Court Confirms Misuse of Regulatory Procedures May be Abuse of Dominant
On July 1, 2010, the EU General Court upheld on appeal the principal points
of a European Commission decision from 2005 in a case concerning AstraZeneca
(AZ). The commission found that AZ had misused the patent system and the
procedures for marketing pharmaceutical products to prevent or delay the market
entry of generic products which competed with the anti-ulcer drug Losec, and to
prevent parallel imports of Losec. These were abuses of the company's dominant
position in various countries in the EU for so-called proton pump inhibitors (of
which Losec was the first).
The court agreed that AZ had misled the patent offices of several countries
for the purpose of obtaining Supplementary Protection Certificates (SPCs), which
grant extended patent protection, to which it was not entitled or to which it
was entitled but for a shorter period. So far as concerns marketing procedures,
the court found that a key purpose of the company's deregistration of market
authorizations of Losec granted by national medicines agencies in certain
countries was to exclude competition from generics firms and parallel traders.
Neither activity was in keeping with "the special responsibility of dominant
companies not to impair, by methods falling outside the scope of competition on
the merits, genuine undistorted competition."
This case is significant generally for dominant companies dealing with
regulators, and specifically in the context of the commission's continuing
investigation of actions taken by originator companies to delay or prevent the
marketing of generics following its 2009 report on competition in the
Commission's Analysis of Acquisition of Minority Stake Upheld but Case
Isn’t What it Seems
On July 6, 2010, the EU General Court upheld on appeal two European
Commission decisions, which both arose out of the attempted takeover of airline
Aer Lingus by Ryanair. This transaction was blocked by the commission in June
2007, under the EU Merger Regulation (EUMR) due to overlaps on routes to and
from Ireland. In a separate October 2007 decision, the commission concluded that
it had no jurisdiction under the EUMR to require Ryanair to divest its (at the
time) 25.17% stake in Aer Lingus, since this did not give Ryanair control over
It is the judgment in the appeal of this October 2007 decision which is of
general interest, but the particular facts of the case are crucial. The court
agreed that the stake did not give Ryanair effective control over Aer Lingus.
Despite the transaction having been blocked, the commission therefore could not
force the sale of this stake under the EUMR on the basis that the acquisition
had nevertheless taken place.
However, the key point is that the court distinguished the Ryanair/Aer Lingus
situation, concerning whether a blocked transaction had nevertheless been
implemented in breach of the EUMR, from the ban on implementation of a
transaction prior to clearance (gun-jumping). The judgment therefore does
not provide a precedent for early acquisitions of such minority stakes under the
EUMR (or similar national rules) prior to clearance of the full acquisition.
ESA Finds Abusive Exclusivity Agreements and Imposes First Competition Law
In a little-noticed case, on July 14, 2010, the EFTA Surveillance Authority,
the equivalent of the European Commission for Norway, Iceland and Liechtenstein,
handed down its first ever competition law fine. The case provides a reminder
that a network of exclusivity agreements can give rise to an abuse of a dominant
The case concerned exclusivity agreements entered into by Posten Norge, the
national postal operator in Norway and a leading provider of parcel delivery
services, under which it had established parcel collection points at various
third-party retail outlets. These agreements made it difficult for competing
suppliers of parcel delivery services to establish their own networks, giving
rise to an abuse for which Posten Norge was fined EUR13 million.
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