The Court of Justice delivers important judgments on pay for delay agreements

25/03/21

Today the Court of Justice dismissed appeals brought by Lundbeck, a Danish pharmaceutical company, and five other pharmaceutical companies against the judgments of the General Court upholding a decision of the European Commission.  The Commission’s decision found that Lundbeck had entered into agreements to pay four manufacturers of generic medicines in return for each of them agreeing to stay out of the market for a period of time constituted an infringement by object of Article 101 TFEU, and imposed fines totalling €149 million. This practice is colloquially called ‘pay for delay’.

In upholding the Commission’s decision, the Court of Justice analysed the case law on restrictions of competition by object, including Cartes Bancaires and the recent judgment of the Court in Paroxetine.  The Court rejected the appellants’ argument that Lundbeck and the four manufacturers of generic medicines were not potential competitors at the relevant time.  The Court further held that the object of Lundbeck’s agreements was to restrict competition by Lundbeck making sizeable cash payments to its potential competitors in order to induce them to cease their efforts to enter the market independently. These agreements rightly belonged to the category of practices that are particularly harmful to competition. It was not necessary for agreements of the same type to have previously been censured by the Commission in order for them to be a restriction by object.  The Court also rejected Lundbeck’s argument that its agreements settled patent disputes and did not exceed the scope and duration of those patents; a patent does not permit its holder to enter into agreements that are contrary to Article 101 TFEU.

The judgment in Case C-591/16 P Lundbeck is here.