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Italian Court overturns decision on Abuse of Dominance in the Pharma Sector

20/11/2012

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The Italian Administrative Court (“Court”) recently reversed a decision taken earlier this year by the Italian Competition Authority (“ICA”) under which Pfizer was fined €10.7 million for an abuse of a dominant position contrary to Article 102.  The abuse concerned Pfizer’s conduct concerning medicines based on the active ingredient latanoprost (sold in Italy under the brand name Xalatan®), a treatment for glaucoma.

The ICA’s decision

The ICA found that Pfizer had developed a “complex strategy” to artificially extend the patent protection Xalatan® in Italy.  This included securing a divisional patent and obtaining an SPC in Italy, based on this divisional patent, as well as applying for a paediatric extension and threatening legal proceedings to discourage generics.  This was found to have had the effect of delaying the entry of generic latanoprost products into the Italian market.  Pfizer offered various commitments to remedy the ICA’s concerns, but these were rejected.

The Court’s judgment

In granting the appeal, the Court first highlighted the ICA’s error in refusing Pfizer’s proposed commitments, noting that these were in fact “likely to diminish the legal uncertainty created by Pfizer’s strategy” due to their “objective substantive consistency”.  The Court then criticised the ICA’s analysis of Article 102.

Although the ICA focussed on Pfizer’s overall “complex strategy”, the Court required evidence of a “clear exclusionary intent” before an abuse could be found.  The Court stated that Pfizer had merely defended its legitimate interests by relying on the available legal provisions, and no “quid pluris” or ‘something more’ could be identified.  Accordingly, Pfizer’s conduct did not fall “within the scope of anti-competitive infringement”.  In recognising that patents give rise to exclusionary rights, the Court’s judgment is in contrast to the ICA’s broad-brush negative treatment of legitimate tools available for extending patent protection.
The ICA’s decision had been based heavily on the European Commission’s decision in AstraZeneca, largely approved by the EU General Court (final judgment of the EU Court of Justice is expected on 6 December).  The Court criticised the ICA for interpreting AstraZeneca too widely and noted that in contrast Pfizer had not presented any elusive or erroneous information to the EPO when pursuing its divisional patent.

The Court further criticised the ICA’s assessment of Pfizer’s judicial strategy for being in conflict with the fundamental right of access to the courts under EU law, as set out in ITT-Promedia.  The Court noted that Pfizer’s pre-litigation warning letters were justified by the SPC and that the majority of the legal proceedings involving the SPC had been initiated by the generics, rather than Pfizer.

The Court also found fault with the ICA for basing its decision on the EPO’s revocation of the divisional patent which formed the basis for the SPC, a revocation that was at that time subject to appeal.  The Court suggested that the proceedings should have been stayed until the final EPO decision, and indeed the divisional has since been found valid by the EPO Board of Appeal.  Although the Court criticised the ICA for being motivated by the EPO proceedings, the recent validation of the divisional patent also seems to have influenced the Court itself in its competition law analysis.
Under Italian law the Court’s judgment remains subject to the possibility of further appeal by the ICA.

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