The Secretary of State for Health and Others v Servier Laboratories Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henderson |
| Judgment Date | 12 October 2012 |
| Neutral Citation | [2012] EWHC 2761 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC11C01423 |
| Date | 12 October 2012 |
[2012] EWHC 2761 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building
London, EC4A 1NL
Mr Justice Henderson
Case No: HC11C01423
Mr Christopher Vajda QC, Mr David DrakeandMr Philip Woolfe (instructed by Peters & Peters Solicitors LLP) for the Claimants
Mr Nicholas Green QC and Ms Kelyn Bacon (instructed by Bristows) for the Defendants
Hearing dates: 18 and 19 April 2012
Judgment on Application for a stay
Introduction
This is my judgment on the application by the defendants (collectively "Servier") for a stay of the present proceedings which I heard at the second case management conference on 18 April 2012. The application was first made as long ago as 22 December 2011, shortly after the basic pleadings in the action had closed with service of the claimants' reply to the defence of all four defendants on 13 December 2011. The reason given for the application, in the application notice of 22 December 2011, was the existence of a "substantial overlap" between the claim in the action and an ongoing investigation conducted by the European Commission ("the Commission") against the defendants. In particular, it was said that both the claim and the Commission's investigation concerned alleged infringements of Articles 101 and/or 102 TFEU in relation to the same product, Perindopril, and the same conduct in relation to that product, namely the enforcement of Perindopril patents and the conclusion of patent settlement agreements with generic companies.
The claimants (who are the Secretary of State for Health and other bodies within the English National Health Service which between them are responsible for the provision of drugs and other pharmaceutical products within the NHS) do not dispute that there is at least a degree of overlap between the claim and the Commission's investigation. They also accept that the trial of the present action cannot take place until after the conclusion of the investigation and any litigation in the Court of Justice of the European Union (the "CJEU") to which it may give rise, which may be several years hence. They submit, however, that there is no justification for the imposition of an immediate stay, and that directions should be given for the initial stages of what will inevitably be a complex and lengthy disclosure exercise. Those stages would comprise the service, and discussion between the parties, of statements of the disclosure they propose to give, followed by resolution by the court of any disclosure issues which cannot be agreed, and then disclosure by list on the basis thus agreed or determined. A further case management conference should be listed to review the position when those steps have been taken.
At the first case management conference, which was held before me on 24 January 2012, it was agreed that the application for a stay should be adjourned until the court had transmitted a request to the Commission pursuant to Article 15.1 of Council Regulation (EC) No 1/2003 ("the 2003 Regulation"), which enables courts of a Member State to ask the Commission to transmit to them information in its possession or its opinion on questions concerning the application of the EU Competition Rules.
The underlying principle, which is laid down in Article 16.1 of the 2003 Regulation, states that:
"When national courts rule on agreements, decisions or practices under Article 81 or Article 82 of the Treaty [ the predecessors of Articles 101 and 102 TFEU] which are already the subject of a Commission decision, they cannot take decisions running counter to the decision adopted by the Commission. They must also avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings it has initiated. To that effect, the national court may assess whether it is necessary to stay its proceedings."
In the present case, the Commission has not yet taken a "decision", but it is common ground that the investigation against Servier, which the Commission opened on 8 July 2009, constitutes proceedings initiated by the Commission within the meaning of Article 16.1, and that the investigation may in due course lead to a decision. The second sentence of Article 16.1 is therefore engaged, and the English court is obliged not to make any decisions which would conflict with a decision contemplated by the Commission.
In addition, paragraph 12 of the Commission Notice on the co-operation between the Commission and the courts of the EU Member States in the application of Articles 81 and 82 EC ( OJ C 101, 27.4.2004, pp.54–64, "the Notice on Co-operation") provides that:
"Where a national court comes to a decision before the Commission does, it must avoid adopting a decision that would conflict with a decision contemplated by the Commission. To that effect, the national court may ask the Commission whether it has initiated proceedings regarding the same agreements, decisions or practices and if so, about the progress of proceedings and the likelihood of a decision in that case. The national court may, for reasons of legal certainty, also consider staying its proceedings until the Commission has reached a decision. The Commission, for its part, will endeavour to give priority to cases for which it has decided to initiate proceedings within the meaning of Article 2(1) of Commission Regulation (EC) No 773/2004 and that are the subject of national proceedings stayed in this way, in particular when the outcome of a civil dispute depends on them."
It can be seen, therefore, that the Notice on Co-operation reflects and re-inforces the procedure envisaged by Article 15.1 of the 2003 Regulation, and it in effect encourages the national court to ask the Commission to explain the nature and likely timetable of any proceedings which it has initiated in order to help the national court to decide whether there is a risk of it adopting a conflicting decision, and (if so) whether it should stay the national proceedings until the Commission has reached its decision.
At the hearing on 24 January 2012 there was some debate about the precise wording and scope of the questions which the court should put to the Commission, but there was no disagreement about the object of the exercise, which was to ascertain as far as possible the extent of any overlap between the allegations of infringement of Articles 101 and/or 102 in the present action and the Commission's investigation. To that end, the form of the questions which I approved after hearing argument, as scheduled to my order of 24 January 2012, set out the factual and legal background in agreed terms and asked, in summary:
a) whether the Commission's investigation concerned the same product, patent, agreements and parties as are the subject of the present claim;
b) whether any (and if so which) of the activities and agreements included in the present claim fell outside the scope of the Commission's investigation;
c) if the court decided to stay the present proceedings, whether the Commission intended to give priority to the investigation as envisaged by paragraph 12 of the Notice on Co-operation;
d) whether the Commission was working on a statement of objections to be served on Servier; and, if so,
e) when the statement of objections was likely to be issued, and what timetable the Commission would be likely to adopt, including in particular for the submission of written replies, an oral hearing and the adoption of a final decision.
I wrote to the Commission on 17 February 2012, enclosing the order of 24 January 2012 and inviting a response to the questions, if possible, by the end of March. The Commission then raised concerns about confidentiality, which were the subject of further correspondence with myself which was copied to the parties. In my letter to the Commission of 26 March 2012, I suggested a possible way forward as follows:
"In the first instance, I would invite the Commission to provide such information (if any) as it is prepared to release without a confidentiality ring having been established, but on the basis that the information released would be used only for the purposes of the forthcoming case management conference, the relevant part of which would be held in private. None of this information would be disclosed to the public, or referred to in any public judgment, without the consent of the Commission, or unless such disclosure was required by law or a Court order."
I went on to say that, if the Commission were prepared to release information on such a basis, it might prove sufficient to enable the court to determine the application for a stay without the need for a confidentiality ring to be established.
Fortunately, that hope proved well-founded, and both parties have been content to proceed on the basis of the substantive response to my letter provided by the Commission on 2 April 2012 and the annex thereto. The answers to the questions in the order of 24 January 2012 were as follows (for convenience I use the same lettering as in paragraph 6 above):
" Reply to question (a)
The Commission has investigated behaviour which may infringe Article 101 and/or 102 of the TFEU. The Article 101 aspect of the Commission's investigation relates to agreements concluded between Servier and a number of generic companies (namely, Niche/Unichem, Matrix, Teva, Krka and Lupin). As to the Article 102 aspect of the Commission's investigation, we are currently examining the elements to establish a possible abuse of a dominant position (i.e market definition, dominance, abusive practices).
The Servier investigation concerns the same product as the claim...
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