The Secretary of State for Health and Another English v Servier Laboratories Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Roth |
| Judgment Date | 17 April 2019 |
| Neutral Citation | [2019] EWHC 1004 (Ch) |
| Court | Chancery Division |
| Docket Number | Case Nos: HC-2011-000064 HC-2012-000188 |
| Date | 17 April 2019 |
[2019] EWHC 1004 (Ch)
Mr Justice Roth
Case Nos: HC-2011-000064
HC-2012-000189
HC-2012-000188
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMPETITION LIST (ChD)
Rolls Buildings, Fetter Lane
London, EC4A 1NL
Jon Turner QC, David Drake (instructed by Peters & Peters Solicitors LLP) for the English Claimants
Julian Gregory, (instructed by RPC LLP) for the Scottish / NI Claimants
Josh Holmes QC, (instructed by Geldards LLP) for the Welsh Claimants
Kelyn Bacon QC, Daniel Piccinin (instructed by Sidley Austin LLP) for the Defendants
Hearing dates: 6–7 March 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
To what extent, if at all, are factual findings made by the General Court of the European Union (“the General Court”) in its judgment on an application for annulment of a competition infringement decision of the European Commission (“the Commission”) binding as res judicata under EU law against the claimants in a private damages action for breach of competition law in the English court? Where those claimants are connected to the UK government which had the right to intervene as a Member State in the European proceedings, is it an abuse of process under English law for the claimants to make arguments and adduce evidence inconsistent with those findings? These, in summary, are the two questions raised by the defendants in response to the claimants' case on certain preliminary issues that are to be heard in these three actions, which are being tried together. Since the answers to those questions significantly affect the shape of the trial of those preliminary issues, which is due to be heard in October 2019, the court directed that they be heard in advance.
The three actions are claims for damages brought, respectively, on behalf of (i) the English health authorities, (ii) the Scottish and Northern Irish health authorities, and (iii) the Welsh health authorities. It is convenient to refer to them, save where further elaboration is required, as the English claimants, the Scottish/NI claimants, and the Welsh claimants. However, the three actions together will be referred to as “the English proceedings”, in distinction to the European proceedings progressing before the EU institutions.
To explain the context of the two questions and how they arise, it is necessary to describe both the European proceedings and the English proceedings, and then the relevant part of the General Court's judgment.
THE EUROPEAN PROCEEDINGS
On 27 July 2012, the Commission issued a Statement of Objections (“SO”) in Case COMP/39.612 Perindopril (Servier). The SO was addressed to a number of companies, including the first, third and fourth defendants. All the defendants are part of the Servier group of companies and for the purpose of this judgment it is unnecessary to distinguish between them save only to note that the second defendant was not an addressee of the Commission's eventual decision (see para 6 below). With that caveat, I shall refer to them collectively as “Servier”.
The SO, in essence, alleged that five patent settlement agreements concluded between Servier and a number of producers of generic pharmaceutical products, which involved substantial payments by Servier to the generic company (“reverse payment patent settlements”), infringed Art 101 of the Treaty on the Functioning of the European Union (“TFEU”) in giving rise to an appreciable restriction of competition both by object and by effect. Further, it alleged that by its strategy of pursuing these successive patent settlements so as to protect its market position from generic challengers Servier was abusing a dominant position, contrary to Art 102 TFEU. The agreements concerned patents held by Servier relating to perindopril, a prescription-only pharmaceutical product used for a number of different therapeutic purposes, in particular for cardiovascular diseases. It is one of a class of drugs known as angiotensin converting enzyme (“ACE”) inhibitors. Perindopril was a so-called ‘blockbuster’ drug and became Servier's most successful product, accounting for about 30% of its total turnover.
On 9 July 2014, the Commission issued its decision in the case (“the Decision”). The Commission held that Servier and the generic companies had infringed Art 101 TFEU by reason of the agreements, and further that Servier had infringed Art 102 TFEU. For present purposes, it is those aspects of the Decision concerning Art 102 that are relevant. In particular, in determining that Servier held a dominant position, the Commission held that the relevant market for finished products comprised only perindopril and rejected Servier's argument that it comprised, at least, all ACE inhibitors.
All the addressees of the Decision were subject to significant fines. The total fine on Servier was €330,997,200.
On 21 September 2014, Servier applied to the General Court for annulment of the Decision, as regards both Art 101 and Art 102. On 22 December 2014, a brief summary of Servier's grounds of appeal was published in the EU Official Journal (OJ C462/27). Servier relied on 17 pleas in support of its appeal. The 14 th plea is summarised as follows:
“… the Commission wrongly and artificially restricted the relevant market for finished products to the single molecule of perindopril, by excluding fifteen other enzyme conversion inhibitors available on the market.”
The 15 th plea challenges the finding of dominance on the basis that this rested on the erroneous definition of the market challenged by the 14 th plea.
The oral hearing before the General Court took place on 6–9 June 2017 and the Court gave its judgment on 12 December 2018 (“the Judgment”). The United Kingdom did not intervene in the proceedings before the General Court.
It will be necessary to refer to the material parts of the Judgment in some detail below. However, in summary, the General Court dismissed the appeal as regards four of the five agreements that were found to constitute an infringement of Art 101, but annulled the Decision as regards one of those agreements and as regards the infringement by Servier of Art 102. It is the part that concerns Art 102 that is critical for present purposes, and there the General Court reached its conclusion on the basis that the Commission had not established that the relevant market was limited to perindopril, as compared to all ACE inhibitors.
Both the Commission and Servier have appealed against the Judgment to the Court of Justice of the EU (“the CJEU”). Such an appeal is limited to questions of law, including distortions of evidence. The appeal by the Commission is a confidential document. However, I was given in confidence a copy of the Commission's appeal and, since the hearing, a summary of the appeal has been published on the CJEU website. It is sufficient to state that the Commission is challenging the General Court's approach to market definition including, by the ninth ground of its appeal, the General Court's analysis of the considerations of therapeutic substitutability. For reasons explained in a short, unreserved judgment delivered after initial argument, I decided that the hearing of the questions addressed in this judgment should not be adjourned pending the appeal to the CJEU.
THE ENGLISH PROCEEDINGS
The English claimants commenced their action on 3 May 2011. Originally, the claimants comprised the Secretary of State for Health (“the Secretary of State”) as the UK government minister with responsibility for the Department of Health and the provision of the National Health Service (“NHS”) in England; the NHS Business Services Authority, a Special Health Authority which managed on behalf of the former health authorities and primary care trusts (“PCTs”) the making of reimbursement payments to pharmacists in England for dispensed prescriptions; the 10 former Strategic Health Authorities (“SHAs”) which distributed to PCTs funds allotted to them by the Secretary of State; and 146 former PCTs, which made reimbursement payments to pharmacists and doctors in respect of medicines supplied pursuant to the NHS in England. With effect from 1 April 2013, these SHAs and the PCTs were abolished and their rights of action vested in the Secretary of State. Since that abolition, the claim has continued to be pursued by the Secretary of State and the NHS Business Services Authority.
The Scottish/NI action was commenced on 18 July 2012. The 17 claimants are the equivalent bodies to the English claimants for Scotland and Northern Ireland, including the Scottish Ministers and the Department of Health, Social Services and Public Safety for Northern Ireland.
The Welsh action was commenced on 10 September 2012. The eight claimants are the equivalent bodies for Wales, including the Welsh Ministers.
The Particulars of Claim in all three actions were significantly amended following the publication of the Decision in 2014 so as to rely on the findings of infringement made by the Commission.
As amended, the English action alleges that...
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The Secretary of State for Health and Another v Servier Laboratories Ltd
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