Antitrust and Life Sciences Alert: EU Court of Justice Hears Appeal of Abuse of Dominance Finding Against AstraZeneca

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On 12 January 2012, the Court of Justice of the European Union heard AstraZeneca's appeal [1] of the General Court's judgment [2] largely upholding the European Commission's decision [3] fining AstraZeneca €60 million for abuse of dominance by misusing the patent system and the procedures for the marketing of pharmaceutical products. According to the Commission, this had the result of delaying generic entry of omeprazole (marketed as Losec) in several European countries.

As previously reported, this is the first time the Commission has found a pharmaceutical company in violation of abuse of dominance legislation as a result of patent rights being exercised. The case covers issues of market definition, assessment of "dominance", and the meaning of "competition on the merits" and the scope of the "special responsibility" imposed by EU law on dominant companies in the pharmaceutical industry.

At the hearing, AstraZeneca's representatives challenged the Commission's "dominance" and "abuse" findings. Of particular interest, AstraZeneca questioned how the withdrawal of a marketing right, granted to it under EU law, could constitute an abuse. It argued that only in "exceptional circumstances" (as used in the EU's "essential facilities" doctrine) could a dominant company's exercise of a right violate competition law. The Commission's representatives argued that many acts which constitute an abuse of dominance are "legal" and it is not necessary for an act to be "illegal" for it to be an abuse. It was also pointed out that the exercise of intellectual property rights does not shield a dominant company from the application of competition law.

Judge Ilešic took interest in these issues and repeatedly asked the Commission to specify exactly in which circumstances a pharmaceutical company is obliged to maintain marketing authorisations. The Commission responded that an abuse cannot be defined in the abstract without reference to the specific facts of a case. It also emphasised the importance of "intent" and noted that AstraZeneca's conduct was part of a campaign to delay generic entry. Further, the Commission argued that the abuse was defined "very narrowly" and that a company which engages in "normal behaviour", or which does not reap any commercial advantage from certain conduct, was unlikely to abuse a dominant position.

To support that AstraZeneca was not an overly aggressive decision, the Commission referred to the U.S. Federal Trade Commission's enforcement actions and claimed that its more intensive scrutiny and actions against originator companies had not resulted in reduced pharmaceutical research activity in the U.S. This argument carries more than a little bit of irony, as many of the U.S. agency's enforcement actions against patent-holder pharmaceutical companies have not been upheld by U.S. courts.

On 15 May 2012, the Advocate General will make its non-binding recommendation to the Court of Justice. It is then likely to take several months before the Court of Justice hands down its judgment.

For a summary of the parties' arguments before the Court of Justice, see the Report for the Hearing here.

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[1] Case C-457/10P - AstraZeneca v. Commission.

[2] Case T-321/05 - AstraZeneca v. Commission, 1 July 2010.

[3] Case COMP/A 37.507/F3 - AstraZeneca, 15 June 2005.

Topics:  AstraZeneca, EU, Life Sciences

Published In: Antitrust & Trade Regulation Updates, Civil Procedure Updates, Intellectual Property Updates, International Trade Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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