In case T-691/14, the General Court of the European Union (the “GC”) has reduced Servier’s fine for abuse of dominance position through a pay-for-delay practice by €102.67 million. According to the GC, the European Commission (the “Commission”) incorrectly defined the relevant market and it erroneously limited the market to perindopril, while it should have included comparable medications. In addition, Servier’s settlement agreement with Krka did not foreclose its rival from operating in the market. By contrast, the agreements Servier made with the other five drugmakers constituted by-object restrictions of competition.
More precisely, the case concerns Servier’s patent on perindopril which is primarily used to treat hypertension and heart failure. This patent expired in several EU member states during the early 2000s and Servier obtained several additional secondary patents on its manufacturing process, which were challenged by rival drugmakers. To resolve challenges, Servier entered into settlements with rival drugmakers who agreed neither to enter the EU perindopril market nor to challenge Servier’s new patents on the perindopril manufacturing process (so-called pay for delay). With respect to the drugmaker Krka, Servier had granted a licence to market generic perindopril in certain regions of Europe.
In 2014, the Commission found that Servier was dominant in the perindopril-molecule market, and that the settlements violated EU law because they prevented potential competitors entering that market. In relation to Krka, the payment allegedly induced Krka from refraining to market perindopril in Servier’s desired areas. As a result, it fined Servier almost €331 million, and six rival drugmakers a combined €97 million fine.
On appeal, the GC has reduced Servier’s fine from €330.99 million to €228.32 million on the basis that the Commission had not proven that Servier was dominant in the perindopril-molecule market and that the fine concerning the Matrix settlement should be reduced by a third because the Commission had already fined Servier for the same conduct in the settlements with Niche and Unichem. The GC has also annulled the €10 million fine imposed on the rival drugmaker Krka because there was no evidence that Servier induced Krka to withdraw from or not to enter the perindopril market because of the settlement agreement.
The GC rejected Servier’s argument not to qualify settlement agreements as by object restrictions of competition. However, it noted that such by-object infringements can still be justified under Article 101(3) TFEU, but Servier’s agreements did not comply with the conditions provided therein.