25.10.2016   

EN

Official Journal of the European Union

C 393/7

(1)

The Perindopril (Servier) decision concerns (i) five patent settlement agreements between Servier (2), an originator pharmaceutical producer company, and five generic producers (2005-2007); and (ii) a technology acquisition by Servier (2004), which sought to delay generic entry in the perindopril market, a medicine to treat cardiovascular diseases.

(2)

The patent settlement agreements were signed between Servier and respectively:

(3)

Perindopril is an angiotensin converting enzyme (ACE) inhibitor product, used for the treatment of cardiovascular diseases such as hypertension. Perindopril became Servier's most successful product, with annual global sales for the years 2006 and 2007 exceeding USD 1 billion.

(4)

The Commission investigated whether Servier had devised, updated and implemented a strategy to confront generic entry, which became possible due to the expiry of Servier's key compound patent in the period 2001-2005. Generic entry for products like perindopril typically leads to two notable changes in the market. First, there is a significant decrease in prices (as much as 90 %) and, secondly, there are substantial volume shifts from the originator company to generic companies.

(5)

The evidence showed that Servier devised a strategy to prolong its exclusivity over perindopril. Servier relied on and applied for a number of processes and crystalline form patents. In 2004, Servier bought from Azad technology to produce perindopril, removing a close source of competition out of the market, which went beyond simply meeting competition and legitimate defence of its intellectual property. Subsequently, Servier also asserted its patents and was involved in patent litigation with a number of its generic challengers, which believed there were chances that their perindopril products may not infringe Servier's patents, and/or that Servier's '947 patent was invalid.

(6)

In addition, between 2005 and 2007, Servier concluded five patent settlement agreements on the basis of significant inducements to the respective generic companies (so-called reverse payment patent settlements). These inducements most often took the form of direct payments, totalling possibly in excess of EUR 90 million. In the case of Krka, it took the form of a market sharing agreement whereby Servier granted a licence for Krka's core markets in return for Krka withdrawing from competition in Servier's biggest markets (in particular the United Kingdom and France). The five patent settlement agreements prohibited entry with the developed generic product before the lapse of the patents in suit, and discontinued a number of legal challenges to the validity of the '947 patent which was later annulled and described by a UK Court as ‘the sort of patent which can give the patent system a bad name.’

(7)

An overview of the acquisitions and settlements in question is provided below:

(8)

In November 2008, the Commission carried out unannounced inspections at the premises of Servier and several generic companies. On 2 and 27 July 2009, the Commission formally opened proceedings and adopted the Statement of Objections addressed to Servier, Niche/Unichem, Matrix/Mylan, Teva, Krka and Lupin, including certain group companies affiliated to these undertakings (together, the ‘Parties’). The Oral Hearing took place between 15 and 18 April 2013. A Letter of Facts was sent to the Parties on 18 December 2013 and, on 4 April 2014, Letters of Facts concerning the issue of parental liability were sent to Niche/Unichem and Matrix/Mylan.

(9)

On 30 June 2014 and 7 July 2014, the Advisory Committee on Restrictive Practices and Dominant Positions issued a favourable opinion to the adoption of a Prohibition Decision pursuant to Articles 7 and 23 of Regulation (EC) No 1/2003.

(10)

On 7 July 2014 the Hearing Officer issued his final report.

(11)

The patent settlement agreements are assessed under Article 101 of the Treaty. With respect to Servier, those agreements, as well as the technology acquisition, are also assessed under Article 102 of the Treaty.

(12)

The Commission found that perindopril constituted a separate relevant market in the United Kingdom, France, the Netherlands and Poland.

(13)

While a certain degree of functional substitutability between perindopril and other ACE inhibitors was acknowledged with respect to first-time use patients, the Commission was led to its overall conclusion by the following observations related to the sales of perindopril: a non-negligible degree of differentiation between perindopril and other treatments, a nature of experience good exhibited by perindopril, important switching costs (because of associated risks, patients tended to stick to the successful treatment) affecting the bulk of perindopril patients, presence of loyalists among prescribers (who tended to prescribe the product that had proven to be successful for their previous patients), the general price insensitivity of demand for perindopril, the regulatory framework, which shielded perindopril from competitive pressures, and the fact that the price pressure over perindopril from its own generics was by several orders of magnitude greater than that exercised by alternative medicines. All those elements were found mutually reinforcing.

(14)

Servier was found to be dominant on the market for perindopril in the United Kingdom, France, the Netherlands and Poland, for the period starting in 2000 and ending between 2007 and 2009 (depending on the specific national market).

(15)

The decision also delineates a market for the technologies to produce perindopril API. The conclusion was notably based on the inelasticity of demand as highlighted by several factors (for instance, the lack of possibility to use API technology for other medicines to make perindopril API). Servier was equally found to be dominant on the technology market at least in the period 2001-2007.

(16)

Based on the jurisprudence of the Court of Justice of the European Union, the Commission found in its decision that patent settlements agreements, like any other agreements, are subject to Union competition law. The decision takes the view that an agreement which settles litigation and entails limitations on the generic company's commercial freedom in return for a value transfer may, in the specific circumstances of the case, be considered as a restriction of competition by object within the meaning of Article 101(1) of the Treaty.

(17)

In order to identify whether each agreement covered by the decision had the potential to restrict competition by its very nature, the Commission analysed the specific facts of the case relating to each agreement to determine whether:

The Commission's assessment took into account the economic and legal context leading up to the agreement's conclusion, the actual content and objectives of the agreement, and each party's subjective intentions, as evidenced by the facts of the case.

(18)

In the present case, other important factors were also taken into consideration.

(19)

The Commission's analysis of the individual patent settlement agreements established that the content, objectives, and legal and economic context of the patent settlement agreements concluded between Servier and the generic companies constituted restrictions by object.

(20)

According to settled case law, there is no need to take account of the concrete effects of an agreement when it is established that it has as its object the restriction of competition.

(21)

For the sake of completeness, the Commission analysed the likely restrictive effects of the patent settlement agreements on competition. In doing so, it took into account the actual conditions in which the agreements produced their effects, namely the economic and legal context, the nature of the product concerned, the real operating conditions and the structure of the market concerned; as well as, the existing and potential competition.

(22)

For the markets in the United Kingdom, France, the Netherlands and Poland (14), the Commission concluded that each of the patent settlement agreements (including related agreements) was likely to entail restrictive effects on competition in view of the competition that would have existed absent the agreement and the limited degree of remaining competition.

(23)

None of the parties submitted the evidence necessary to show that all four conditions for the application of Article 101(3) of the Treaty had been met.

(24)

The decision established that Servier abused its dominant position by pursuing an exclusionary strategy consisting of a series of transactions (a technology acquisition and five patent settlement agreements). Servier's exclusionary strategy aimed at removing the closest sources of competition to its branded perindopril.

(25)

Concerning the technology acquisition, the decision found that the Azad technology to produce an API not covered by Servier's patents was potentially enabling and represented a potential source of competition on the API market and the final product market. The acquired technology was never put to use by Servier. Evidence shows that it was a part of Servier's ‘defence mechanism.’ Servier's acquisition foreclosed an important and very scarce source of potential competition. Competition was not removed on the merits of Servier's technology, but by an acquisition eliminating this independent source. This distorted the competitive structure of the perindopril markets identified by the Commission and contributed to the likely foreclosure effects of Servier's exclusionary strategy, making generic entry more difficult, or delayed.

(26)

The technology acquisition was complemented by Servier's successive conclusion of five patent settlement agreements, which were capable of protecting or likely to protect Servier's market position and deviated from competition on the merits, and contributed to the overall effects of Servier's single and continuous infringement of Article 102 of the Treaty.

(27)

Servier's consistent and linear course of action in buying out potential sources of competition both by means of an intellectual property acquisition and reverse payment patent settlements was found to deviate from competition on the merits. Servier's efficiency claims concerning the technology acquisition and patent settlement agreements were unsubstantiated and did not meet the conditions for such conduct to be objectively justified.

(28)

Servier's exclusionary strategy, implemented through the aforementioned six transactions concluded within the space of 27 months, thus constitutes a single and continuous infringement of Article 102 of the Treaty in the period 2004-2009 on the market for perindopril formulations in the United Kingdom, France, the Netherlands and Poland, and on the EU market for perindopril API technology. In the decision, none of the constitutive elements is found to constitute a stand-alone infringement of Article 102 of the Treaty.

(29)

All subsidiaries of parent companies held liable for the relevant infringement were wholly-owned by their parent company, except Niche and Matrix. The Commission considered that the presumption of decisive influence applied in this case and held the parent jointly and severally liable with the subsidiary.

(30)

With respect to Niche, 60 % of its shares were owned by Unichem for part of the infringement period. As to Matrix, 71,5 % of its shares were acquired by Mylan during the infringement period. The Commission found that Unichem and Mylan exercised decisive influence over their respective subsidiaries, and held these parent companies jointly and severally liable for the fine.

(31)

The following companies were addressees of the Commission's decision:

(32)

Taking into account the gravity and duration of the infringements to Articles 101 and 102 of the Treaty, and pursuant to the Guidelines on fines (15), the Commission imposed on Servier a total of fines of EUR 330 997 200 for the infringements in question; and on the generic undertakings (and their parent companies) a total of fines of EUR 96 699 308 for the infringement of Article 101 of the Treaty.

(33)

Regarding Servier, the fines take into account Servier's actual perindopril sales. Regarding Servier's generic counterparts, the fines cannot be calculated on the basis of sales value, since the anti-competitive behaviour was aimed at keeping them off the market. Therefore, the decision applied paragraph 37 of the Guidelines on fines (16) and relied on the value transfer received by the generic counterparts. The amount of the value transfer made by the originator to the generic undertaking encompasses various aspects that the parties may have considered when entering into the agreement, notably the strength of the potential entry. The fine calculated for Niche/Unichem exceeds the 10 % turnover limit and therefore the final amount of the fine was reduced. For all other undertakings, the fine remains below the 10 % turnover limit.

(34)

The specific fines imposed for the infringement of Articles 101 and 102 of the Treaty were as follows:

(35)

The Commission ordered the undertakings concerned to refrain from repeating any act or conduct having the same or similar object or effect.