposes costs and obligations, which may lead to public liability, which it should not be required to continue to benefit others. The CJEU concluded that deregistration without objective justification could amount to abuse. It stressed, as it has done in several recent cases, that an undertaking which holds a dominant position has a ‘special responsibility’ to the market and that it could not use regulatory procedures to make entry more difficult, in the absence of the defence of legitimate interests or objective justification . The reduction in costs or liabilities associated with a MA may, however, amount to an objective justification . The CJEU noted that there was no evidence from AZ that the costs of the MA were relevant to its internal decision making, and the issue was first raised on appeal.
The GC’s findings in relation to the deregistration of the MA were also challenged on the basis that it should be treated in the same way as an ‘essential facility’ style case looking at compulsory licensing. It was argued the relevant test should not have been was entry ‘more difficult’ but ‘substantially eliminated’. The CJEU rejected the characterisation of a MA as being similar to a property right, as the exercise of an ‘option’ by a dominant undertaking was ‘unlike a situation in which the unfettered exercise of an exclusive right awarded for the realisation of an investment or creation is limited’ .
Although there is nothing particularly new in AstraZeneca it is a good example of the way in which the CJEU handles its role reviewing the judgements of the GC. It takes a wide view of review, rejecting several attempts by the Commission to have arguments struck out as inadmissible, but it will not substitute its own view for that of the Commission or GC; concentrating on whether the GCs reasoning adequately supported its findings.
Pharmaceutical products are highly regulated and bound up with a plethora of IP issues. They are very likely to be a source of competition concerns. It appears that the winding down of IP protections and the introduction of generic drugs has led to a number of recent cases (see, for example, Reckitt Benckiser in the UK). It is unsurprising that the CJEU, and competition law, is taking a strong stance facilitating the entry of competition from generics and limiting a dominant undertakings ability to chill increased competition beyond the strict limits of their initial IP protection.