The European Union General Court rules on AstraZeneca v Commission

July.05.2010

On 1 July 2010, the European Union ("EU") General Court published its decision on an appeal made by AstraZeneca against the European Commission's decision of 15 July 2005, by which AstraZeneca was fined €60 million for abuse of dominance. This decision, which is the first of its kind in the EU, raises several points of interest for the pharmaceutical industry.

The General Court upheld most of the Commission's decision finding that AstraZeneca had abused its dominant position by:

  • i) misusing the patent system by engaging in a pattern of deliberate misrepresentation to patent offices and national courts to obtain supplementary protection certificates ("SPCs"), which extended the duration of the exclusive right guaranteed by a patent, to which it knew it was not entitled for the patented product "omeprazole" (a proton pump inhibitor), the active substance in "Losec" (also marketed as "Prilosec"); and
  • ii) operating a strategy of selectively withdrawing Losec capsules, replacing them with Losec tablets, and requesting the deregistration of the marketing authorisation for the capsules.

These infringements were committed with the intention of unfairly restricting competition from generics and parallel imports.1

i) Misrepresentation

The Court found that AstraZeneca's representations to patent attorneys and European patent offices were characterised by a "manifest lack of transparency", which would prompt those offices to draw incorrect conclusions as to the first date of marketing authorisation for omeprazole in the EU. AstraZeneca's conduct was deliberate and contrary to the special responsibility of a dominant company. Thus, it violated Article 102.  

ii) Deregistration of marketing authorisation

While upholding the Commission's finding that AstraZeneca had abused its dominant position by selectively deregistering the Losec capsule marketing authorisation, the Court noted:

  • withdrawing Losec capsules from the market and launching tablets were not objectionable acts because these acts did not raise the legal barriers for generic entry; it was the withdrawal of market authorisations that delayed entry and constituted an abuse;
  • allowing an authorisation to lapse, without its renewal being requested, would not be objectionable;
  • it was legitimate for a dominant company to prepare a strategy to minimise erosion of its sales and to deal with competition from generics, provided that the conduct envisaged did not depart from practices coming within the scope of competition on the merits.

The fact that AstraZeneca was entitled to request deregistration of marketing authorisations,  pursuant to legislation other than competition law, did not mean that the conduct could escape the Article 102 prohibition. The illegality of abusive conduct under Article 102 is unrelated to its compliance or non-compliance with other legal rules.

The General Court's judgment can be found here

In its press release MEMO/10/294, the Commission welcomed the judgment, as this is the first decision on abuse of dominance in the pharmaceutical markets, and it confirms that Article 102 applies to the pharmaceutical sector. As the judgment highlights that misuse of regulatory procedures can constitute an abuse of dominance, the Commission stated that it considers it be significant to the follow up to Commission's final report on its competition enquiry into the pharmaceutical sector, published 8 July 2009.

For any questions concerning this alert, please contact Douglas Lahnborg.

1 The Court reduced the fine imposed on AstraZeneca to €52.5 million holding that the Commission failed to establish to the required legal standard that the deregistration of marketing authorisations for Losec in Denmark and Norway was capable of having an impact on parallel imports.