201806220171970682018/C 240/333072018CJC24020180709EN01ENINFO_JUDICIAL20180507293132

Case C-307/18: Reference for a preliminary ruling from Competition Appeal Tribunal, London (United Kingdom) made on 7 May 2018 — Generics (UK) Ltd, GlaxoSmithKline plc, Xellia Pharmaceuticals ApS, Alpharma, LLC, formerly Zoetis Products LLC, Actavis UK Ltd and Merck KGaA v Competition and Markets Authority


C2402018EN2920120180507EN0033292313

Reference for a preliminary ruling from Competition Appeal Tribunal, London (United Kingdom) made on 7 May 2018 — Generics (UK) Ltd, GlaxoSmithKline plc, Xellia Pharmaceuticals ApS, Alpharma, LLC, formerly Zoetis Products LLC, Actavis UK Ltd and Merck KGaA v Competition and Markets Authority

(Case C-307/18)

2018/C 240/33Language of the case: English

Referring court

Competition Appeal Tribunal, London

Parties to the main proceedings

Applicants: Generics (UK) Ltd, GlaxoSmithKline plc, Xellia Pharmaceuticals ApS, Alpharma, LLC, formerly Zoetis Products LLC, Actavis UK Ltd and Merck KGaA

Defendant: Competition and Markets Authority

Questions referred

Potential competition

1.

For the purpose of Article 101(1) TFEU, are the holder of a patent for a pharmaceutical drug and a generic company seeking to enter the market with a generic version of the drug to be regarded as potential competitors when the parties are in bona fide dispute as to whether the patent is valid and/or the generic product infringes the patent?

2.

Does the answer to Question 1 differ if:

(a)

there are pending court proceedings between the parties involving this dispute; and/or

(b)

the patent-holder has obtained an interim injunction preventing the generic company from launching its generic product on the market until determination of those proceedings; and/or

(c)

the patent holder regards the generic company as a potential competitor?

Restriction by object

3.

When there are pending court proceedings concerning the validity of a patent for a pharmaceutical drug and whether a generic product infringes that patent, and it is not possible to determine the likelihood of either party succeeding in those proceedings, is there a restriction of competition ‘by object’ for the purpose of Article 101(1) when the parties make an agreement to settle that litigation whereby:

(a)

the generic company agrees not to enter the market with its generic product and not to continue its challenge to the patent for the duration of the agreement (which is no longer than the unexpired period of the patent), and

(b)

the patent holder agrees to make a transfer of value to the generic company in an amount substantially greater than the avoided litigation costs (including management time and disruption) and which does not constitute payment for any goods or services supplied to the patent holder?

4.

Does the answer to Question 3 differ if:

(a)

the scope of the restriction on the generic company does not go beyond the scope of the patent in dispute; and/or

(b)

the amount of the value transfer to the generic company may be less than the profit it would have made if it had instead succeeded in the patent litigation and entered the market with an independent generic product?

5.

Do the answers to Questions 3 and 4 differ if the agreement provides for the supply by the patent holder to the generic company of significant but limited volumes of authorised generic product and that agreement:

(a)

does not give rise to any meaningful competitive constraint on the prices charged by the patent holder; but

(b)

brings some benefits to consumers which would not have occurred if the patent holder had succeeded in the litigation, but which are significantly less than the full competitive benefits resulting from independent generic entry which would have occurred if the generic company had succeeded in the litigation, or is this relevant only to assessment under Article 101(3)?

Restriction by effect

6.

In the circumstances set out in Questions 3-5, is there a restriction of competition ‘by effect’ for the purpose of Article 101(1) or does that depend upon the court finding that in the absence of that settlement:

(a)

the generic company would probably have succeeded in the patent proceedings (i.e. that the chance that the patent was valid and infringed was below 50 %); alternatively

(b)

the parties would probably have entered into a less restrictive settlement (i.e. that the chance of a less restrictive settlement was above 50 %)?

Market definition

7.

Where a patented pharmaceutical drug is therapeutically substitutable with a number of other drugs in a class, and the alleged abuse for the purpose of Article 102 is conduct by the patent holder that effectively excludes generic versions of that drug from the market, are those generic products to be taken into account for the purpose of defining the relevant product market, although they could not lawfully enter the market before expiry of the patent if (which is uncertain) the patent is valid and infringed by those generic products?

Abuse

8.

In the circumstances set out in Questions 3-5 above, if the patent holder is in a dominant position, does its conduct in entering into such an agreement constitute an abuse within the meaning of Article 102 TFEU?

9.

Does the answer to Question 8 differ if the patent holder makes an agreement of that kind not in settlement of actual litigation but to avoid litigation being commenced?

10.

Does the answer to Question 8 or 9 differ if:

(a)

the patent holder pursues a strategy of entering into several such agreements to preclude the risk of unrestricted generic entry; and

(b)

the consequence of the first such agreement is that by reason of the structure of the national arrangements for reimbursement by the public health authorities to pharmacies of their costs of purchasing pharmaceutical drugs, the reimbursement level for the pharmaceutical drug in question is reduced, resulting in a substantial saving to the public health authorities (albeit a saving which is significantly less than that which would arise upon independent generic entry following a successful outcome for the generic company in patent litigation); and

(c)

that saving was no part of the intention of the parties when entering into any of the agreements?