Eurotunnel v Secretary of State for Transport

Eurotunnel and the Secretary of State for Transport have today settled Eurotunnel’s challenge to the award by the Government of contracts to DFDS, Brittany Ferries, and Seaborne Freight for the provision of additional freight capacity between the UK and continental Europe. The capacity contracts were procured under the extreme urgency provisions in regulation 32(2)(c) of the Public Contracts Regulations 2015 to deal with the consequences of a ‘no-deal Brexit’. Eurotunnel challenged this procurement as being unlawful under the Regulations. The Secretary of State denied that Eurotunnel had standing to make such a challenge and denied all the claims.The procurement claim was due to be heard by Mr Justice Stuart-Smith in the Technology & Construction Court between 1 and 6 March 2019.

Daniel Beard QC, Valentina Sloane, Ligia Osepciu and Jack Williams of Monckton Chambers acted for Eurotunnel.

Philip Moser QC, Ewan West and Azeem Suterwalla of Monckton Chambers acted for the Secretary of State.

RD & Ors, R (on the application of) v Worcestershire County Council [2019] EWHC 449 (Admin)

In a judgment handed down today, the Administrative Court has ruled that Worcestershire County Council acted unlawfully in failing to carry out proper transitional planning in relation to families affected by its decision to cut a much-valued home-visiting service known as ‘Portage’ for children with special educational needs and disabilities. The Claimants raised a variety of statutory and common law challenges to the decision-making process. Mr Justice Nicklin ultimately decided the case on the basis that the Defendant had frustrated the affected families’ legitimate expectations, which had arisen from assurances made by the Defendant at the time the decision to cut the Portage service was taken to the effect that proper transitional planning would take place in order to ensure that the impact of the cessation of the service would be properly mitigated.

Michael Armitage acted for the Claimants, instructed by Bindmans LLP. Having acted unled at the permission stage, Michael was led by Jenni Richards QC of 39 Essex Chambers at the substantive hearing.

Steve Broach also advised the Claimants at an earlier stage in the proceedings.

The judgment is the latest in a series of cases in which Monckton members have successfully represented claimants challenging local authority cuts (see News 14 August 2018, 6 August 2018 and 22 July 2016)

On 21 February 2019, the FCA issued a decision which finds that 3 asset management firms breached competition law. This is the FCA’s first formal decision under its competition enforcement powers.

The infringements found by the FCA consisted of the sharing of strategic information, on a bilateral basis, between competing asset management firms during one initial public offering and one placing, shortly before the share prices were set. The firms disclosed and/or accepted otherwise confidential bidding intentions, in the form of the price they were willing to pay and sometimes the volume they wished to acquire. This allowed one firm to know another’s plans during the IPO or placing process when they should have been competing for shares.

Asset managers bid for the shares they want in IPOs and placings against competing asset managers in prevailing market practice. The FCA found that if asset managers share detailed and otherwise confidential information about their bids with each other, they undermine the process by which prices are set. This can reduce pressure to make bids that reflect what they really think the company is worth. This could reduce the share price achieved by the IPO or placing and so raise the cost of equity capital for the issuing company. According to the FCA, firms rely on such capital as a way of financing investments, so unlawful information sharing could increase the cost of related investments or even make them unviable.

The FCA has fined Hargreave Hale Ltd £306,300 and River and Mercantile Asset Management LLP (RAMAM) £108,600. The FCA also found that Newton Investment Management Limited was involved in the anti-competitive conduct, but it was not fined because it was given immunity under the competition leniency programme.The companies now have two months to appeal the FCA’s decision.

Kassie Smith QC, Alison Berridge and Jack Williams are acting for the FCA.

Daniel Beard QC is acting for Hargreave Hale.

A Complex dispute concerning the Aggregates Levy has now been concluded after over 14 years of litigation in the European and domestic courts. Three separate but linked appeals to the General Court have been withdrawn after hearings in Luxemburg  but before Judgments were handed down.

The Aggregates Levy was introduced by the UK Government in the Finance Act 2001 as an environmental tax on the commercial exploitation of aggregate in the UK.  Its overall aim was to encourage the commercial exploitation of aggregate to be conducted in a more environmentally friendly manner.

The Levy included a series of complex exemptions and reliefs for certain types and uses of aggregate in the UK.  Due to particular circumstances affecting Northern Ireland, a specific relief was adopted in order to give the industry in Northern Ireland sufficient time to adapt to the Levy.  The European Commission decided that, with certain exceptions, these exemptions and reliefs from the Levy did not constitute state aid. Its decisions to that effect were challenged by the British Aggregates Association and, in relation to Northern Ireland, certain quarries located in the Republic of Ireland on the basis that the exemptions and reliefs did comprise state aid, which was said to have distorted competition in a way that was not compatible with the single market.

It is the appeals against those decisions in cases T-101/14, T-610/15 and T-741/15 that have now been withdrawn.  These appeals were the second round of challenges conducted in the European Courts against the Commission’s approval of certain other aspects of the Levy. In general terms it was said that the exemptions from the levy amounted to incompatible state aid.

The Government has now made a written statement in Parliament indicating that it will be reviewing the operation and effectiveness of the levy over the next year.  The Written Statement can be found here.

Melanie Hall QC and Ben Rayment represented the United Kingdom on each of the appeals.

La Gaitana Farms SA & Ors v British Airways Plc [2019] EWCA Civ 37

In a judgment handed down today in the air cargo cartel damages litigation, the Court of Appeal (Master of the Rolls; Flaux and Bean LJJ) has held that the national court did not have jurisdiction to award damages for a contravention of what is now Article 101 TFEU in relation to collusion on surcharges on air freight services provided between the EU and third countries, during the period prior to 1 May 2004. Under the transitional regime that applied during that period, the national court could only consider such conduct if the European Commission or the designated national regulatory authorities had first made a relevant decision. Moreover, the Court of Appeal held that the advent of Regulation 1/2003 did not change the position such as to enable the national court now to apply Article 101 TFEU to pre-1 May 2004 conduct on flights between the EU and third countries, despite the fact that the transitional regime no longer applies to such conduct. The judgment contains a detailed exposition of the general principle of the non-retrospectivity of substantive legal rules and is therefore of significant wider interest.

Philip Moser QC acted for the “La Gaitana” Appellants at the hearing of the appeal.

Jon Turner QC and Michael Armitage acted for the Respondent, British Airways.

Daniel Beard QC and Tom Sebastian acted for the “Part 20” Respondents to the appeal.

This is the latest judgment in the air cargo litigation, which encompasses a large number of claims that have now settled. Monckton Chambers has been at the heart of the litigation, and (in addition to the individuals above) the following Members of Chambers have all previously been instructed in the proceedings:

• Tim Ward QC Korean Air, Asiana Airlines, Thai Airways
• Philip Moser QC, Paul Harris QC, Ben Rayment, Anneliese Blackwood, Alison Berridge, Conor McCarthy La Gaitana, Kodak, Hyundai, Emerald
• Michael Bowsher QC, Anneli Howard Japan Airlines
• Jon Turner QC, Robert Palmer, Michael Armitage, Stefan Kuppen BA
• Daniel Beard QC, Tom Sebastian Polar Air, Thai Airways, Societe Air, Singapore Airlines, Scandinavian Airlines, Qantas, LAN Cargo, Korean Airlines, Japan Airlines, Deutsche Lufthansa, Cathay Pacific, Cargolux, Asiana Airlines, Bao Xiang
• Kassie Smith QC, Laura John Cargolux
• Meredith Pickford QC Korean Air, Air Canada
• Ronit Kreisberger, Nik Grubeck Cathay Pacific
• Rob Williams Sanofi
• Philip Woolfe Thai Airways, Saudi Arabian Airways, Polar Air, Malaysian Airlines, Hong Kong Airlines, Emirates, All Nippon Airways, Air New Zealand, Korean Air

ABBVIE LIMITED -v- THE NHS COMMISSIONING BOARD (OPERATING AS NHS ENGLAND)

[2019] EWHC 61 (TCC)

Pharma giant AbbVie challenged the largest NHS drug procurement ever undertaken, for contracts to treat and eliminate Hepatitis C (“HCV”) worth about £1 billion over five years commencing April 2019.

The procurement is a “whole market” procurement, to award market shares to all three existing HCV drug suppliers. The Claimant challenged two aspects of the Procurement, claiming breach of the duty of equal treatment in Regulation 18 (1) of the Public Contracts Regulations:

i) A “dummy price mechanism” (“DPM”) used in the assessment which the Claimant said gave an unfair advantage to bidders unable to supply part of the market as compared to those that could.

ii) An Unmetered Access Model (“UAM”) involving a fixed fee for all the patients a supplier commits to treat, the Claimant claiming as unfair that failure by one bidder to treat all its patients might require others to do so without additional pay.

In an important judgment on the equal treatment principle and the margin of discretion available to the contracting authority Choudhury J dismissed the claim on all points, holding:

i) The DPM did not amount to a breach of equal treatment. That a bidder might fare better than a rival under a particular model did not necessarily mean that model was in breach of equal treatment. The choice of model falls within the wide discretion available to contracting authorities to choose award criteria for their purposes. The evidence clearly demonstrated that the Claimant could still win the largest share, depending on the prices it chose to bid. Alternatively, the DPM would be objectively justified for reasons including the increase of competition, reducing cost and maximising health benefits.

ii) In relation to the UAM, the fixed fee did not breach equal treatment. The advantage the Claimant believed it had by reason of a more popular product was not a difference in competitive position which needed to be catered for in the tender rules. An application of the same rules to all suppliers, irrespective of competitive position, does not amount to unequal treatment. Also, the Claimant’s claimed understanding of how value was to be assessed was not that of the reasonably well-informed and normally diligent tenderer. Alternatively, on the evidence any discriminatory effect would be modest and thus relatively easy to justify and was objectively justified for the reasons relied upon by the Defendant.

Philip Moser QC of Monckton Chambers acted for the successful Defendant, instructed by Blake Morgan.

Ligia Osepciu of Monckton Chambers was also instructed by the Defendant on the case.

The full (non-confidential part of the) judgment is here.

Thee Competition And Markets Authority v Concordia International Rx (UK) Ltd [2019] EWHC 47 (Ch)

The High Court (Marcus Smith J) has today dismissed Concordia’s long running challenge to the warrant granted to the CMA in respect of Concordia’s premises in October 2017. The ruling concerns the first challenge to a warrant granted under the Competition Act 1998.

The decision is the subject of an open judgment in which the Judge rejected Concordia’s argument that the CMA had no reasonable basis for seeking a warrant at an advanced stage of investigations concerning Concordia. The judge reached the conclusion that the warrants were justified on the basis of the evidence which he had found was subject to public interest immunity (PII) and which Concordia had not seen.

The judgment is here. It is the latest in a series of judgments arising from the challenge which also include:

• The judgment of the Court of Appeal in August 2018 that evidence which is subject to PII (and which cannot be disclosed to the challenging party) may be taken into account as part of a closed material procedure to determine the challenge;
• The ruling of HHJ Matthews that a special advocate should not be appointed in connection with the challenge;
• The ruling of Marcus Smith J in December 2018 that evidence relevant to the challenge was subject to PII. This evidence was considered in a closed material proceeding as part of the final hearing.

Mark Brealey QC acted for Concordia. Rob Williams acted for the CMA.

The Court of Justice of the European Union has published the Advocate General’s Opinion in Case C-507/17 Google Inc v Commission nationale de l’informatique et des libertes (CNIL).

In his opinion, Advocate General Maciej Szpunar advised that de-referencing requests under the CJEU’s decision in Google Spain v Gonzales et al (the so-called ‘right to be forgotten’) do not oblige Google and other search providers to de-list search results on a global basis. Among other things, the Advocate General agreed with the submissions of the third party interveners that global de-referencing posed a grave risk to freedom of expression:

[T]here is a danger that the Union will prevent people in third countries from accessing information. If an authority within the Union could order a global deference, a fatal signal would be sent to third countries, which could also order a dereferencing under their own laws. …. There is a real risk of reducing freedom of expression to the lowest common denominator across Europe and the world.

The Advocate General’s opinion substantially adopts the submissions of the interveners ARTICLE 19, Human Rights Watch, the Electronic Frontier Foundation and 5 other digital rights organisations, who were represented before the CJEU by Gerry Facenna QC, Eric Metcalfe and M. Guillaume Tapie of the Paris Bar.

The Opinion has received international news coverage, including The Guardian, The Wall Street Journal, ABC News, and The Washington Post. The Court’s press release on the Opinion is available here. The Judgment of the Court of Justice is expected later in 2019.

The General Court (‘GC’) of the European Union has confirmed the Commission’s Decision that certain patent settlement agreements may be restrictive of competition by object but has upheld in part certain aspects of the appeals against the Decision, including Servier’s appeal in relation to a finding of an abuse of a dominant position in relation to the ACE inhibitor drug perindopril.

The Servier group developed perindopril, an angiotensin converting enzyme (‘ACE’) inhibitor drug, intended primarily for the treatment of hypertension and heart failure. The perindopril compound patent, filed with the European Patent Office (EPO) in 1981, expired in various EU Member States over the course of the 2000s.

The active pharmaceutical ingredient of perindopril takes the form of a salt, erbumine. A new patent relating to erbumine and its manufacturing processes was filed with the EPO by Servier in 2001 and granted in 2004. This was the ‘947 patent.

Following disputes in which the validity of that patent was challenged, Servier entered into various settlement agreements with a number of generic companies, namely Niche, Unichem (Niche’s parent company), Matrix (now Mylan Laboratories), Teva, Krka and Lupin, by which each of those companies was to refrain, in particular, from entering the market or challenging that patent. A subsidiary of Servier, Biogaran, a wholly-owned subsidiary of Servier SAS, also entered into a licence and supply agreement with Niche.

On 9 July 2014, the Commission adopted the Decision in which it found that the contested agreements constituted restrictions of competition by object and by effect. It also found that Servier had implemented, in particular by those agreements, an exclusionary strategy which constituted an abuse of a dominant position.

The GC has upheld the Commission’s reasoning according to which, when an originator company, the proprietor of a patent, grants a generic company advantages inducing it to refrain from entering the market or challenging the originator company’s patent, the agreement at issue, even if presented as a settlement agreement, must then be considered a market exclusion agreement. In such circumstances it is the inducement, and not the recognition by the parties to the settlement of the validity of the patent, which is the real reason for the restrictions on competition introduced by the agreement.

The GC confirms that the agreements that Servier concluded with Niche, Unichem, Matrix, Teva and Lupin, in which the diverse and complex nature of the arrangements for granting the inducive benefit may be observed, constituted market exclusion agreements restrictive of competition by object. It also confirms that the agreement concluded between Niche and Biogaran sought to grant an additional advantage to Niche so that it would conclude the settlement agreement with Servier.

Having regard to the links between that agreement and the agreement concluded by Servier with Niche and Unichem, the GC considered however that the Commission ought to have applied a further reduction of the penalty to Servier in addition to the reduction it had already applied in relation to the agreements as a whole on account of overlaps between the infringements.

As regards the agreements between Servier and Krka, the GC has held, first, that the existence of an inducement by Servier in exchange for Krka’s withdrawal from the market was not established on the facts. In particular, the GC rejects the Commission’s finding that the royalty which Krka had to pay to Servier in the context of a licence agreement relating to the 947 patent was not concluded at arm’s length. Consequently, the General Court concludes that there was no restriction of competition by object in that regard. Secondly, the General Court finds that it was not established that, in the absence of agreements, Krka would probably have entered the markets in question at risk and that Krka’s continuation of the proceedings against the 947 patent would probably, or even plausibly, have allowed a faster or more complete invalidation of the patent. Accordingly, the General Court also concludes that there was no restriction of competition by effect in that regard and the fines imposed on Servier and Krka in respect of that agreement should be annulled.

As regards the abuse of a dominant position, the Commission found in the Decision that the relevant finished product market was limited to a single molecule within the ACE inhibitor class, namely perindopril, in its originator and generic versions.

The GC however considered that the Commission failed to show that the finished products market was limited to the perindropil molecule alone, when the latter could be exposed to non-price competitive pressures from other medicines of the same therapeutic class. Accordingly the Commission had not established that Servier enjoyed a dominant position on the relevant market.

George Peretz QC was instructed in case T-679/14 as the Commission’s advocate on the appeal by Teva.

Ben Rayment was instructed in case T-680/14 as the Commission’s advocate on the appeal by Lupin.