ECJ affirms fines of EUR 150 million for restriction of competition with citalopram
The ECJ dismissed the appeals of a number of pharmaceutical companies seeking to delay the marketing of the generic antidepressant citalopram
From the late 1970’s, Lundbeck developed and patented an antidepressant medicine containing the active substance known as citalopram. Once its original compound patent expired, Lundbeck continued to hold only a number of secondary patents which offered more limited protection. Manufacturers of generic versions of citalopram were therefore able to plan to enter the market.
In 2002 Lundbeck entered into agreements with undertakings active in the production or sale of generic medicines. In return for a commitment by the generic undertakings not to enter the citalopram market, Lundbeck made significant payments to them and, in particular, purchased their stock of generic products.
In October 2003 the Commission was informed of the agreements in question by the Danish authority for the protection of competition and consumers. Following a sector inquiry launched in January 2008, which was followed by the investigation specifically concerning the agreements at issue, the Commission held, by the decision of 19 June 2013 that Lundbeck and the generic manufacturers concerned were at least potential competitors and that the agreements at issue constituted restrictions of competition ‘by object’. The amounts paid by Lundbeck for the purpose of preventing those producers from entering the citalopram market corresponded approximately to the profits that they could have made if they had successfully entered the market. The Commission therefore imposed a total fine of € 93.7 million on Lundbeck, whilst the generic manufacturers were fined a total of €52.2 million.
The appeals brought before the General Court of the European Union by the companies against the Commission’s decision were dismissed by a number of judgments. Following, the companies brought appeals before also before the ECJ, but without success.
The ECJ (in cases C-585/16P, 588/16P, C-601/16P, C-611/16 P, C-614/16P) found that in order to assess whether an undertaking which is not present in a market is a potential competitor with one or more other undertakings which are already present in the market, it must be determined whether there are real and concrete possibilities of the former joining that market and competing with the undertakings present in it. That criterion does not require in any way that it be demonstrated with certainty that the undertaking will in fact enter the market concerned and, a fortiori, that it will be capable, thereafter, of retaining its place there.
Specifically, with regard to agreements occurring in the context of the opening of the market for a medicine containing an active ingredient which has recently entered the public domain, it should be established whether the manufacturer of generic medicines has in fact a firm intention and an inherent ability to enter the market, and does not meet barriers to entry that are insurmountable. As regards, in particular, the assessment of whether there are barriers to entry into the market concerned which are insurmountable, the Court notes that the existence of a patent which protects the manufacturing process of an active ingredient that is in the public domain cannot, as such, be regarded as such an insurmountable barrier.
Therefore, the existence of a patent cannot, as such, mean that a manufacturer of generic medicines who has a firm intention and an inherent ability to enter the market, and who, by the steps taken, shows a readiness to challenge the validity of that patent and to take the risk of being subject, upon entering the market, to infringement proceedings brought by the holder of that patent, cannot be characterised as a potential competitor of the manufacturer of the originator medicine concerned.
Furthermore, the ECJ also held that it is not for the competition authority concerned to carry out a review of the strength of the patent at issue or of the probability of a dispute between the patent holder and a manufacturer of generic medicines being brought to an end with a finding that that patent is valid and has been infringed.
Second, the Court found that the General Court did not err in law in concluding that the agreements at issue constitute restrictions of competition ‘by object’. In that respect, the Court stated that characterisation as a ‘restriction by object’ must be adopted when it is plain from the examination of the settlement agreements concerned that the transfers of value from the manufacturer of originator medicines to the manufacturer of generic medicines cannot have any explanation other than the parties’ common commercial interest not to engage in competition on the merits. It is appropriate to assess on a case-by-case basis whether the net gain of those transfers of value was sufficiently significant actually to act as an incentive to the manufacturer of generic medicines to refrain from entering the market concerned and not to compete on the merits with the manufacturer of originator medicines. There is no requirement that the net gain should necessarily be greater than the profits which that manufacturer of generic medicines would have made if it had been successful in the patent proceedings. In addition, the Court stated that, much like the position regarding the assessment of whether there is potential competition, an assessment of the strength of the process patents at issue or of the prospects of success of one or other of the parties to the settlement agreements concerned is not relevant for the purposes of characterising those agreements as a ‘restriction by object’ provided that that transfers of value are sufficiently significant.