The UK may have left the EU, and Court of Justice (CJEU) judgments therefore no longer rule supreme on this side of the English Channel. However, a number of recent preliminary references to the Court raise points of significant interest for the pharmaceutical and tech sectors.
This post looks at the key recent referrals affecting those sectors, and notes a couple of missed opportunities for securing greater clarity on difficult areas of law.
Avastin/Lucentis – an unusual second CJEU referral
In the pharmaceutical sector, Italy’s highest court has referred the long-running dispute in relation to the Avastin and Lucentis products back to the CJEU for a second time. This follows a request to revoke a judgment by the Italian Supreme Court (Consiglio di Stato (CDS)) on alleged anti-competitive collusion between the products’ manufacturers.
The proceedings date back to 2014, when the Italian Competition Authority (ICA) identified anti-competitive collusion over the promotion of Lucentis (an authorised drug for the treatment of eye diseases) over a cheaper competitor (Avastin) (the 2014 Decision). The ICA found the purpose of the arrangement was to artificially increase the demand for Lucentis by misleading consumers over safety concerns resulting from the off-label use of Avastin.
The companies were fined EUR 182.6 million but subsequently appealed the decision right the way up to the CDS. The CDS made a preliminary reference to the CJEU seeking assistance on the correct interpretation of Article 101 TFEU. In 2018, the CJEU confirmed an agreement of this nature could restrict competition by object and that the drugs in question belonged to the same relevant market. Following the CJEU ruling, the CDS upheld the 2014 Decision.
The appellant manufacturers now argue the CDS should revoke its earlier decision on the basis it violates the interpretation given by the CJEU. In particular the CDS committed errors by failing to investigate:
- the relevance of compliance with pharmaceutical legislation regarding the off-label prescription of Avastin, and
- whether the information about the risks associated with Avastin’s off-label use was misleading.
The companies also point to a jurisdictional problem in Italian national law whereby a CDS ruling cannot be challenged where it conflicts with a CJEU decision.
In response, the CDS has unusually made a second Article 267 referral, asking:
- whether the highest national court, whose decisions cannot be appealed under national law, is entitled to verify whether principles established in a CJEU preliminary ruling have been applied correctly, or whether the CJEU should make this assessment,
- if its earlier decision conflicts with the CJEU’s 2018 judgment, in confirming that Lucentis and Avastin belonged to the same relevant market despite the unlawful off-label use of Avastin, and in failing to examine the nature of the allegedly misleading information disclosed by the companies, and
- whether Italian procedure, which does not allow a CDS judgment to be challenged for non-compliance with a CJEU preliminary ruling, violates EU rules.
While the issues raised in this reference are likely to be most significant for the procedural question of the extent of the national court’s freedom to interpret CJEU guidance, the reference carries with it the potential for substantive issues on the application of competition law in the context of off-label use to be subject to further consideration by the CJEU.
Nokia / Daimler – clarity deferred, for now
The hotly anticipated clarification from the CJEU on aspects of SEP licensing will not now take place. It was reported in early June 2021 that Daimler and Nokia have settled their dispute before the Düsseldorf Regional Court with the parties having signed a patent licensing agreement and settled all pending litigation (press release here).
The dispute which led to the reference concerned a patent infringement claim by Nokia in relation to the modules for music, data-streaming and over-the-air updates which Daimler builds into its cars (for more detail on the case see our previous blogs here and here). On 26 November 2020 the Düsseldorf court had submitted ten detailed questions to the CJEU. The referral sought guidance on some heavily debated topics in SEP licensing such as whether SEP holders are under an obligation to grant FRAND licences to any company that asks, or whether they can selectively license only end-device manufacturers. The CJEU was also poised to clarify the obligations for an SEP holder and implementer as set out in the Huawei v ZTE.
With the rapid expansion of connected technologies, particularly in the automotive industry, the question of SEP licensing is becoming increasingly important to sectors outside telecoms. The Internet of Things is further accelerating this trend and leading to questions being raised on how established licensing practices will be applied to new players in the SEP market. The CJEU will now not have the opportunity to answer some of these key questions but it would not be a surprise to see a similar referral made in the near future, as suggested by our colleague Luke Maunder here.
Another reference to come out of the Düsseldorf courts is rather less likely to fall away before the CJEU has a chance to render a ruling.
Following a hearing on 24 March 2021, the Düsseldorf Higher Regional Court has referred seven questions to the CJEU in the context of Facebook’s appeal of the decision of the Bundeskartellamt (BKartA – the German competition authority). The BKartA’s February 2019 decision found that Facebook abused its dominant position on the social network market by collating data on its users from Instagram, WhatsApp and third party websites without properly following regulatory requirements (see the decision and referred questions here).
The investigation has already given rise to a number of appeals in relation to the remedy imposed by the BKartA, which required Facebook to abide by certain conditions in its collection of data. This obligation was initially suspended by the Düsseldorf Higher Regional Court, but the suspension was subsequently lifted by the German Supreme Court, which reinstated the remedy (see our most recent post on the case here).
This latest development comes in the appeal of the main BKartA decision, and may follow indirectly from the disparity of opinion between the two appeal courts. The referral centres on the contentious question of the interplay between competition law and data protection, and the limits of competition authorities’ competence to deal with breaches of the GDPR. The questions posed by the Court go into considerable detail, but issues of particular note include:
- The extent to which a user’s registration on Facebook under its standard terms and conditions qualifies as effective consent for the processing of sensitive personal data when given to a dominant undertaking;
- Whether the BKartA is competent to establish a breach of the GDPR; and
- Whether a potential infringement of the GDPR may be factored into an assessment under antitrust law.
MFNs – a missed opportunity to settle the debate?
Although this article focuses on references which have been made to the CJEU, it is also notable that in May, as part of the long running Booking.com dispute, the German Supreme Court decided not to ask for CJEU clarification on the vexed question of MFN clauses. The Court had to decide whether so-called ‘narrow’ MFNs (i.e. clauses which prevent companies advertising via a platform from offering better terms on their own website – to be contrasted with ‘wide’ clauses which apply to any online presence) could be classed as an ancillary restraint for the purposes of competition law – if that analysis was accepted, such clauses would not be caught by Article 101 TFEU.
Instead of making a reference to the CJEU, the Court has decided for itself that narrow MFNs infringe competition law and do not qualify as ancillary to a main, unrestrictive agreement.
This has been a controversial topic over recent years with other countries’ competition authorities being prepared to accept the lawfulness of narrow MFNs. Given this remains an area of divergence throughout Europe despite the best efforts of the ECN Working Group (who have previously prepared a report on the online hotel booking sector (here)) it is perhaps unfortunate that the CJEU will not be able to give a definitive ruling on the matter. Nevertheless, the CJEU may be grateful to have one fewer reference to deal with, and the beleaguered hotel sector may appreciate the certainty that comes with a final ruling on this issue, at least in Germany.