General Court upholds Commission ”Pay for Delay” decision in the Lundbeck case

09 Sep 2016

The General Court of the EU yesterday dismissed appeals by Lundbeck, the leading pharmaceutical company, and a number of manufacturers of generic products, against a Commission decision finding that they were party to agreements that infringed EU competition rules and imposing fines.

The case concerned citalopram, a widely-used treatment for mental health conditions.  The agreements were entered into at a time when various generic manufacturers had been taking steps to start supplying citalopram, but Lundbeck had also launched, or was threatening to launch, patent infringement proceedings against those manufacturers in the UK and EEA.  Under the agreements, the generic manufacturers received payment from Lundbeck and also agreed not to supply citalopram for a period of time.

The General Court dismissed the companies’ claim that, because of the position in relation to patents, the generic manufacturers could not be regarded as potential competitors of Lundbeck.  It also rejected the companies’ argument that, because Lundbeck had a patent claim, an agreement not to sell citalopram in potential breach of that claimed patent could not be regarded as an ‘object restriction’ for the purposes of Article 101(1) of the Treaty on the Functioning of the EU.  It agreed with the Commission that, despite the patent claims: (i) the generic companies should be regarded as potential entrants, and (ii) the agreement was a restriction by object.

The case is the first judgment by the European Courts on the “pay for delay” issue, and is a very important decision for the pharmaceutical sector, as well as being the latest word on the category of object restrictions.

A link to the judgments is here.

Please click here to view the full case note.

George Peretz QC acted for the European Commission in T-467/13 Arrow v Commission; Ben Rayment acted for the European Commission in T-471/13 Xellia and Alpharma v Commission; Ronit Kreisberger and Ligia Osepciu acted for Merck in T-470/13 Merck KGaA v Commission; James Bourke acted for the European Commission in Case T-472/13 Lundbeck v Commission, Case T-469/13 Generics (UK) v Commission and Case T-470/13 Merck KGaA v Commission.