Supreme Court says that CMA should pay appellant’s costs in Flynn-Pfizer appeal

 

Supreme Court says that CMA should pay appellant’s costs in Flynn-Pfizer appeal

 

The Supreme Court has ruled on costs relating to the appeals by Pfizer and Flynn against the decision of the Competition and Markets Authority (CMA) that imposed penalties on Pfizer and Flynn for charging unfair and excessive prices for phenytoin drugs.

The Competition Appeal Tribunal (CAT) in its June 2018 judgment found that the CMA’s conclusions on abuse of dominance were in error and it remitted this issue to the CMA for reconsideration.

The starting point in assessing costs in the CAT is that an unsuccessful party will pay the successful party’s costs.  While the costs rules in the CAT are flexible, the CAT ordered that the CMA pay Pfizer and Flynn a proportion of their costs of their appeal.

Allowing the appeal by the CMA, the Court of Appeal held that the CAT had erred in not taking the starting point that costs should not generally be awarded against a public body.

The Supreme Court disagreed with the Court of Appeal and found that the CAT was within its powers to take as a starting point the principle that "costs follow the event". 

Therefore, the Supreme Court allowed the appeals by Pfizer and Flynn and reinstated the CAT's costs ruling.

The Supreme Court did not accept the claim that imposing a cost order on the CMA in these circumstances would have a chilling effect on its enforcement.

The implications of the judgment may be felt beyond cases involving challenges to CMA decisions.  There is a potential read across to decisions of the sector regulators on the application of their concurrent competition and sector regulatory powers.

Flynn Pharma Limited v CMA and Pfizer Inc and another v CMA [2022] UKSC 14