CJEU Case C-307/18 / Judgment

Generics (UK) Ltd and Others v Competition and Markets Authority
Deciding body type
Court of Justice of the European Union
Deciding body
Court (Fourth Chamber)
Type
Decision
Decision date
30/01/2020
ECLI (European case law identifier)
ECLI:EU:C:2020:52
  • CJEU Case C-307/18 / Judgment

    Key facts of the case:

    Reference for a preliminary ruling — Competition — Pharmaceutical products — Barriers to the entry on the market of generic medicines arising from settlement agreements (relating to disputes concerning process patents) concluded by a manufacturer of originator medicines who is the holder of those patents and manufacturers of generic products – Article 101 TFEU — Potential competition — Restriction by object — Characterisation — Restriction by effect — Assessment of effects — Article 102 TFEU — Relevant market – Inclusion of generic medicines in the relevant market — Abuse of dominant position — Characterisation — Justifications.

    Outcome of the case:

    On those grounds, the Court (Fourth Chamber) hereby rules:

    1. Article 101(1) TFEU must be interpreted as meaning that a manufacturer of originator medicines who is the holder of a manufacturing process patent for an active ingredient that is in the public domain, on the one hand, and the manufacturers of generic medicines who are preparing to enter the market of the medicine containing that active ingredient, on the other, who are in dispute as to whether that patent is valid or whether the generic medicines concerned infringe that patent, are potential competitors, where it is established that the manufacturer of generic medicines has in fact a firm intention and an inherent ability to enter the market, and that its market entry does not meet barriers that are insurmountable, which it is for the referring court to assess.

    2. Article 101(1) TFEU must be interpreted as meaning that a settlement agreement with respect to pending court proceedings between a manufacturer of originator medicines and a manufacturer of generic medicines, who are potential competitors, concerning whether a process patent (for the manufacture of an active ingredient of an originator medicine that is in the public domain) held by the manufacturer of originator medicines is valid and whether a generic version of that medicine infringes the patent, whereby that manufacturer of generic medicines undertakes not to enter the market of the medicine containing that active ingredient and not to pursue its action for the revocation of that patent for the duration of that agreement, in return for transfers of value in its favour by the manufacturer of originator medicines, constitutes an agreement which has as its object the prevention, restriction or distortion of competition:

    • if it is clear from all the information available that the net gain from the transfers of value by the manufacturer of originator medicines in favour of the manufacturer of generic medicines can have no explanation other than the commercial interest of the parties to the agreement not to engage in competition on the merits;

    • unless the settlement agreement concerned is accompanied by proven pro-competitive effects capable of giving rise to a reasonable doubt that it causes a sufficient degree of harm to competition.

    3. Article 101(1) TFEU must be interpreted as meaning that if a settlement agreement, such as those at issue in the main proceedings, is to be demonstrated to have appreciable potential or real effects on competition, and, therefore, is to be characterised as a ‘restriction by effect’, that does not presuppose a finding that, in the absence of that agreement, either the manufacturer of generic medicines who is a party to that agreement would probably have been successful in the proceedings relating to the process patent at issue, or the parties to that agreement would probably have concluded a less restrictive settlement agreement.

    4. Article 102 TFEU must be interpreted as meaning that, in a situation where a manufacturer of originator medicines containing an active ingredient which is in the public domain, but the process of manufacturing which is covered by a process patent, the validity of which is disputed, impedes, on the basis of that process patent, the market entry of generic versions of that medicine, there must be taken into consideration, for the purposes of definition of the product market concerned, not only the originator version of that medicine but also its generic versions, even if the latter would not be able to enter the market legally before the expiry of that process patent, if the manufacturers concerned of generic medicines are in a position to present themselves within a short period on the market concerned with sufficient strength to constitute a serious counterbalance to the manufacturer of originator medicines already on that market, which it is for the referring court to determine.

    5. Article 102 TFEU must be interpreted as meaning that the strategy of a dominant undertaking, the holder of a process patent for the production of an active ingredient that is in the public domain, which leads it to conclude, either as a precautionary measure or following the bringing of court proceedings challenging the validity of that patent, a set of settlement agreements which have, at the least, the effect of keeping temporarily outside the market potential competitors who manufacture generic medicines using that active ingredient, constitutes an abuse of a dominant position within the meaning of Article 102 TFEU, provided that that strategy has the capacity to restrict competition and, in particular, to have exclusionary effects, going beyond the specific anticompetitive effects of each of the settlement agreements that are part of that strategy, which it is for the referring court to determine.

  • Paragraphs referring to EU Charter

    41) Second, full account must be taken of the intellectual property rights and, in particular, the patents held by the manufacturers of originator medicines relating to one or more processes of manufacturing an active ingredient that is in the public domain, rights which enjoy a high level of protection in the internal market under Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (OJ 2004 L 157, p. 45, and corrigendum OJ 2004 L 195, p. 16) and Article 17(2) of the Charter of Fundamental Rights of the European Union (see, to that effect, judgment of 16 July 2015, Huawei Technologies, C‑170/13, EU:C:2015:477, paragraph 57).

    ...

    137) While, admittedly, and as recalled in paragraph 41 of the present judgment, Directive 2004/48 and Article 17(2) of the Charter of Fundamental Rights ensure a high level of protection of intellectual property in the internal market, the fact remains that the process patent on which a manufacturer of originator medicines is likely to rely in order to impede the placing on the market of a generic version of a medicine containing an active ingredient that is in the public domain does not offer any certainty to the manufacturer of the originator medicine concerned that the generic medicine containing that active ingredient may not lawfully be placed on the market or that that patent is safe from any challenge, as was moreover the case in the main proceedings, as is clear from paragraph 14 of the present judgment.