Case C‑201/19 P

Servier SAS and Others

v

European Commission

Judgment of the Court (First Chamber) of 27 June 2024

(Appeal – Competition – Pharmaceutical products – Market for perindopril – Article 101 TFEU – Agreements, decisions and concerted practices – Potential competition – Restriction of competition by object – Strategy to delay the market entry of generic versions of perindopril – Patent dispute settlement agreement – Duration of the infringement – Concept of a single infringement – Annulment or reduction of the fine)

1. Appeal – Grounds – Incorrect assessment of the facts and evidence – Inadmissibility – Review by the Court of Justice of the assessment of the facts and evidence – Possible only where the clear sense of the evidence has been distorted – Review by the Court of the legal classification given to the facts of the dispute – Whether permissible

   (Art. 256(1) TFEU; Statute of the Court of Justice, Art. 58, first para.)

   (see paragraphs 58-61, 189, 269, 322, 326, 335)

2. Appeal – Grounds – Mere repetition of the pleas and arguments put forward before the General Court – Inadmissibility – Challenge to the interpretation or application of EU law made by the General Court – Admissibility

   (Art. 256 TFEU; Statute of the Court of Justice, Art. 58, first para.; Rules of Procedure of the Court of Justice, Arts 168(1)(d) and 169(2))

   (see paragraphs 62, 63)

3. Agreements, decisions and concerted practices – Adverse effect on competition – Criteria for assessment – Characterisation of an undertaking as a potential competitor – Real and concrete possibilities of entering the market – Criteria – Firm intention and inherent ability of the undertaking to enter the relevant market – No insurmountable barriers – Assessment – Burden of proof – Existence of patents protecting an originator medicine or one of its manufacturing processes – Characterisation of a manufacturer of generic medicines as a potential competitor of the originator manufacturer holding the patents

   (Art. 101 TFEU)

   (see paragraphs 69-71, 79-82, 98-126, 191-195, 200-204, 262-267)

4. Agreements, decisions and concerted practices – Adverse effect on competition – Patent dispute settlement agreements – Agreement concluded between a manufacturer of originator medicines and a manufacturer of generic medicines – Agreement containing clauses under which the manufacturer of generic medicines undertakes not to challenge patents and not to market products – Consideration consisting in transfers of value – Characterisation as a restriction by object – Criteria – Degree of harm of the agreements to competition in the market concerned – Assessment of the inducive effect of the transfers of value on the decision of the generic manufacturer not to enter the market – Need to examine the effects of the anticompetitive conduct on competition – None – Undertakings involved which acted without having an intention to prevent, restrict or distort competition – Facts which are not decisive

   (Art. 101(1) TFEU)

   (see paragraphs 72-77,
   83-88, 143-146, 152-157, 163-168, 222-228, 272, 277, 282, 291-296, 307-310, 332-334, 344-352)

5. Agreements, decisions and concerted practices – Adverse effect on competition – Ancillary restriction – Concept – Restriction necessary to the implementation of a main operation which is not anticompetitive – Main operation constituting a restriction of competition by object – Ancillary restraints doctrine inapplicable

   (Art. 101(1) TFEU)

   (see paragraphs 147-151, 278)

6. Agreements, decisions and concerted practices – Prohibition – Infringements – Agreements and concerted practices constituting a single infringement – Attribution of liability for the entire infringement to a single undertaking – Conditions – Unlawful practices and conduct forming part of an overall plan – Assessment – Criteria – Common objective pursued by all the participants – Requirement for a link of complementarity between the practices complained of – None

   (Art. 101(1) TFEU)

   (see paragraphs 240-250)

7. Agreements, decisions and concerted practices – Adverse effect on competition – Patent dispute settlement agreements – Agreement concluded between a manufacturer of originator medicines and a manufacturer of generic medicines – Agreement containing clauses under which the manufacturer of generic medicines undertakes not to challenge patents and not to market products – Consideration consisting in transfers of value – Commission decision finding an infringement and imposing a fine – Decision vitiated by inconsistent reasoning as regards the end date of the agreement, decision or concerted practice in the various national markets – Rejection by the General Court of the claim for annulment alleging that inconsistent reasoning – Error of law

   (Art. 101(1) TFEU)

   (see paragraphs 368-379)

8. Fundamental rights – Charter of Fundamental Rights – Principle that offences and penalties must be defined by law – Scope – Foreseeability of the infringing nature of the penalised conduct – Patent dispute settlement agreement between an originator company and a generic undertaking – Agreement contrary to competition law – Originator company which could not have been unaware of the anticompetitive nature of its conduct

   (Art. 101(1) TFEU; Charter of Fundamental Rights of the European Union, Art. 49(1))

   (see paragraphs 386-390)

9. Appeal – Jurisdiction of the Court – Whether it may review, on grounds of fairness, the assessment by the General Court in regard to the amount of the fines imposed on undertakings which have infringed the competition rules of the Treaty – Precluded

   (Arts 256 and 261 TFEU; Statute of the Court of Justice, Art. 58; Council Regulation No 1/2003, Art. 31)

   (see paragraph 404)

10. Competition – Fines – Amount – Determination – Judicial review – Unlimited jurisdiction of the EU judicature – Scope – Determination of the amount of the fine imposed – Criteria for assessment

    (Arts 101(1) and 261 TFEU; Council Regulation No 1/2003, Arts 23(3) and 31)

    (see paragraphs 412-417)

Résumé

By seven judgments, the Court of Justice essentially dismisses the appeals brought by several manufacturers of medicines against the judgments of the General Court ( 1 ) which dismissed in part their actions for annulment of the decision by which the European Commission imposed fines on them for having participated in agreements on the market for the pharmaceutical product perindopril and, in respect of one of them, for having committed an abuse of a dominant position on that market. ( 2 ) In so doing, the Court of Justice clarifies the dividing line between legitimate action by manufacturers of medicines which consists in settling actual patent disputes in the pharmaceutical sector, on the one hand, and agreements which unlawfully delay the entry of manufacturers of generic medicines to the market for a pharmaceutical product under the guise of a patent dispute settlement agreement, on the other.

The Servier pharmaceutical group, the parent company of which, Servier SAS, is established in France (individually or jointly, ‘Servier’), developed perindopril, a medicinal product in the class of angiotensin-converting enzyme (ACE) inhibitors, used in cardiovascular medicine and primarily intended for the treatment of hypertension and heart failure. The perindopril compound patent, filed with the European Patent Office (EPO) in 1981, expired during the 2000s.

The active pharmaceutical ingredient of perindopril takes the form of a salt, which is erbumine. In 1988, Servier filed a number of patents with the EPO relating to processes for the manufacture of that active ingredient, with an expiry date of 16 September 2008.

Two new patents relating to perindopril and the process for its manufacture were filed with the EPO by Servier in 2001 and were granted in 2004 (‘the 947 and 948 patents’). Servier also obtained national patents relating to the 947 patent in several Member States before they were parties to the Convention on the Grant of European Patents.

As from 2003, a number of disputes arose between Servier and manufacturers of generic medicines which were preparing to market a generic version of perindopril. In that context, 10 generic manufacturers filed opposition proceedings against the 947 patent before the EPO; the EPO Technical Board of Appeal revoked the contested patent in May 2009. Several manufacturers of generic medicines have also challenged the validity of the 947 patent before certain national courts. Servier, for its part, has brought infringement actions and applications for interim injunctions against the manufacturers of generic medicines in question.

In order to bring those disputes to an end, Servier concluded, between 2005 and 2007, settlement agreements with several generic manufacturers, in particular with Niche Generics Ltd and its parent company Unichem Laboratories Ltd (‘the Niche agreement’), Matrix Laboratories Ltd (‘the Matrix agreement’), Teva UK Ltd (‘the Teva agreement’), KRKA, tovarna zdravil, d.d. (‘the Krka agreements’) and Lupin Ltd (‘the Lupin agreement’).

In accordance with those agreements, the generic manufacturers undertook, inter alia, as appropriate, to limit or cease the manufacture, supply or marketing of the forms of perindopril protected by Servier’s abovementioned patents and no longer to challenge those patents. In return for those commitments and other clauses provided for in the abovementioned agreements, Servier undertook, inter alia, to make significant payments to those undertakings.

In that context, Biogaran SAS, a subsidiary of Servier specialised in the development of generic medicines, also concluded a licence and supply agreement with Niche Generics (‘the Biogaran agreement’).

By decision of 9 July 2014, the Commission found that the Niche, Matrix, Teva, Krka, Lupin and Biogaran agreements constituted restrictions of competition prohibited by Article 101 TFEU. It also considered that Servier had committed an abuse of a dominant position in breach of Article 102 TFEU, since those agreements formed part of a strategy intended to delay the entry of generic versions onto the perindopril market, in which that undertaking held a dominant position.

Thus, the Commission imposed on Servier fines totalling EUR 289727200 for the infringements of Article 101 TFEU, and a fine of EUR 41270000 for the infringement of Article 102 TFEU. The manufacturers of generic medicines involved were also given significant fines for having infringed Article 101 TFEU by participating in the agreements at issue.

Hearing actions brought by Servier and the manufacturers of generic medicines concerned, the General Court annulled the Commission decision in so far as it found an infringement of Article 101(1) TFEU in relation to the Krka agreements and an infringement of Article 102 TFEU, and cancelled the fines imposed respectively on Servier and Krka for those infringements. ( 3 ) In addition, it reduced the amount of the fine imposed on Servier for its participation in the Matrix agreement. ( 4 ) By contrast, the General Court confirmed all the other fines imposed.

Servier and the manufacturers of generic medicines whose actions had been dismissed brought appeals against the judgments of the General Court.

Findings of the Court

The concepts of potential competition and of restriction of competition by object

The Court of Justice examines, in the first place, the claims for annulment according to which the General Court erred in law in confirming the existence of potential competition between Servier and the manufacturers of generic medicines in question and in characterising the agreements at issue as restrictions of competition by object.

As a preliminary point, the Court notes that, for the purposes of the examination under Article 101(1) TFEU of collusive practices in the form of horizontal cooperation agreements between undertakings, such as the agreements at issue, it must be determined, at an initial stage, whether those practices may be classified as a restriction of competition by undertakings that are in competition with each other, even if only potentially.

If that is the case, it is necessary to ascertain, at a second stage, whether, in the light of their economic characteristics, those practices fall within the characterisation of a restriction of competition by object. Where there is a restriction by object, there is no need to examine, nor a fortiori to prove, their effects on competition. On the other hand, where the anticompetitive object of an agreement between undertakings or a concerted practice is not established, it is necessary to examine its effects.

In the light of those considerations, the Court of Justice rejects, first, the complaints alleging that the General Court applied a broad interpretation of the concept of potential competition and reversed the burden of proof borne by the Commission.

The Court begins by recalling that, in the specific context of the opening of the market for a medicinal product to the manufacturers of generic medicines, it has already held that, in order to assess whether one of those manufacturers, although not present in a market, is a potential competitor of a manufacturer of originator medicines present in that market, it is necessary to determine whether there are real and concrete possibilities of the former moving into that market and competing with the latter. To that end, it is necessary to assess whether the manufacturer of generic medicines had taken sufficient preparatory steps to impose competitive pressure on the manufacturer of originator medicines. It must also be determined that the market entry of the manufacturer of generic medicines does not meet insurmountable barriers.

On the latter point, the Court states that, although the existence of patents protecting an originator medicine or one of its manufacturing processes is indisputably part of the economic and legal context characterising the relationships of competition between the holders of those patents and the manufacturers of generic medicines, the fact remains that the existence of a patent which protects the manufacturing process of an active ingredient that is in the public domain cannot, as such, be regarded as an insurmountable barrier to the market entry of a manufacturer of generic medicines. It follows that the existence of such a patent does not mean that a manufacturer of generic medicines which has in fact a firm intention and an inherent ability to enter the market, and which, by the steps taken, shows a readiness to challenge the validity of that patent and to take the risk, upon entering the market, of being subject to infringement proceedings brought by the patent holder, cannot be characterised as a potential competitor of the manufacturer of the originator medicine concerned.

In addition, although the perception on the part of a manufacturer of generic medicines of the strength of a patent is one of the relevant factors among others, such as the preparatory steps taken with a view to entering the market, for assessing the intentions of that manufacturer and, therefore, any firm intention on its part to make such an entry, that perception is not relevant, in principle, for the purpose of assessing the inherent ability of such a manufacturer actually to enter the market, nor, moreover, is it relevant for assessing the objective existence of insurmountable barriers to such entry.

Contrary to the claims of some of the appellants, the General Court did not, in that context, reverse the burden of proof in holding that, since the Commission established, on the basis of a body of consistent evidence, the existence of potential competition between Servier and the manufacturers of generic medicines in question, it was for those manufacturers to refute the existence of such competition by adducing evidence to the contrary. Moreover, such a burden of proof does not constitute a probatio diabolica, since it is sufficient for the undertakings in question to prove a positive fact, namely the existence of technical, regulatory, commercial or financial difficulties which constitute insurmountable barriers to one of them entering the market.

Second, the Court of Justice rejects the grounds of appeal according to which the General Court characterised the agreements at issue as restrictions of competition by object on the basis of incorrect criteria.

Having observed that that characterisation as restrictions of competition by object cannot be rejected on the ground that the Commission has no previous decision-making practice in that area, the Court of Justice rejects the complaints challenging the General Court’s decision not to take into account the alleged positive effects of the agreements at issue on competition, since an examination of the effects of those agreements was not necessary, or even relevant, for the purpose of determining whether they may be characterised as a restriction of competition by object.

The General Court also did not err in rejecting the application of the case-law according to which a restriction ancillary to a legitimate agreement is not covered by the prohibition rule laid down in Article 101(1) TFEU if it is objectively necessary to the implementation of the legitimate agreement and proportionate to its objectives. That case-law requires that the main agreement be in no way anticompetitive, which is not the case with the agreements at issue.

In response to the complaints alleging that the General Court refused to take into consideration the appellants’ intention to bring patent disputes to an end, the Court of Justice recalls that, while the objective aims of agreements from a competition standpoint are relevant for the purpose of assessing their possible anticompetitive object, the fact that the undertakings involved acted without having an intention to restrict competition and the fact that they pursued certain legitimate objectives are not decisive for the purposes of the application of Article 101(1) TFEU. Thus, the fact that the negotiation of the agreements at issue might reflect an economically rational strategy from the appellants’ point of view in no way demonstrates that the pursuit of that strategy is justifiable from the point of view of competition law.

Lastly, the Court rejects the arguments concerning the importance that should be attached to the reverse payments provided for in the agreements at issue, namely the payments made by Servier in favour of the manufacturers of generic medicines, for the purpose of characterising those agreements as a restriction of competition by object.

In that regard, the Court recalls that, while an agreement to settle a patent dispute may, under certain conditions, be concluded entirely lawfully on the basis of the parties’ recognition of the validity of the patent in question, characterisation of such an agreement as a restriction of competition by object also depends on other characteristics of the agreement and on the circumstances in which it was concluded, as a result of which the agreement can, if applicable, be regarded as revealing a sufficient degree of harm to competition.

Accordingly, the presence of non-challenge and non-marketing clauses in a settlement agreement may give rise to characterisation as a restriction of competition by object where it is apparent that the manufacturer of generic medicines does not agree to those clauses on the basis of its recognition of the validity of the patent held by the manufacturer of originator medicines, but on the basis of a payment to it by the latter.

Consequently, where a patent dispute settlement agreement which contains non-challenge and non-marketing clauses involves transfers of value by the manufacturer of originator medicines in favour of the manufacturer of generic medicines, it is necessary to ascertain, first, whether the net gain from those transfers may be fully justified by the need to compensate for the costs of or disruption caused by the dispute to which the agreement relates, or by the need to provide remuneration for the actual and proven supply of goods or services from the manufacturer of generic medicines to the manufacturer of the originator medicine. If that is not the case, it must be ascertained, second, whether those transfers can have no explanation other than the commercial interest of those manufacturers of medicines not to engage in competition on the merits. For the purposes of that examination, it is necessary to determine whether the net gain from the transfers of value was sufficiently large actually to act as an incentive for the manufacturer of generic medicines to refrain from entering the market concerned, and there is no requirement that that net gain be necessarily greater than the profits which it would have made if it had been successful in the patent proceedings.

In that context, the Court of Justice states, in addition, that the General Court did not err in law in holding that certain costs reimbursed by Servier, such as any compensation owed to third parties by the manufacturers of generic medicines, could not be regarded as inherent in the settlement of the dispute. Nor, in that regard, did the General Court reverse the burden of proof by requiring the parties to the agreements at issue to demonstrate that those costs were inherent in the settlement in question.

The application of Article 101(1) TFEU to the agreements at issue

Having thus confirmed the General Court’s interpretation of the concepts of potential competition and of restriction of competition by object, the Court of Justice carries out, in the second place, a detailed examination of the agreements at issue in the light of that reasoning.

A. The Niche and Matrix agreements

As regards the Niche and Matrix agreements, the Court observes that the common strategy of Niche Generics (‘Niche’), its parent company Unichem Laboratories (‘Unichem’) and Matrix Laboratories (‘Matrix’) was to develop a generic version of perindopril and market it in the territory of the European Union. In that context, Matrix was responsible for producing the active ingredient while Unichem was responsible for the production of a generic version of perindopril in tablet form, using that active ingredient. The marketing of that medicinal product, including its regulatory aspects, was entrusted to Niche.

As regards Matrix, the Court also states that the company Mylan Inc. increased its holding in the capital of Matrix to 71.5% in January 2007, and to more than 97% in 2011. Since 5 October 2011, Matrix has been known as Mylan Laboratories.

In the light of the foregoing, the Court of Justice observes that the General Court did not err in law in finding that the transfers of value made by Servier pursuant to the Niche and Matrix agreements were intended to induce Niche, Unichem and Matrix to refrain from entering the perindopril market in the European Union. Moreover, since the patent-related obstacles to the entry of those manufacturers of generic medicines to the perindopril market were not insurmountable, those obstacles cannot call into question the inducive nature of the transfers of value established. Furthermore, the alleged absence of anticompetitive intent on the part of the parties to the Niche and Matrix agreements is not decisive for the purposes of the application of Article 101(1) TFEU.

The Court of Justice also rejects the complaints according to which the General Court erred in law in confirming that Niche and Matrix did not participate in a single infringement, but rather in two separate infringements, for which the Commission was entitled to impose individual fines. Since characterisation as a single infringement requires that each of the instances of anticompetitive conduct concerned form part of the same overall plan as a result of their identical anticompetitive object, the General Court correctly applied that test in holding that, in view of the absence of a common plan between Niche and Matrix, the Niche and Matrix agreements constituted two separate infringements.

As regards Mylan’s liability for the infringement arising from the Matrix agreement and Unichem’s liability for the infringement arising from the Niche agreement, the Court of Justice considers that the General Court correctly held that liability for Matrix’s and Niche’s conduct could be imputed to Mylan and Unichem respectively in their capacity as parent companies, since Matrix and Niche did not determine independently their own conduct on the market, but essentially carried out the instructions given to them by their parent companies, having regard especially to the economic, organisational and legal links between them.

As regards Unichem, the Court of Justice notes, moreover, that it is apparent from the findings of the General Court that both Unichem and its subsidiary Niche participated directly in the infringement arising from the Niche agreement. Since Unichem had not validly disputed the evidence demonstrating that direct participation before the General Court, that evidence was sufficient, in accordance with the principle of personal responsibility, to impute liability to it for that infringement.

Furthermore, the fact that Unichem is situated in a third country also does not prevent the application of Article 101 TFEU to it, since the Niche agreement was implemented in the European Union both by Servier and by Niche.

B. The Teva and Lupin agreements

As regards the application of Article 101(1) TFEU to the Teva agreement, the Court of Justice confirms the General Court’s assessment that the net gain from the transfers of value provided for in that agreement induced Teva UK to refrain from entering the perindopril market, which justifies the characterisation of that agreement as a restriction of competition by object. Moreover, the line of argument according to which the Teva agreement had the legitimate objective of allowing Teva to enter the market in the United Kingdom by marketing a generic version of perindopril supplied by Servier is not capable of calling that characterisation into question, since the fact that those undertakings acted without having an intention to prevent, restrict or distort competition and the fact that they pursued certain legitimate objectives are not decisive for the purposes of the application of Article 101(1) TFEU.

As regards the Lupin agreement, the Court of Justice, by contrast, upholds Servier’s complaint alleging that the General Court erred in law in confirming the Commission’s conclusion that the infringement relating to that agreement continued on the Belgian, Czech, Irish and Hungarian markets after the marketing of a generic version of perindopril by the medicine manufacturer Sandoz, even though the introduction of that generic version on the French market had been accepted by the Commission as marking the end of the infringement resulting from the Lupin agreement on that national market.

C. The Biogaran agreement

Under the Biogaran agreement, Niche undertook, inter alia, to transfer to Biogaran marketing authorisation files for three medicinal products other than perindopril, and a marketing authorisation obtained in France for one of those three medicinal products. In return, Biogaran was to pay Niche the sum of 2.5 million pounds sterling (GBP), which was non-refundable, even if those marketing authorisations were not obtained.

Taking the view that the Biogaran agreement had constituted an additional inducement intended to persuade Niche not to enter the perindopril market and revealed Biogaran’s direct involvement in the infringement committed by Servier, the Commission imposed a significant fine on Servier and Biogaran, jointly and severally, for the infringement of Article 101 TFEU.

Since the General Court confirmed that analysis and the fine imposed by the Commission, the Court of Justice observes that it is essential to examine all the contractual arrangements in question as forming a whole. In the light, inter alia, of the economically inexplicable transfers of value resulting from the Biogaran agreement in favour of Niche, the Court of Justice thus finds that the General Court did not err in law in holding that the Biogaran agreement was an agreement ancillary to the Niche agreement intended to pay Niche additional remuneration in order to induce it to refrain from entering the perindopril market by means of the Niche agreement.

The imposition of the fines

Lastly, the Court rejects the various complaints relating to the imposition and calculation of the fines, with the exception of those raised by Servier relating to the duration of the infringement arising from the Lupin agreement. In particular, the Court rejects the arguments according to which, when faced with a novel situation such as that in the present case, characterised by a lack of previous decisions or case-law, and which is complex, the Commission could not impose fines without infringing the principle of legality of criminal offences and penalties.

In the latter regard, the Court recalls that the principle of legality of criminal offences and penalties indeed requires the law to give a clear definition of offences and the penalties which they attract, but that it does not preclude the gradual, case-by-case clarification of the rules on criminal liability by judicial interpretation, provided that the result was reasonably foreseeable at the time the offence was committed. In view of the scope of the prohibition laid down in Article 101(1) TFEU, Servier could not have been unaware that, by paying the manufacturers of generic medicines not to enter the perindopril market, it was engaging in conduct prohibited by that provision. Conversely, the manufacturers of generic medicines could reasonably have expected that, by agreeing to be paid by Servier to stay out of the perindopril market, their conduct was caught by the prohibition laid down in Article 101(1) TFEU. It follows that, despite the complexity of the agreements at issue and their context, the undertakings involved could not have been unaware of the unlawful nature of those agreements.

Conclusion

In the light of the foregoing, the Court dismisses in their entirety the various appeals brought by the manufacturers of medicines, with the exception of that brought by Servier, which is dismissed only in part. As regards the latter appeal, the Court upholds more specifically the complaints seeking to challenge the duration of the infringement relating to the Lupin agreement and, accordingly, the complaints relating to the calculation of the fine imposed on Servier in respect of its participation in that agreement. Taking the view, moreover, that the state of the proceedings permits final judgment to be given as regards those complaints, the Court, first, finds that the infringement relating to the Lupin agreement ended on the Belgian, Czech, Irish and Hungarian markets when the generic version of perindopril produced by Sandoz arrived on the French market, and, second, sets the fine imposed on Servier in respect of its participation in that agreement at EUR 34745100.

( 1 ) Judgments of 12 December 2018, Servier and Others v Commission (T‑691/14, EU:T:2018:922); Niche Generics v Commission (T‑701/14, EU:T:2018:921); Unichem Laboratories v Commission (T‑705/14, EU:T:2018:915); Teva UK and Others v Commission (T‑679/14, EU:T:2018:919); Lupin v Commission (T‑680/14, EU:T:2018:908); Mylan Laboratories and Mylan v Commission (T‑682/14, EU:T:2018:907); Biogaran v Commission (T‑677/14, EU:T:2018:910).

( 2 ) Commission Decision C(2014) 4955 final of 9 July 2014 relating to a proceeding under Article 101 and Article 102 [TFEU] (Case AT.39612 – Perindopril (Servier)).

( 3 ) Judgments of 12 December 2018, Krka v Commission (T‑684/14, EU:T:2018:918), and Servier and Others v Commission (T‑691/14, EU:T:2018:922).

( 4 ) Judgment of 12 December 2018, Servier and Others v Commission (T‑691/14, EU:T:2018:922).