ECJ rules on pay for delay

ECJ rules on pay for delay

In a wide ranging and important judgment the European Court of Justice (ECJ) has ruled on various questions referred to it by the UK Competition Appeal Tribunal. 

The ruling arises out of an appeal against a decision of the Competition and Markets Authority finding that GlaxoSmithKline, Alpharma Limited and Generics (UK) Limited infringed EU and UK competition law through patent settlement agreements that it found delayed the generic entry of paroxetine.

As to the question of whether manufacturers of generic drugs who had not yet entered the market were potential competitors, the ECJ ruled that it was  

necessary to consider whether the manufacturer of generic medicines has a firm intention and an inherent ability to enter the market, having regard to barriers to entry.  Patent rights of themselves do not constitute an unsurmountable barrier to entry.

As to the question of restrictions of competition by object, the ECJ ruled that patent settlements whereby a generic manufacturer agrees not to enter the market or challenge a patent in return for a transfer of value have the object of restricting competition if it is clear that this can have no explanation other than the commercial interest in the parties not competing.

As to the question of restriction of competition by effect, the ECJ ruled that it is necessary to determine how the market will probably operate in the absence of the practice.

As to abuse of dominance, the ECJ ruled that a set of settlement agreements which have, at the least, the effect of keeping potential competitors temporarily outside the market constitutes an abuse, provided that the strategy has the capacity to restrict competition.

Case C-307/18 , Generics (UK) Ltd e.a. v Competition and Markets Authority ECLI:EU:C:2020:52