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.

Cunningham v Ellis & Ors [2018] EWHC 3188 (Comm)

A £39 million Commercial Court fraud and conspiracy claim has been struck out and summary judgment entered in the Defendants’ favour.The Claimant had been majority shareholder of Allerton Group Limited (“AGL”), the parent of a group involving steel fabrication and bridge building. The group entered administration in 2009 as a result of cashflow pressures. The Claimant alleged that there had been a conspiracy between three of the group’s directors (“the Directors”), AGL’s bank and the administrators, Ernst and Young, to render AGL insolvent so the directors could purchase the business themselves at an artificially deflated value.

Following a four-day hearing in the Commercial Court, Teare J struck out the claim in its entirety and gave summary judgment in favour of the defendants. He held:

1. The Particulars of Claim were inadequate for the purpose of alleging conspiracy to injure by unlawful means or fraudulent misrepresentation, having failed to plead primary facts from which it can be inferred that the Defendants were party to a deliberate and unlawful conspiracy;
2. The allegations had no realistic prospect of success
3. The claims were time-barred (save where the claims fell within section 21(1)(a) Limitation Act 1980).

William Buck and David Gregory acted for the Directors.

The judgment can be found here.

In a landmark judgment delivered today the Court of Justice of the European Union has made it clear that, as a matter of EU law, the UK is free to change its mind about Brexit and unilaterally revoke the notice given under Article 50 TEU, thereby remaining in the EU on its present terms of membership.

The judgment of the Full Court, delivered in an unprecedented accelerated timescale, declares that a Member State which has notified its intention to leave the EU may, prior to actually leaving: “revoke that notification unilaterally, in an unequivocal and unconditional manner”, provided that it “has taken the revocation decision in accordance with its constitutional requirements” and “the purpose of that revocation is to confirm the EU membership of the Member State concerned under terms that are unchanged as regards its status as a Member State, and that revocation brings the withdrawal procedure to an end.”

Reaffirming its case law that the EU Treaties, unlike ordinary international treaties, have established a new legal order, the subjects of which comprise not only those States but also their nationals, the Court interpreted Article 50 by reference to its wording, the objectives it pursues, and the context and provisions of EU law as a whole.

• As to the wording, the Court noted that Article 50 refers to an intention, which “is, by its nature, neither definitive nor irrevocable”, and also noted that the Article leaves the decision about whether to withdraw to the Member State alone, dependent solely on its own sovereign choice [49]-[50];
• As to the objective, the Court found that Article 50 TEU pursues two objectives: (i) enshrining the sovereign right of a Member State to withdraw from the European Union and, (ii), establishing a procedure to enable such a withdrawal to take place in an orderly fashion, both of which support a right of unilateral revocation [56]-[60].

The Court also found, at [60]-[65], that a right of unilateral revocation was consistent with the fundamental aims and objectives of the Treaties, in particular:

• “the creation of an ever closer union among the peoples of Europe” and the aim of the European Union “to eliminate the barriers which divide Europe”;
• values of liberty and democracy, which “form part of the very foundations of the European Union legal order”;
• the fact that “the European Union is composed of States which have freely and voluntarily committed themselves to those values, and EU law is thus based on the fundamental premiss that each Member State shares with all the other Member States, and recognises that those Member States share with it, those same values”; and
• citizenship of the Union, which “is intended to be the fundamental status of nationals of the Member States”, whereas any withdrawal of a Member State from the European Union is liable to have a considerable negative impact on the rights of all Union citizens.

The Court held that it would be inconsistent with those aims and values, and in particular with the Treaties’ purpose of creating an ever closer union among the peoples of Europe, to force the withdrawal of a Member State which, having notified its intention to withdraw in accordance with its constitutional requirements and following a democratic process, decides to revoke the notification of that intention through a further democratic process.

The claim was pursued by a group of Scottish politicians supported by the Good Law Project and by two Westminster MPs (Tom Brake MP (Lib Dem) and Chris Leslie MP (Lab)), who were represented by Gerry Facenna QC and Anneli Howard, acting together with Scottish counsel Morag Ross QC and Stephen Donnelly, instructed by Jennifer Jack of Harper Macleod and John Halford of Bindmans LLP.

The Court’s judgment may be found here. The Court’s reasoning and answer reflects the submissions of the MPs, which may be found here.

The Court of Justice of the European Union has published the Advocate General’s Opinion in Case C-621/18 Wightman and Others v Secretary of State for Exiting the European Union.

In his opinion, Advocate General Campos Sánchez-Bordona concludes:

“When a Member State has notified the European Council of its intention to withdraw from the European Union, Article 50 of the Treaty on European Union allows the unilateral revocation of that notification, until such time as the withdrawal agreement is formally concluded, provided that the revocation has been decided upon in accordance with the Member State’s constitutional requirements, is formally notified to the European Council and does not involve an abusive practice.”

Dismissing the UK Government’s argument that the issue is hypothetical and merely theoretical, the Advocate General’s view is that a unilateral decision by the UK to remain in the European Union in the face of an unsatisfactory Brexit, is a valid option under EU law:

“If the Court accepts that the notification of the intention to withdraw may be revoked unilaterally, the United Kingdom could communicate such revocation to the European Council, and thereby remain a member of the European Union. As the United Kingdom Parliament has to give its final approval, both if a withdrawal agreement is reached and in the absence of that agreement, several members of that parliament consider that if the notice of the intention to withdraw were revocable, this would open a third way, namely remaining in the European Union in the face of an unsatisfactory Brexit. The referring court appears to adopt that position, reasoning that the Court’s answer will have the effect of clarifying the precise options open to members of the United Kingdom Parliament when casting their votes.”

The Advocate General’s proposed answer adopts the answer suggested by Chris Leslie MP and Tom Brake MP, who were represented by Gerry Facenna QC and Anneli Howard, together with Scottish counsel Morag Ross QC and Stephen Donnelly, instructed by Harper Macleod and Bindmans. Their written submissions to the Court are published here.

The Advocate General’s Opinion is not binding on the Court of Justice; it provides an independent, legal view which the Court may or may not follow. Judgment of the Court of Justice is expected before Christmas.

See The Court of Justice of the European Union press release here.

 

On Tuesday 27 November, Gerry Facenna QC and Anneli Howard appeared before the Full Court of Justice of the European Union on behalf of two Members of Parliament, Chris Leslie MP (Lab) and Tom Brake MP (Lib Dem) in the urgent preliminary reference case concerning the UK’s Article 50 notice. The Court of Session in Scotland referred the question of whether the Article 50 notice could be unilaterally revoked by a Member State and, if so, on what terms and with what effect.

The hearing before 27 Judges involved extensive debate and questions on admissibility, the jurisdiction of the CJEU to accept preliminary references seeking prospective guidance on the law, and the legality under EU law of any decision by the UK to change its mind about Brexit. The President of the Court observed that the case was a constitutional landmark moment for the EU.

The MPs, together with the Petitioners (a group consisting mainly of Scottish politicians including an MP, MSPs and MEPs) argued that, under the EU law, a Member State that has notified its intention to leave still remains free to change its mind unilaterally, and remain within the EU, provided it is acting in good faith. The UK Government invited the Court to dismiss the reference on the basis that it was hypothetical. The EU Council and Commission accepted that an Article 50 notice was revocable as a matter of law, but took the position that this could only be done with the consent of the other 27 Member States on the European Council.

The Advocate General has indicated that he will hand down his opinion on 4 December 2018. The Court’s judgment is expected to follow shortly afterwards.

Gerry Facenna QC and Anneli Howard acted alongside Scottish counsel Morag Ross QC and Stephen Donnelly, instructed by Jennifer Jack of Harper Macleod and John Halford of Bindmans.  Details of the intervener’s pleadings and oral speech can be found here.

Today, in proceedings brought by the CMA, the High Court (Mr Justice Nugee) has made an enforcement order under sections 217 and 219A of the Enterprise Act 2002 against viagogo, the operator of a secondary ticketing platform.

The Court had been due to hear an application by the CMA for an interim enforcement order this week, but the parties agreed on a form of final enforcement order which will now secure a series of legally-binding consumer protection measures to be given effect by January 2019.

The measures put in place by the order relate to a number of issues, such as the need to provide information about business sellers trading through viagogo’s website, seat numbers, face value, whether the ticket is subject to any restrictions on its use, restrictions on “pressure selling” messages, provisions relating to the operation of viagogo’s guarantee and customer services functions, and the practice of “speculative selling” before events actually go on sale. The case was brought under both domestic and EU consumer protection rules.

More information about the case is available here and here.

Rob Williams, Azeem Suterwalla and Jack Williams acted on behalf of the Competition and Markets Authority (the CMA).

The Supreme Court has today refused permission for the Secretary of State for Exiting the European Union to appeal against the decision of the Court of Session in Scotland to seek a ruling from the CJEU on the revocability of the Article 50 Notice.

This means that the accelerated preliminary reference will proceed before the CJEU. The oral hearing is next Tuesday, 27 November.

Monckton Chambers’ Gerry Facenna QC and Anneli Howard, together with Scottish counsel Morag Ross QC, are acting for Liberal Democrat Brexit Spokesperson Tom Brake MP, and Labour’s Chris Leslie MP, who argue that EU law permits a Member State unilaterally to revoke a notification it has given under Article 50 TEU if, in accordance with its own constitutional arrangements, it decides to remain within the EU.

See previous news items 08 Oct here and  21 Sept here.

Warwickshire County Council v Halfords Autocentres Ltd [2018] EWHC 3007 (Admin)

The High Court has held that, where a trader acts misleadingly during a test purchase by a local trading standards officer, it breaches consumer protection law, even if the officer is not acting as a consumer within the meaning of the relevant legislation: Warwickshire County Council v Halfords Autocentres Limited and Competition and Markets Authority [2018] EWHC 3007 (Admin).

In February 2017, a trading standards officer employed by Warwickshire County Council booked a vehicle in for a service at the Stratford-upon-Avon branch of Halfords. The vehicle deliberately had a number of faults and the booking was a “test purchase” designed to assess the quality of the service facility offered by Halfords. Without knowing that the customer was in fact a trading standards officer, Halfords purported to service the vehicle and charged the officer for a full service. However, when the vehicle was examined by the Council, it emerged that various faults had been neither rectified nor reported by Halfords.

The Council brought a prosecution against Halfords, alleging that it had committed an offence under the Consumer Protection from Unfair Trading Regulations 2008 by issuing an invoice which misleadingly claimed that a full service had been carried out when it had not. However, at the close of the prosecution case, the District Judge in the Magistrates Court accepted an application of no case to answer, holding that the officer was not a “consumer” for the purposes of the 2008 Regulations and that Halfords had not therefore engaged in a “commercial practice” within the meaning of those Regulations.

The Council appealed by way of case stated and, since the Judge’s interpretation threatened to undermine the operation of the 2008 Regulations to the detriment of consumers, the CMA intervened in the appeal.

In an important judgment issued on 9 November 2018, the Divisional Court (Lord Justice Hickinbottom and Mr Justice Jay) overturned the Judge’s ruling, accepting the CMA’s argument that, even if the officer was not a consumer (which the Court did not determine), the conduct engaged in by Halfords constituted a commercial practice on a proper construction of the 2008 Regulations. In reaching its conclusion, the Court drew upon the Unfair Commercial Practice Directive (2005/29/EC), from which the Regulations are derived, observing that the Directive sought to secure a “high level of consumer protection” and was therefore “broadly framed”. It accepted the CMA’s submission that the construction adopted by the Judge was liable to undermine the ability of the CMA and trading standards authorities to enforce consumer protection law through the use of test purchasing. The Court held in conclusion that a commercial practice for the purposes of the 2008 Regulations “may be constituted or derived from a test purchase made of a product (including a service) that is generally promoted and intended for purchase by consumers, even where the purchaser may not himself be a consumer”.

Ben Lask, who is Standing Counsel to the CMA, acted for the CMA. The full judgment can be read here.