PAY-FOR-DELAY AGREEMENTS UNDER EU COMPETITION LAW – A COMMENT ON PAROXETINE
(case C-307/18 – Generics (UK) and others v Competition and Markets Authority)
Abstract
Summary
The Court of Justice of the European Union (“Court of Justice”) issued its first ruling on pay-for-delay agreements, in reply to a reference for a preliminary ruling from the UK’s Competition Appeal Tribunal (“CAT”) during its review of the appeal of a Competition and Markets Authority (“CMA”) decision applying a fine to GlaxoSmithKline (“GSK”) and five generic manufacturers for having entered into agreements settling patent disputes relating to GSK’s antidepressant paroxetine, on the basis that such agreements infringed competition rules.
In its Paroxetine ruling of 30 January 2020[1], the Court of Justice found that patent settlements are not, by their very nature, anticompetitive; however, generic manufacturers can be regarded as potential competitors to the originator manufacturers when they have announced their intention to compete in the same market as the originator and, as such, patent settlement agreements are to be reviewed as horizontal agreements between competitors. Finally, a payment from the originator to the generic manufacturer in a patent settlement agreement is not enough to qualify such an agreement as a restriction of competition by object (the agreement is not anticompetitive by its very nature), unless there is no other justification for the payment other than to compensate the generic manufacturer for accepting to delay its entry in the market. In those circumstances, the Court finds that such an agreement will constitute a restriction of competition by object[2].
In this comment, we review the Court’s findings in relation to the issue of potential competition between the originator and the generics manufacturers and the qualification of this agreement as a restriction of competition by object.
Keywords: pay-for-delay; restriction; competition; agreement; settlement; patent
[1] See Judgement of the Court of 30 January 2020, Case C-307/18 (Generics (UK) and Others v Competition and Markets Authority), ECLI:EU:C:2020:52.
[2] The Court was also asked by the CAT to clarify whether an originator entering into a pay-or-delay agreement could be considered an abuse of a dominant position (which was also part of the charges brough by the CMA). We will not consider this part of the judgement on our comment.
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