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AstraZeneca antitrust fine upheld by European Court of Justice

Lessons for pharma as landmark ruling stands

European Court of Justice
Picture: Cédric Puisney

A €52.5m fine levied against AstraZeneca (AZ) for blocking the market entry of generic versions of its Losec product was upheld by the European Court of Justice (CJEU) yesterday.

The landmark ruling is the first abuse of dominance case undertaken by the European Commission (EC) in the pharmaceutical sector and upholds a 2010 General Court decision that in turn upheld the EC's 2005 finding that AZ infringed EC competition rules.

In its ruling the CJEU said AZ's actions were "serious infringements and consequently the amount of the fine cannot be reduced".

The EC's position is that when Losec (omeprazole) approached the end of its patent life, AZ selectively withdrew the capsule formulation of the product - by deregistering marketing authorisations in selected countries - and replaced it with a tablet version.

The EC concluded that this hindered generic market entry and was an abuse of dominance. AZ's appeal to the General Court received little encouragement so a further appeal was made to the CJEU.

The case prompted an investigation by the EC into the strategies employed by the branded pharmaceutical industry to defend its products from generic competition, which reported findings in 2009.

In late 2010, the EC carried out dawn raids on AZ in an investigation which was reportedly looking into whether AZ had abused its position with regard to Nexium (esomeprazole) - which is a purified version of one of the enantiomers of the active pharmaceutical ingredient (API) found in Losec. The pharma company was cleared of any wrongdoing in that probe earlier this year.

John Cassels, a partner in Field Fisher Waterhouse's Competition and EU Regulatory Group, said the latest ruling was "not at all surprising", but that various lessons could be drawn from the case.

He pointed to the trend towards narrower market definition which means that companies which may have considered themselves too small to be considered dominant may be misguided about their antitrust risk profile.

In addition, first movers in a category may face a risk of dominance even when there is a high level of innovation in a sector. The CJEU did not accept that AZ's high market share was less meaningful in assessing dominance because of strong competition in innovation in the sector.

Finally, the case "appears to impose active obligations on dominant companies, for example, to disclose their interpretation of legal provisions upon which they rely relies when applying for intellectual property rights," said Cassells.

7th December 2012

From: Regulatory

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