EU first-instance judgment on AstraZeneca Losec abuse

The EU General Court has handed down its judgment (about 120 pages) on the appeal by AstraZeneca against the Commission's finding of abuse in relation to Losec.

The judgment upholds most of the decision of the European Commission, which finds AstraZeneca guilty of infringing the EU competition law prohibition on abuse of a dominant position. See Patent abuses under Article 82 for a commentary on that decision.

Most of AstraZeneca's wide ranging arguments are dismissed. There were two points on which the Court ruled in favour of AstraZeneca:

Paragraphs 352-362 of the judgment say:

352 According to settled case-law, an abuse is an objective concept referring to the behaviour of an undertaking in a dominant position which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is already weakened and which, through recourse to methods different from those governing normal competition in products or services on the basis of traders’ performance, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition (Hoffmann-La Roche v Commission, paragraph 239 above, paragraph 91; AKZO v Commission, paragraph 243 above, paragraph 69; Case T‑228/97 Irish Sugar v Commission [1999] ECR II‑2969, paragraph 111; and Michelin v Commission, paragraph 334 above, paragraph 54).

353 In this respect, it should be borne in mind that Article 82 EC is aimed both at practices which may cause damage to consumers directly and at those which are detrimental to them through their impact on an effective competition structure (Europemballage and Continental Can v Commission, paragraph 267 above, paragraph 26).

354 It follows that Article 82 EC prohibits a dominant undertaking from eliminating a competitor and thereby strengthening its position by using methods other than those which come within the scope of competition on the merits (AKZO v Commission, paragraph 243 above, paragraph 70, and Irish Sugar v Commission, paragraph 352 above, paragraph 111). It is also apparent from the case-law that an abuse of a dominant position does not necessarily have to consist in the use of the economic power conferred by a dominant position (see, to that effect, Europemballage and Continental Can v Commission, paragraph 267 above, paragraph 27, and Hoffmann-La Roche v Commission, paragraph 239 above, paragraph 91).

355 In the present case, the Court observes that the submission to the public authorities of misleading information liable to lead them into error and therefore to make possible the grant of an exclusive right to which an undertaking is not entitled, or to which it is entitled for a shorter period, constitutes a practice falling outside the scope of competition on the merits which may be particularly restrictive of competition. Such conduct is not in keeping with the special responsibility of an undertaking in a dominant position not to impair, by conduct falling outside the scope of competition on the merits, genuine undistorted competition in the common market (see, to that effect, Nederlandsche Banden-Industrie-Michelin v Commission, paragraph 30 above, paragraph 57).

356 It follows from the objective nature of the concept of abuse (Hoffmann-La Roche v Commission, paragraph 239 above, paragraph 91) that the misleading nature of representations made to public authorities must be assessed on the basis of objective factors and that proof of the deliberate nature of the conduct and of the bad faith of the undertaking in a dominant position is not required for the purposes of identifying an abuse of a dominant position.

357 The Court would point out that the question whether representations made to public authorities for the purposes of improperly obtaining exclusive rights are misleading must be assessed in concreto and that assessment may vary according to the specific circumstances of each case. In particular, it is necessary to examine whether, in the light of the context in which the practice in question has been implemented, that practice was such as to lead the public authorities wrongly to create regulatory obstacles to competition, for example by the unlawful grant of exclusive rights to the dominant undertaking. In this respect, as the Commission asserts, the limited discretion of public authorities or the absence of any obligation on their part to verify the accuracy or veracity of the information provided may be relevant factors to be taken into consideration for the purposes of determining whether the practice in question is liable to raise regulatory obstacles to competition.

358 Moreover, in so far as an undertaking in a dominant position is granted an unlawful exclusive right as a result of an error by it in a communication with public authorities, its special responsibility not to impair, by methods falling outside the scope of competition on the merits, genuine undistorted competition in the common market requires it, at the very least, to inform the public authorities of this so as enable them to rectify those irregularities.

359 The Court would also point out, in the light of the applicants’ arguments set out in paragraphs 309, 312 and 314 above, that, although proof of the deliberate nature of conduct liable to deceive the public authorities is not necessary for the purposes of identifying an abuse of a dominant position, intention none the less also constitutes a relevant factor which may, should the case arise, be taken into consideration by the Commission. The fact, relied upon by the applicants, that the concept of abuse of a dominant position is an objective concept and implies no intention to cause harm (see, to that effect, Aéroports de Paris v Commission, paragraph 309 above, paragraph 173) does not lead to the conclusion that the intention to resort to practices falling outside the scope of competition on the merits is in all events irrelevant, since that intention can still be taken into account to support the conclusion that the undertaking concerned abused a dominant position, even if that conclusion should primarily be based on an objective finding that the abusive conduct actually took place.

360 Lastly, the mere fact that certain public authorities did not let themselves be misled and detected the inaccuracies in the information provided in support of the applications for exclusive rights, or that competitors obtained, subsequent to the unlawful grant of the exclusive rights, the revocation of those rights, is not a sufficient ground to consider that the misleading representations were not in any event capable of succeeding. As the Commission rightly observes, where it is established that behaviour is objectively of such a nature as to restrict competition, the question whether it is abusive in nature cannot depend on the contingencies of the reactions of third parties.

361 Consequently, the Commission applied Article 82 EC correctly in taking the view that the submission to the patent offices of objectively misleading representations by an undertaking in a dominant position which are of such a nature as to lead those offices to grant it SPCs to which it is not entitled or to which it is entitled for a shorter period, thus resulting in a restriction or elimination of competition, constituted an abuse of that position. The question whether those representations were objectively misleading must be assessed in the light of the specific circumstances and context of each individual case. In this case, the factual assessment made by the Commission in this respect is the subject of the second plea.

362 The Court rejects the applicants’ argument that a finding of an abuse of a dominant position requires that an exclusive right obtained as a result of misleading representations has been enforced. When granted by a public authority, an intellectual property right is normally assumed to be valid and an undertaking’s ownership of that right is assumed to be lawful. The mere possession by an undertaking of an exclusive right normally results in keeping competitors away, since public regulations require them to respect that exclusive right. Furthermore, to the extent that the applicants argue that an intellectual property right must have been exercised in legal proceedings, that argument would tend to make the application of Article 82 EC conditional on the contravention by competitors of the public regulations by their infringing the exclusive right of an undertaking; that argument must be rejected. Moreover, third parties seldom have information enabling them to know whether an exclusive right has been unlawfully granted.

Paragraph 365 says:

365 In this respect, the applicants cannot rely on the judgment in Tetra Pak v Commission, paragraph 310 above, in order to submit that elimination of all competition would be necessary. The Court observes, first of all, that the present case and the judgment in Tetra Pak v Commission, paragraph 310 above, concern different situations. Whereas the present situation concerns acts liable to induce public authorities to grant an intellectual property right to which the undertaking in a dominant position is not entitled or to which it is entitled for a shorter duration, the judgment in Tetra Pak v Commission, paragraph 310 above, relates to the acquisition by an undertaking in a dominant position of a company holding an exclusive patent licence which constituted the only means of competing effectively with the undertaking in the dominant position (paragraphs 1 and 23 of that judgment). Next, it is not all apparent from that judgment that Article 82 EC requires the elimination of all competition in order to be applied. In that judgment, the Court merely approved the Commission’s assessment that, in the case before it, Article 82 EC did not allow the undertaking in a dominant position, by acquiring an exclusive licence, to strengthen its ‘[already] very considerable’ dominance and to prevent or considerably delay ‘the entry of a new competitor into a market where very little if any competition [was] found’ (paragraph 23 of that judgment).

For further information or advice please contact Shankar Rajagopalan.

Filed under Article 82, ECJ/CFI, Healthcare, Pharmaceuticals.

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