First published in the Life Sciences IP Review, June 2022

Through its judgment on the case of Pfizer and Flynn v CMA, the UK Supreme Court (UKSC) has confirmed that there is no general rule providing public bodies with protected status as parties to litigation where they lose a case.

A significant case

This judgment stems from a significant case for the pharmaceutical industry in which the CMA ruled that the Appellants (Pfizer and Flynn) had abused their dominant position by charging unfair prices for an epilepsy drug. Pfizer and Flynn appealed the CMA’s infringement decision, the appeal was (partially) successful and the CAT overturned part of the infringement decision.

The CAT delivered its costs ruling in March 2019, resulting in both parties being awarded a percentage of their costs following the existing precedent on appeals under the Competition Act 1998 (CA 1998) that the “starting point for assessing costs is that they should follow the event.”[1]

The CMA appealed the costs ruling to the Court of Appeal which overturned the judgment, based on a line of cases related to a range of different public bodies (known as the Booth line cases[2]), stating that there should be no order as to costs against the CMA by the CAT and that this rule should be generally applicable to all public bodies.

Pfizer and Flynn appealed the Court of Appeal’s judgment to the UKSC, arguing that no general rule existed.

The judgment and its implications

The UKSC held that there is no “no generally applicable principle that all public bodies should enjoy a protected status as parties to litigation where they lose a case”. The judgment did however outline that the CAT should consider several factors when ruling on costs awards, relating to both parties, and they can depart from the traditional starting point set out by the CA 1998 where appropriate.

The UKSC’s judgment will hopefully keep from deterring any companies who are considering bringing a worthy appeal against a CMA infringement decision. If the Court of Appeals’ “generally applicable rule” against costs had not been overturned this would likely have been a major deterrent, especially to smaller firms with fewer resources and financial capacity.

Finally, much of competition law is developed through case law, and the reasoning provided in appeal judgments often brings clarity. Any reduction in the number of appeals would likely lead to a lack of development and therefore less informed clients and advisors.

“Any other outcome would have been to the detriment of UK competition law.”

To read the full article by our competition law experts, head to LSIPR

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[1] On a net basis, the CAT held that the CMA should pay Pfizer 58% of its allowable costs and Flynn 55%. [2022] UKSC 14 at 8.
[2] Cases relied on by the CMA: Bradford Metropolitan District Council v Booth [2000] 164 JP 485; Baxendale-Walker v Law Society [2007] EWCA Civ 233; R v Perinpanathan v City of Westminster Magistrates’ Court [2010] EWCA Civ 40 and BT v Ofcom (Business Connectivity) [2018] EWCA Civ 2542.