Netherlands: AstraZeneca - CJEU's Decision Re. Abuse Of Dominant Position (Losec)

In a judgment of 6 December 2012, the Court of Justice dismissed AstraZeneca's appeal against the General Court's decision that the company had abused its dominant position with respect to its blockbuster anti-ulcer drug, Losec.

In 2005, the European Commission imposed a fine of EUR 60 million on AstraZeneca AB and AstraZeneca plc (hereinafter jointly referred to as "AstraZeneca") for abuse of a dominant position on the proton pump inhibitor (PPI) market:

  • First, the Commission found that AstraZeneca had deliberately made "misleading representations" to the patent offices of certain Member States in order to obtain or maintain supplementary protection certificates (SPCs) for Losec, for the purpose of extending patent protection to which it was not entitled (or to which it was entitled but for a shorter period of time) in order to block generic competition.

Under the SPC Regulation, the key date to determine SPC protection is the date of the "first authorisation to place the product on the market as a medicinal product". It appeared from internal memoranda that AstraZeneca's patent department had in fact identified the French technical marketing authorisation as the "first authorisation" for the purposes of the SPC Regulation. When filing its SPC applications with national patent offices, however, AstraZeneca indicated instead the date of the first pricing decision, in order to obtain a longer period of protection. According to AstraZeneca, a pricing decision is indeed necessary in certain Member States in order for a medicinal product to be marketed. However, AstraZeneca did not expressly disclose in the applications that the indicated date was that of the first pricing decision. The Commission considered this lack of transparency to constitute a misleading representation. In the Commission's opinion, AstraZeneca should have voluntarily and proactively disclosed all relevant information to the patent offices, in particular the existence of the French marketing authorisation, in order to allow the authorities to decide, with full knowledge of the facts, which authorisation they wished to take into account for the purpose of issuing the SPC.

  • Second, the Commission found that AstraZeneca had abused its dominant position by selectively withdrawing its Losec capsules and replacing them with Losec tablets and requesting cancellation of the marketing authorisation for the capsules in Denmark, Sweden and Norway, in order to delay or hinder the marketing of generic Losec and prevent parallel imports of Losec.

AstraZeneca appealed to the General Court, which rejected most of its arguments and confirmed abuse with respect to the provision of misleading information. With respect to the second form of abuse, however, the Court set aside part of the Commission's decision as it found that the Commission had not proven that parallel imports had effectively been blocked in Denmark and Norway. The Court consequently reduced the fine to EUR 52.5 million.

AstraZeneca subsequently filed an appeal with the Court of Justice, seeking to have the General Court's judgment set aside. AstraZeneca's main arguments concerned errors of law by the General Court in its assessment of the two types of abuse and determination of the fine.

In its decision, the Court of Justice dismissed AstraZeneca's appeal.
As for the first form of abuse (misrepresentation), the Court noted that "clearly (... )AstraZeneca's consistent and linear conduct (...) which was characterised by the notification to the patent offices of highly misleading representations and by a manifest lack of transparency, inter alia as regards the existence of the French technical authorisation, and by which AstraZeneca deliberately attempted to mislead the patent offices and judicial authorities in order to keep for as long as possible its monopoly on the PPI market, fell outside the scope of competition on the merits."

With respect to the second form of abuse, the Court found that this type of conduct "(...) consisting in the deregistration, without objective justification and after the expiry of the exclusive right to make use of the results of the pharmacological and toxicological tests and clinical trials (...) of the marketing authorisations for Losec capsules in Denmark, Sweden and Norway, by which AstraZeneca intended, (...), to hinder the introduction of generic products and parallel imports – does not come within the scope of competition on the merits."

This case has important implications on the application of competition law to life-cycle management strategies, which innovative companies will need to (even more) carefully scrutinize in the future.

The effects of this case may however also be felt beyond the pharmaceutical sector. The Court has confirmed that dominant companies have a "special responsibility", more particularly an obligation to conduct themselves in a "transparent" way in their dealings with the authorities.

Click here for the Court of Justice's judgment (C-457/10 P, AstraZeneca v Commission).
Click here for the General Court's decision.
Click here for the Commission's decision.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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