Generics (UK) Ltd v Competition and Markets Authority

A pay for delay settlement in which a patent holder pays a generic manufacturer to stay out of the market can restrict competition by object and be an abuse of dominance.

Citation
Case C-307/18, EU:C:2020:52
Court
Court of Justice of the European Union
Year
2020
Subject
Competition Law
Topic
Restrictions by object and effect, and exemption

Facts

GlaxoSmithKline held patents for the antidepressant paroxetine. Several generic manufacturers sought to enter the market, and GSK brought patent infringement proceedings against them. The proceedings were settled by agreements under which GSK made substantial payments and transfers of value to the generic manufacturers, which agreed not to enter the market independently for the duration of the agreements. The Competition and Markets Authority fined the companies, and the Competition Appeal Tribunal referred questions to the Court of Justice.

Legal principle

The Court of Justice held that a generic manufacturer seeking to enter the market can be a potential competitor of the patent holder, even while their dispute about the patent is ongoing, if it has a firm intention and inherent ability to enter the market. A settlement agreement restricts competition by object where it is plain from the analysis of the agreement that the transfers of value can have no explanation other than the commercial interest of the parties not to engage in competition on the merits. Such a strategy could also be an abuse of a dominant position. The Competition Appeal Tribunal later upheld most of the CMA's findings.

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This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.

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