Judgment — ECLI:EU:C:2024:551
Date: 2024-06-27
Language of the case: English
Court formation: First Chamber
Subject matter: Competition;Agreements, decisions and concerted practices
Procedure: Action for annulment;Appeal - unfounded
Origin: United Kingdom;Netherlands

summary form in the Official Journal of the European Union of 18 February 2014 (OJ 2014 C 46, p. 1; ‘the Teva/Cephalon decision’). It maintains that, in that decision, the Commission acknowledged that, notwithstanding the existence of patent litigation, a manufacturer of generic medicines was not exerting potential competition, since those patents, without creating insurmountable barriers, had in fact limited the real and concrete possibilities of market entry. It argues that the General Court failed to set out the differences between the situation which gave rise to that decision and the circumstances of the present case. 50 By the third part of its first ground of appeal, Teva submits that the General Court misconstrued the legal concept of ‘potential entry’ by rejecting Teva’s arguments seeking to demonstrate that its real and concrete possibilities of entering the perindopril market in the United Kingdom were jeopardised due to the risk of infringement actions and interim injunctions, without, however, carrying out a detailed assessment of the facts of the case. It maintains that, although the General Court found that Teva was concerned about that risk, it did not examine whether that undertaking actually had real and concrete possibilities of entering the market and whether, in the absence of the Teva agreement, such entry could constitute a viable strategy. It asserts that the General Court, in paragraph 147 of the judgment under appeal, refused to rule on Teva’s arguments in that regard. 51 The Commission disputes that line of argument. Findings of the Court 52 In order to respond to the line of argument by which Teva submits that the General Court erred in law by holding that the Commission had been entitled to establish that Teva was a potential competitor of Servier, it should be recalled that, in the specific context of the opening of the market for a medicinal product to the manufacturers of generic medicines, it is necessary to determine, in order to assess whether one of those manufacturers, although absent from a market, is a potential competitor of a manufacturer of originator medicines present in that market, whether there are real and concrete possibilities of the former moving into that market and competing with the latter (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others, C‑307/18, EU:C:2020:52, paragraph 36 and the case-law cited). 53 Thus, it is necessary to assess, first, whether, at the time when those agreements were concluded, the manufacturer of generic medicines had taken sufficient preparatory steps to enable it to enter the market concerned within such a period of time as would impose competitive pressure on the manufacturer of originator medicines. Such steps permit the conclusion that a manufacturer of generic medicines has a firm intention and an inherent ability to enter the market of a medicine containing an active ingredient that is in the public domain, even when there are process patents held by the manufacturer of originator medicines. Second, it must be determined that the market entry of such a manufacturer of generic medicines does not meet barriers to entry that are insurmountable (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others, C‑307/18, EU:C:2020:52, paragraphs 43 to 45). 54 In that regard, the existence of a patent which protects the manufacturing process of an active ingredient that is in the public domain cannot, as such, be regarded as an insurmountable barrier, and does not mean that a manufacturer of generic medicines which has in fact a firm intention and an inherent ability to enter the market, and which, by the steps taken, shows a readiness to challenge the validity of that patent and to take the risk, upon entering the market, of being subject to infringement proceedings brought by the patent holder, cannot be characterised as a potential competitor of the manufacturer of originator medicines concerned (judgment of 30 January 2020, Generics (UK) and Others, C‑307/18, EU:C:2020:52, paragraph 46). 55 Admittedly, where the validity of such a patent has been definitively established before all the courts before which that question has been brought, it would hardly be conceivable that other aspects of the economic and legal context characterising objectively the competitive relationships between the holder of that patent and a manufacturer of generic medicines could justify the conclusion that there was still a potential competitive relationship between them. However, it is nevertheless for the administrative authority or the competent court to examine all the relevant elements before reaching the conclusion that that holder and that manufacturer are not potential competitors, especially where disputes between them regarding the question of the validity of the relevant patent are still pending. 56 The Court of Justice has already held that any patents protecting an originator medicine or one of its manufacturing processes are indisputably part of the economic and legal context characterising the relationships of competition between the holders of those patents and the manufacturers of generic medicines. However, the assessment of the rights conferred by a patent must not consist in a review of the strength of the patent or of the probability of a dispute between the patent holder and a manufacturer of generic medicines concluding with a finding that the patent is valid and has been infringed. That assessment must rather concern the question whether, notwithstanding the existence of that patent, the manufacturer of generic medicines has real and concrete possibilities of entering the market at the relevant time (judgment of 30 January 2020, Generics (UK) and Others, C‑307/18, EU:C:2020:52, paragraph 50). 57 Furthermore, a finding of potential competition between a manufacturer of generic medicines and a manufacturer of originator medicines can be confirmed by additional factors, such as the conclusion of an agreement between them when the manufacturer of generic medicines was not present on the market concerned, or the existence of transfers of value to that manufacturer in exchange for the postponement of its market entry (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others, C‑307/18, EU:C:2020:52, paragraphs 54 to 56). 58 In the present case, the General Court held, in essence, in paragraph 87 of the judgment under appeal, that a potential competitor is one which has real and concrete possibilities of entering the market in question. Such a finding must, according to that court, be based fundamentally on the ability to enter that market, supported, where appropriate, by the intention to do so. It also follows from paragraph 117 of that judgment that, according to the General Court, where those conditions are satisfied, it must then be determined whether the claims of the undertakings concerned relating to the existence of insurmountable barriers to such entry call into question the assessment of their real and concrete possibilities of entering that market, based on their ability and intention to do so. 59 In paragraphs 92 to 95 of the judgment under appeal, the General Court pointed out that evidence of the existence of potential competition may be supported by the perception, on the part of the undertakings present on the market, of the competitive threat represented by the possibility of a new entrant joining that market. It noted, in that regard, referring to its own case-law, that the conclusion of an agreement between those undertakings may constitute an indication of that perception capable of supporting a finding of potential competition. 60 It follows from those considerations that the General Court did not err in law and ruled in accordance with what has been stated in paragraphs 52 to 57 of the present judgment when it set out the criteria for concluding that there is a potential competitive relationship between a manufacturer of originator medicines and a manufacturer of generic medicines. The criteria adopted by the General Court correspond, in essence, to those adopted by the Court of Justice in paragraphs 36 to 57 of the judgment of 30 January 2020, Generics (UK) and Others (C‑307/18, EU:C:2020:52). 61 Contrary to what Teva claims in the first part of its first ground of appeal, the General Court did not confine the analysis of whether a potential competitive relationship existed solely to examining whether the barriers to entry to the perindopril market in the United Kingdom were insurmountable. Indeed, after first holding, on the grounds set out in paragraphs 88 to 96 of the judgment under appeal, that the Commission had not applied incorrect criteria in order to assess the existence of potential competition, the General Court then inferred from the findings made in paragraphs 109 to 115 of that judgment that the Commission had validly been entitled to consider that Teva had not only the intention to take the risk of entering that market, but also the ability to enter it. Lastly, the General Court examined, in paragraphs 117 to 162 of that judgment, whether that assessment could be called into question on account of the insurmountable nature of the patent-related, regulatory and technical barriers relied on by Teva. At the end of that examination, it held that that was not the case and, consequently, rejected Teva’s line of argument alleging an error of assessment with regard to its status as a potential competitor of Servier. 62 Teva submits, however, that the General Court erred in law when it held, in essence, in paragraphs 131 and 132 of the judgment under appeal, that, in the absence of a final court decision finding there to be an infringement, the existence of a valid patent does not prevent potential competition from taking place. 63 It should be noted, in that regard, that the General Court took into account, in paragraphs 119 to 131 of the judgment under appeal, the barriers to Teva’s market entry which resulted, according to that undertaking, from the existence of Servier’s patents. In particular, the General Court pointed out, in paragraph 131 of the judgment under appeal, that patent litigation ‘is one of the means by which generic companies can reduce [the] risk [of infringement] and enter the market’. In paragraph 132 of that judgment, the General Court inferred that ‘the Commission did not err in finding that, in the present case, Servier’s patents were not insurmountable barriers to the market entry of the generic companies’. It went on to observe that ‘at the time the agreements at issue were concluded, no final decision on the merits of an infringement action had found that the products of those companies were infringing’. In paragraphs 133 to 139 of that judgment, the General Court reiterated that assessment, rejecting Teva’s arguments to the contrary based, inter alia, on the Commission Notice entitled ‘Guidelines on the application of Article [101 TFEU] to technology transfer agreements’ (OJ 2004 C 101, p. 2), on the case-law of the General Court and on the Teva/Cephalon decision. 64 Thus, contrary to what Teva claims, the General Court held not that a patent the validity and, as the case may be, the infringement of which have not been established by a final court decision may ‘simply be ignored’, which would be tantamount to considering that such a patent can never be taken into account as a barrier to that undertaking’s entry to a market, but rather, following an analysis of all the factors referred to in paragraphs 118 to 147 of the judgment under appeal, that the Commission had not erred in finding that Servier’s patents did not, in the present case, constitute insurmountable barriers to Teva’s entry to the market concerned. The General Court thus ruled in accordance with the case-law referred to in paragraphs 54 to 56 of the present judgment. It follows that the grounds set out in paragraphs 131 and 132 of the judgment under appeal are not vitiated by the error of law alleged by Teva in the first part of its first ground of appeal. 65 Moreover, the alleged contradictory reasoning, relied on by Teva in the second part of its first ground of appeal, is based on the same misreading of the judgment under appeal. In that regard, it should be noted that the General Court stated, in paragraph 136 of that judgment, that, ‘since patents do not, in principle, constitute insurmountable barriers to the market entry of a competitor, but may give rise to such barriers depending on the outcome of litigation and have an impact on the real concrete possibilities of entering that market …, it cannot be ruled out that the Commission could, in some of its decisions, including inter alia the abovementioned Teva/Cephalon decision, have relied on the existence of patents in order to find a lack of potential competition’. The General Court’s use of the phrase ‘depending on the outcome of litigation’ reflects the fact, referred to in paragraph 55 of the present judgment, that while, admittedly, a patent the validity of which has been definitively established before all the courts before which that question has been brought is highly capable of constituting an insurmountable barrier to market entry by a competitor with infringing products, that is not the case as regards a patent the validity of which is being challenged in the context of disputes that are still pending. Therefore, the second part of the first ground of appeal must be rejected. 66 As regards the third part of the first ground of appeal, by which Teva criticises the General Court for having held, in paragraph 147 of the judgment under appeal, that it was not necessary to rule on the allegations concerning the practice of granting interim injunctions in the United Kingdom, it should be recalled that the Court of Justice has already emphasised the limited importance of such injunctions for the purpose of assessing whether a manufacturer of generic medicines and the patent holder are potential competitors, since it is an interim measure which in no way prejudges the merits of an infringement action (judgment of 30 January 2020, Generics (UK) and Others, C‑307/18, EU:C:2020:52, paragraph 53). Moreover, contrary to Teva’s line of argument, the General Court did not rule out, in paragraphs 146 and 147 of the judgment under appeal, the possibility of such interim injunctions being taken into account, but simply held, in accordance with that case-law, that the mere risk of such injunctions being granted cannot, by itself and having regard to the circumstances of the case, which it examined and assessed in paragraph 144 of the judgment under appeal, prevent such a manufacturer from being a potential competitor. The third part of that ground of appeal is therefore unfounded. 67 It must be added, so far as is relevant, that, inasmuch as Teva, by that third part, criticises the factual assessments made by the General Court, it should be borne in mind that such assessments do not, save where the facts or evidence have been distorted, which has not been alleged in the present case, constitute a point of law which is subject, as such, to review by the Court of Justice in appeal proceedings (see, to that effect, judgment of 26 June 2012, Poland v Commission, C‑335/09 P, EU:C:2012:385, paragraph 24 and the case-law cited). 68 The first ground of appeal must therefore be rejected. The second ground of appeal, relating to the characterisation as a restriction of competition by object Arguments of the parties 69 By its second ground of appeal, which is divided into four parts, Teva submits that, in holding that the Commission had been entitled to characterise the Teva agreement as a restriction of competition by object, even though that agreement had pro-competitive or competition-neutral effects, the General Court erred in law. 70 By the first part of its second ground of appeal, Teva submits that, in paragraphs 187 and 188 of the judgment under appeal, the General Court applied an incorrect legal test as regards characterisation as a restriction of competition by object. Teva maintains that, in the decision at issue, in particular in recital 1111 thereof, the Commission had adopted that characterisation after finding that the Teva agreement could have restrictive effects on competition. It argues that the test resulting from the judgment of 11 September 2014, CB v Commission (C‑67/13 P, EU:C:2014:2204), is whether there is a sufficient degree of harm to competition. Teva submits that, consequently, by stating, in paragraph 187 of the judgment under appeal, that the Commission had ‘correctly applied the concept of restriction of competition by object’, the General Court applied a legally incorrect test. 71 By the second part of its second ground of appeal, directed against paragraphs 270 to 272 of the judgment under appeal, Teva submits that the General Court failed to take into account the pro-competitive, or at least neutral, effects of the Teva agreement, which precluded characterisation as a restriction of competition by object. 72 First, Teva submits that the General Court made several errors of law in refusing to take into consideration the assessment that Teva could have had as at 13 June 2006 – the date of conclusion of the Teva agreement – regarding the outcome of the 947 patent opposition proceedings. It states that the General Court rejected the argument by which it maintained that, on that date, the revocation of the 947 patent by the EPO could reasonably be envisaged, which, it argues, the Commission moreover acknowledged in recitals 128 and 1675 of the decision at issue. According to Teva, in such a situation, the Teva agreement would have been pro-competitive. Indeed, Teva did not have a marketing authorisation for perindopril and risked being the subject of an interim injunction based on the infringement of the 339, 340 and 341 patents. It argues that, in those circumstances, the revocation of the 947 patent would not have enabled it to enter the United Kingdom market. It submits that such entry was possible only as a result of the non-challenge clause provided for in the Teva agreement. 73 It maintains that the General Court rejected that argument by merely stating, in paragraph 270 of the judgment under appeal, that it was based on effects of the Teva agreement ‘which were hypothetical and thus not foreseeable’. According to Teva, that statement is contrary to what the General Court held in the judgment of 29 June 2012, GDF Suez v Commission (T‑370/09, EU:T:2012:333, paragraph 80). It submits that, in that judgment, the General Court took into consideration the ‘prospects which could reasonably be envisaged’ at the time of the conclusion of the agreement concerned in order to assess whether that agreement had an anticompetitive object. It argues that, moreover, that statement contradicts the ground set out in paragraph 186 of the judgment under appeal, according to which the Commission and the Courts of the European Union cannot ‘completely ignore [the] potential effects’ of an agreement in order to determine whether it falls within the concept of restriction of competition by object. 74 Second, Teva submits that, by refusing to rule out the characterisation of the agreement as a restriction of competition by object, even though the foreseeable effects of the Teva agreement on competition were, at the time that agreement was concluded, ambivalent, the General Court failed to have regard to the legal criteria laid down in the judgment of 11 September 2014, CB v Commission (C‑67/13 P, EU:C:2014:2204). 75 It maintains that that error is all the more evident since the General Court, in the judgment of 12 December 2018, Krka v Commission (T‑684/14, EU:T:2018:918), ruled out characterisation as a restriction of competition by object after finding that the pro-competitive effects of the licence on the 947 patent which Servier had granted to Krka mitigated the anticompetitive effects of the non-marketing and non-challenge clauses of the agreement settling the disputes relating to that patent concluded by those undertakings. Teva submits that the General Court should have followed the same reasoning and taken into account the pro-competitive benefits of Teva’s exclusive supply agreement in order to preclude characterisation as a restriction of competition by object. 76 Third, Teva submits that, by rejecting, in paragraphs 270 and 271 of the judgment under appeal, its line of argument according to which the potential effects of the Teva agreement were not restrictive of competition, or were indeed pro-competitive, even if the supplying of Teva by Servier had to be taken into account, the General Court erred in law. It argues that the General Court dismissed the pro-competitive effect of the market entry of a generic medicine authorised by the manufacturer of originator medicines, whereas it had recognised such an effect in the judgment of 12 December 2018, Krka v Commission (T‑684/14, EU:T:2018:918). Moreover, the General Court considered that Teva’s market entry could not be regarded as having a pro-competitive effect, on the ground that that market entry would not have been the sole entry, whereas the General Court had noted, in paragraph 111 of that judgment, that Teva ‘had taken into account the possibility of not being the first generic company to enter the market’. 77 Fourth, Teva submits, first of all, that, by stating, in paragraph 271 of the judgment under appeal, that, ‘in the event that the validity of the 947 patent had been confirmed by the EPO, Teva would still have been prevented from obtaining generic perindopril, including generic perindopril which did not infringe that patent, from any undertakings other than Servier’, the General Court erred in law. It maintains that that statement contradicts what the General Court held in the judgment of 12 December 2018, Krka v Commission (T‑684/14, EU:T:2018:918, paragraph 236), and is erroneous, since all the generic versions of perindopril then in development were infringing or plausibly infringing, which neither the Commission nor the General Court called into question. 78 Next, Teva disputes the statement, in paragraph 272 of the judgment under appeal, that, in any event, its market entry with the perindopril supplied by Servier ‘was neither an early entry, nor even an entry corresponding to the first date on which lawful market entry could take place in the absence of an agreement’. It argues that the General Court disregarded the fact that, since Servier’s undertakings under the Teva agreement were limited to the 947 patent, Teva’s market entry could have given rise to actions for infringement of the 339, 340 and 341 patents. Teva states, in that regard, that, in the judgment of 12 December 2018, Krka v Commission (T‑684/14, EU:T:2018:918), the General Court took into consideration the fact that Servier had obtained interim injunctions against Krka in respect of infringement of the 339 patent. 79 Lastly, Teva submits that, by stating, in paragraph 272 of the judgment under appeal, that Teva’s market entry had to ‘occur, according to the terms of the amendment [of 23 February 2007], when the 947 patent … expired’, the General Court erred in its interpretation of that amendment. 80 By the third part of its second ground of appeal, Teva submits that, by holding, in paragraph 306 of the judgment under appeal, that the clauses of the Teva agreement relating to the liquidated damages and the initial lump sum were decisive for the purposes of characterisation as a restriction of competition by object, whereas the Teva agreement had the legitimate objective of allowing Teva to enter the United Kingdom market before the end of the protection resulting from Servier’s patents, the General Court erred in law. 81 First of all, it maintains that the General Court erred in rejecting Teva’s argument that all the clauses of the Teva agreement had been negotiated at arm’s length, whereas a similar argument was upheld in the judgment of 12 December 2018, Krka v Commission (T‑684/14, EU:T:2018:918). 82 Next, Teva reiterates that the Teva agreement allowed it to enter the market before the expiry of the 339, 340 and 341 patents, even if the 947 patent were revoked by the EPO. 83 Lastly, it argues that the clauses relating to the initial lump sum and the liquidated damages have no bearing on whether the Teva agreement is pro-competitive or neutral. 84 By the fourth part of its second ground of appeal, Teva submits that, contrary to what the General Court held in paragraphs 226 and 227 of the judgment under appeal, a reverse payment cannot, in itself, constitute a decisive criterion for the purpose of characterising an agreement as a restriction of competition by object. According to Teva, that criterion is overly broad and has the result of extending the scope of that concept beyond the limits arising from the judgment of 11 September 2014, CB v Commission (C‑67/13 P, EU:C:2014:2204, paragraph 51). 85 The Commission disputes those arguments. Findings of the Court 86 It should be recalled that, if it is to be subject to the prohibition in principle laid down in Article 101(1) TFEU, a collusive practice must have as its ‘object or effect’ the prevention, restriction or distortion to an appreciable extent of competition within the internal market. It follows that that provision, as interpreted by the Court, makes a clear distinction between the concept of restriction by object and the concept of restriction by effect, each of those concepts being subject to different rules with regard to what must be proved (judgment of 30 January 2020, Generics (UK) and Others, C‑307/18, EU:C:2020:52, paragraphs 62 and 63). 87 Accordingly, as regards practices characterised as restrictions of competition by object, there is no need to investigate nor a fortiori to demonstrate their effects on competition, in so far as experience shows that such behaviour leads to falls in production and price increases, resulting in poor allocation of resources to the detriment, in particular, of consumers (see, to that effect, judgments of 19 March 2015, Dole Food and Dole Fresh Fruit Europe v Commission, C‑286/13 P, EU:C:2015:184, paragraph 115, and of 21 December 2023, European Superleague Company, C‑333/21, EU:C:2023:1011, paragraph 159). 88 On the other hand, where the anticompetitive object of an agreement, a decision by an association of undertakings or a concerted practice is not established, it is necessary to examine its effects in order to prove that competition has in fact been prevented or restricted or distorted to an appreciable extent (see, to that effect, judgment of 26 November 2015, Maxima Latvija, C‑345/14, EU:C:2015:784, paragraph 17). 89 That distinction arises from the fact that certain forms of collusion between undertakings can be regarded, by their very nature, as being injurious to the proper functioning of normal competition (judgments of 20 November 2008, Beef Industry Development Society and Barry Brothers, C‑209/07, EU:C:2008:643, paragraph 17, and of 14 March 2013, Allianz Hungária Biztosító and Others, C‑32/11, EU:C:2013:160, paragraph 35). 90 It is true, as Teva has submitted, that the concept of a restriction of competition by object must be interpreted strictly and can be applied only to certain agreements between undertakings which reveal, in themselves and having regard to the content of their provisions, their objectives, and the economic and legal context of which they form part, a sufficient degree of harm to competition for the view to be taken that it is not necessary to assess their effects (see, to that effect, judgments of 26 November 2015, Maxima Latvija, C‑345/14, EU:C:2015:784, paragraph 20, and of 21 December 2023, European Superleague Company, C‑333/21, EU:C:2023:1011, paragraphs 161 and 162 and the case-law cited). 91 In that regard, in the economic and legal context of which the conduct in question forms a part, it is necessary to take into consideration the nature of the products or services concerned, as well as the real conditions of the structure and functioning of the sectors or markets in question. It is not, however, necessary to examine nor, a fortiori, to prove the effects of that conduct on competition, be they actual or potential, or negative or positive (judgment of 21 December 2023, European Superleague Company, C‑333/21, EU:C:2023:1011, paragraph 166 and the case-law cited). 92 As regards the objectives pursued by the conduct in question, a determination must be made of the objective aims which that conduct seeks to achieve from a competition standpoint. Nevertheless, the fact that the undertakings involved acted without having an intention to prevent, restrict or distort competition and the fact that they pursued certain legitimate objectives are not decisive for the purposes of the application of Article 101(1) TFEU (judgment of 21 December 2023, European Superleague Company, C‑333/21, EU:C:2023:1011, paragraph 167 and the case-law cited). 93 Accordingly, the assessment of the degree of economic harm of an agreement to the proper functioning of competition in the market concerned must be based on objective considerations, where necessary as a result of a detailed analysis of the agreement at issue, its objectives and the economic and legal context of which it forms part (see, to that effect, judgments of 30 January 2020, Generics (UK) and Others, C‑307/18, EU:C:2020:52, paragraphs 84 and 85, and of 25 March 2021, Lundbeck v Commission, C‑591/16 P, EU:C:2021:243, paragraph 131). 94 In that context, it should also be borne in mind that a manufacturer of generic medicines, after assessing its chances of success in court proceedings between it and the manufacturer of the originator medicine concerned, may decide to abandon entry to the market in question and to conclude a settlement agreement with that manufacturer. Such an agreement cannot be considered, in all cases, to be a restriction by object within the meaning of Article 101(1) TFEU. The fact that such an agreement involves transfers of value by the manufacturer of originator medicines to a manufacturer of generic medicines is not a sufficient ground to classify it as a restriction by object, since those transfers of value may prove to be justified. That may be the case where the manufacturer of generic medicines receives from the manufacturer of originator medicines sums which correspond in fact to compensation for the costs of or disruption caused by the litigation between them, or which correspond to remuneration for the actual supply of goods or services to the manufacturer of originator medicines (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others, C‑307/18, EU:C:2020:52, paragraphs 84 to 86). 95 Consequently, wherever an agreement to settle a dispute relating to the validity of a patent between a manufacturer of generic medicines and a manufacturer of originator medicines that holds that patent involves transfers of value by the manufacturer of originator medicines in favour of the manufacturer of generic medicines, it is necessary to ascertain, first, whether the net gain from those transfers may be fully justified by the need to compensate for the costs of or disruption caused by that dispute, such as the expenses and fees of the latter manufacturer’s advisers, or by the need to provide remuneration for the actual and proven supply of goods or services from the manufacturer of generic medicines to the manufacturer of the originator medicine (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others, C‑307/18, EU:C:2020:52, paragraph 92). 96 Indeed, the settlement of such a dispute implies that the manufacturer of generic medicines recognises the validity of the patent in question, since it waives its right to challenge it. It follows that it is only where a ‘reverse’ payment, by the manufacturer of originator medicines to the manufacturer of generic medicines, is by way of the reimbursement of such costs or of remuneration for the supply of such goods or services that it can be regarded as consistent with such recognition and, therefore, as capable of being justified in terms of competition. 97 Second, if that net gain from the transfers is not fully justified by such a need, it must be ascertained whether, in the absence of such justification, those transfers can have no explanation other than the commercial interest of those manufacturers of medicinal products not to engage in competition on the merits. For the purposes of that examination, it is necessary to determine whether that gain, including any justified expenses, is sufficiently large to actually act as an incentive for the manufacturer of generic medicines to refrain from entering the market concerned; however, there is no requirement that the net gain should necessarily be greater than the profits which that manufacturer would have made if it had been successful in the patent proceedings (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others, C‑307/18, EU:C:2020:52, paragraphs 87 to 94). 98 In the present case, it should be noted that, on the grounds set out in paragraphs 218 to 234 of the judgment under appeal, the General Court held, in paragraph 235 of that judgment, that the characterisation of a patent dispute settlement agreement as a restriction of competition by object presupposes that the manufacturer of generic medicines was induced to limit its efforts to compete with the manufacturer of originator medicines, with the result that, ‘where [such an agreement] contains non-marketing and non-challenge clauses … the existence of an inducement for the generic company to agree to those clauses supports the conclusion that there is a restriction by object, even if there is a genuine dispute, the settlement agreement includes non-marketing and non-challenge clauses the scope of which does not exceed that of the patent at issue and that patent could – having regard, in particular, to the decisions adopted by the competent administrative authorities or courts – legitimately be regarded as valid by the parties to the agreement at issue at the time it was adopted’. In so doing, the General Court did not err in law, having regard to the rules and principles referred to in paragraphs 86 to 96 of the present judgment. 99 As regards the application of those rules and principles to the circumstances of the present case, the General Court, in essence, confirmed the findings made in the decision at issue concerning the restrictions imposed on Teva with respect to its conduct on the market. On the grounds set out in paragraphs 249 to 281 of the judgment under appeal, the General Court found, first, that the non-challenge clause in the Teva agreement prohibited Teva from establishing that its perindopril did not infringe Servier’s patents and from challenging the validity of those patents in the United Kingdom. Second, it found that the non-marketing clause in that agreement required Teva to refrain, in the United Kingdom, from any production or marketing of its own perindopril which Servier regarded as infringing or of any version which Servier could regard as infringing. Third, it found that the exclusive supply clause in that agreement, which was closely linked to the non-marketing clause, left Teva with an alternative, depending on Servier’s unilateral choice, of either distributing Servier’s perindopril composed of the alpha crystalline form of erbumine or, in the event of failure by Servier to supply, receiving liquidated damages in the amount of GBP 500 000 per month of default. The aggregate effect of that alternative and of the combination of those clauses was, in practice, to enable Servier to prevent Teva from marketing, in the United Kingdom, without its consent, a generic version of the perindopril composed of the alpha crystalline form of erbumine. 100 In order to determine whether the payments of the initial lump sum of GBP 5 million and of the liquidated damages of GBP 5.5 million could be regarded as constituting a reverse payment which induced Teva to sign the Teva agreement, the General Court, in paragraphs 290 to 303 of the judgment under appeal, analysed in detail the question whether those two payments were necessary, in accordance, in essence, with the conditions referred to in paragraphs 94 to 97 of the present judgment, and the question whether those payments, having regard in particular to their size, had induced Teva to accept the restrictions of competition provided for in the Teva agreement. Since Teva did not succeed in adducing evidence capable of calling into question the findings made by the Commission in the decision at issue, the General Court held, on the basis of the considerations set out in paragraphs 290 to 303 of the judgment under appeal and in accordance, in essence, with the criteria set out in paragraphs 94 to 97 of the present judgment, that the sum of GBP 10.5 million which Servier paid to Teva had induced Teva to refrain from entering the market. 101 On the basis of those factors, the General Court held, in paragraph 304 of the judgment under appeal, that the Commission had rightly inferred from the finding of that inducement that the Teva agreement constituted a restriction of competition by object. 102 By the first and second parts of its second ground of appeal, which it is appropriate to examine together, Teva submits, in essence, that characterisation as a restriction of competition by object is inapplicable to an agreement the potential effects of which on competition are positive, neutral or ambivalent. According to Teva, the General Court, in paragraphs 187, 188 and 270 to 272 of the judgment under appeal, erred in law in the application of those criteria, inter alia in so far as it failed to take account of the fact that the Teva agreement was concluded with the aim of allowing that undertaking to enter the United Kingdom market early as a distributor of Servier’s perindopril. 103 In that regard, it should be noted that, in paragraphs 181 to 244 of the judgment under appeal, the General Court examined the complaints by which Teva claimed, in essence, that it was foreseeable, at the time the Teva agreement was concluded, that that agreement would have positive, or neutral, or at least ambivalent, effects on competition, such that that agreement could not be characterised as a restriction of competition by object. In paragraphs 181 to 185 of that judgment, the General Court thus stated, in accordance with the case-law referred to in paragraphs 89 to 91 of the present judgment, that the concept of restriction of competition by object must be interpreted strictly and applied to an agreement which reveals a sufficient degree of harm to competition, having regard to the content of its provisions, its objectives and the economic and legal context of which it forms part, without its being necessary to assess the intention of the parties or the effects of that agreement. 104 As regards the latter element in particular, the General Court pointed out, in paragraphs 182 and 186 of the judgment under appeal, that the examination of the economic and legal context of the agreement concerned cannot lead to an assessment of the effects of that agreement, since otherwise the distinction between a restriction of competition by object and by effect laid down in Article 101(1) TFEU would lose its effectiveness. 105 That assessment is consistent with the case-law referred to in paragraph 91 of the present judgment, according to which, as regards practices characterised as a restriction of competition by object, there is no need to investigate their effects nor a fortiori to demonstrate their effects on competition. Experience shows that certain forms of coordination between undertakings can be regarded, by their very nature, as being injurious to the proper functioning of normal competition (see, to that effect, judgments of 11 September 2014, CB v Commission, C‑67/13 P, EU:C:2014:2204, paragraph 51, and of 21 December 2023, European Superleague Company, C‑333/21, EU:C:2023:1011, paragraph 162 and the case-law cited). 106 However, the General Court also held, in paragraph 186 of the judgment under appeal that ‘the Commission and the Courts of the European Union cannot, when examining whether an agreement restricts competition by object and, in particular, in assessing the economic and legal context of that agreement, completely ignore its potential effects’, so that ‘for the purposes of verifying the specific capability of an agreement to produce competition-restricting effects characteristic of agreements with an anticompetitive object, the analysis of the potential effects of an agreement must therefore be limited to those resulting from information objectively foreseeable at the time of the conclusion of that agreement’. 107 It must be stated that paragraph 186 of the judgment under appeal is vitiated by an internal contradiction, since it indicates both that the effects of a restriction of competition by object do not have to be assessed in order to establish the existence of that restriction and that such effects cannot be ignored when examining whether an agreement restricts competition by object. Those two statements are incompatible. 108 Moreover, paragraph 186 of the judgment under appeal contains an error of law in so far as the statement that the Commission and the Courts of the European Union cannot, when examining whether an agreement restricts competition by object, completely ignore its potential effects is contrary to the case-law referred to in paragraph 91 of the present judgment, according to which, as regards practices characterised as restrictions of competition by object, there is no need to investigate nor a fortiori to demonstrate their effects on competition, be they actual or potential, or negative or positive. 109 In so doing, the General Court confused the exercise of ascertaining whether conduct is capable, by its very nature, of systematically harming competition by reason of its particular characteristics and whether it therefore reveals a sufficient degree of harm to be characterised as a restriction of competition by object, on the one hand, with the exercise of analysing the actual or potential effects of specific conduct in a particular case, which is relevant solely for the assessment of the existence of a possible restriction of competition by effect, on the other. 110 It must therefore be held that, in holding, in paragraph 186 of the judgment under appeal, on the basis of contradictory reasoning, that, when examining whether an agreement restricts competition by object, the potential effects of that agreement must be taken into account in so far as they are foreseeable, the General Court erred in law. 111 On the basis of that error of law, in paragraphs 269 to 272 of the judgment under appeal, the General Court examined whether the Teva agreement revealed a sufficient degree of harm to be characterised as a restriction of competition by object, in the light of its potential effects on competition. In paragraph 270 of that judgment, the General Court stated, first, that the ‘potential effects … [which were] not foreseeable when the agreement in question was concluded … cannot be taken into account in assessing whether that agreement is restrictive of competition by object’ and, second, that, ‘in any event, … it cannot be considered that the alleged potential effects of the [Teva agreement] were not restrictive of competition, or indeed pro-competitive’. 112 In addition, the General Court explained in a detailed manner, in paragraph 271 of the judgment under appeal, in essence, that the object of the Teva agreement was to restrict competition both if the 947 patent had been invalidated by the EPO and if the validity of that patent had been confirmed by that authority since, in both situations, that agreement limited Teva’s freedom of action on the perindopril market in the United Kingdom, inter alia since it could obtain supplies of perindopril only from Servier and resell that medicinal product as a distributor of Servier. Thus, the General Court found that, in each of those scenarios, Teva would not have been able to enter that market in competition with Servier, and it is also for that reason that it rejected Teva’s line of argument put forward at first instance, which corresponds to that put forward by Teva on appeal and which is summarised in paragraphs 72 to 74 of the present judgment. 113 The error of law identified in paragraph 110 of the present judgment therefore had no effect on the operative part of the judgment under appeal since, ultimately, the General Court rejected the arguments concerning the characterisation of the Teva agreement as a restriction of competition by object on the basis of findings of fact relating to the inherently anticompetitive nature of the obligations resulting from that agreement, the validity of which in no way depends on the allegedly pro-competitive, or neutral, or at least ambivalent, nature of the potential effects of that agreement. 114 By contrast, the error of law thus made by the General Court is the premiss of the essence of the line of argument relied on by Teva in the first and second parts of its second ground of appeal. Since that premiss is incorrect in law, those first and second parts cannot succeed, inasmuch as they are based on that premiss. 115 As to the remainder, in so far as Teva calls into question the General Court’s assessment of whether the clauses of the Teva agreement constituted a restriction of competition by object, as summarised in paragraph 99 of the present judgment, it must be observed that the General Court carried out that assessment in accordance with the rules and principles referred to in paragraphs 86 to 96 of the present judgment and that that assessment is therefore free of any error of law. Moreover, in so far as that assessment is based on the interpretation of contractual terms governed by national law, it does not constitute in the light of EU law, save where those terms and the context of which they form part or the applicable national law have been distorted, which has not been alleged in the present case, a point of law which is subject, as such, to review by the Court of Justice in appeal proceedings (see, to that effect, judgment of 9 November 2017, TV2/Danmark v Commission, C‑649/15 P, EU:C:2017:835, paragraphs 48 to 50 and the case-law cited). The first and second parts of that ground of appeal must therefore be rejected in their entirety. 116 By the third and fourth parts of its second ground of appeal, which it is appropriate to examine together, Teva submits, in essence, that, by holding in paragraph 227 of the judgment under appeal that an unjustified reverse payment must be regarded as consideration for the decision of the manufacturer of generic medicines not to compete with the manufacturer of originator medicines, the General Court applied a criterion that was incompatible with the principle of restrictive interpretation of the concept of restriction of competition by object. 117 It should be borne in mind that, in paragraphs 218 to 235 of the judgment under appeal, the General Court held that where presence in a patent dispute settlement agreement of clauses restricting competition such as non-challenge and non-marketing clauses is linked to a reverse payment, it may be characterised as a restriction of competition by object if that payment is not justified by consideration other than a quid pro quo consisting of an undertaking by the manufacturer of generic medicines to refrain from competing with the manufacturer of originator medicines which holds the patent or patents concerned. 118 In paragraphs 286 to 289 of the judgment under appeal, the General Court held, in essence, that, in order to determine whether that condition is satisfied, it is necessary to examine whether that reverse payment is intended to compensate for the costs inherent in the settlement and borne by the manufacturer of generic medicines. The General Court stated that those costs include, in particular, expenses incurred in the context of the disputes to which the settlement agreement relates, provided that those expenses have been established by the parties to that agreement and that they are not disproportionate to the amount of the expenses that are objectively indispensable for the litigation. By contrast, according to the judgment under appeal, the costs inherent in the settlement do not include either the value of the stock of infringing medicines or the research and development costs incurred in developing those medicines. According to that judgment, those costs also exclude, as a general rule, sums payable as compensation under contracts concluded by the manufacturer of generic medicines with third parties, including for termination of contract. 119 Those assessments made by the General Court relating to the circumstances in which it is possible to justify the ‘reverse’ payment of such costs in order to conclude that there has been no inducive transfer of value, correspond, in essence, to the assessments stemming from the case-law of the Court of Justice referred to in paragraphs 94 to 97 of the present judgment, and do not reveal any error of law. 120 Teva further submits that, by holding in paragraph 306 of the judgment under appeal that the existence of a reverse payment made it possible to characterise the Teva agreement as a restriction of competition, the General Court failed to recognise that the Teva agreement had the legitimate objective of allowing Teva to enter the perindopril market in the United Kingdom before the expiry of Servier’s patents. 121 However, as has been recalled in paragraph 92 of the present judgment, the fact that undertakings the conduct of which could be characterised as a restriction of competition by object acted without having an intention to prevent, restrict or distort competition and the fact that they pursued certain legitimate objectives are not decisive for the purposes of the application of Article 101(1) TFEU (judgment of 21 December 2023, European Superleague Company, C‑333/21, EU:C:2023:1011, paragraph 167 and the case-law cited). Only the assessment of the degree of economic harm of that practice to the proper functioning of competition in the market concerned is relevant. Accordingly, the fact that a commercial strategy under which undertakings operating at the same level of the production chain negotiate such agreements between them in order to put an end to a dispute relating to the validity of a patent is economically rational from the point of view of those undertakings in no way demonstrates that the pursuit of that strategy is justifiable from the point of view of competition law. 122 It must therefore be held that the line of argument by which Teva maintains that the Teva agreement had the legitimate objective of allowing that undertaking to enter the market in the United Kingdom by marketing a generic version of perindopril supplied by Servier is not capable of calling into question the General Court’s assessments, which have been examined in paragraphs 99 to 114 of the present judgment without any error of law having been identified, relating to the characterisation of that agreement as a restriction of competition by object. It is not necessary, moreover, to examine whether the fact that that agreement was concluded at arm’s length should have been taken into consideration in order to demonstrate the legitimacy of that objective or to call that characterisation into question. 123 Furthermore, Teva relies on several contradictions between the findings made by the General Court with regard to the Teva agreement and those made with regard to the agreements concluded between Servier and Krka concerning the legal criteria used by that court to characterise those agreements as a restriction of competition by object. However, it is sufficient to note that it is apparent, inter alia, from paragraph 276 of the judgment delivered today in Commission v Krka (C‑151/19 P), that errors of law made by the General Court affect the entirety of the reasoning – set out in paragraphs 179 to 268 of the judgment of 12 December 2018, Krka v Commission (T‑684/14, EU:T:2018:918) – relating to the characterisation of the abovementioned agreements as a restriction of competition by object. In particular, for the reasons set out in paragraphs 341 to 412 of the judgment delivered today in Commission v Krka (C‑151/19 P), the Court of Justice, after upholding the Commission’s appeal in part, definitively rejected Krka’s line of argument challenging that characterisation. In the absence of the alleged contradiction, that complaint and, consequently, the third and fourth parts of the second ground of appeal must be rejected. 124 In the light of the foregoing considerations, the second ground of appeal must be rejected. The third ground of appeal, relating to Article 101(3) TFEU Arguments of the parties 125 By its third ground of appeal, Teva submits that, in rejecting its line of argument according to which the Teva agreement could benefit from an exemption under Article 101(3) TFEU, on the sole ground that that agreement did not satisfy the first requirement laid down in that provision, the General Court relied, in paragraph 341 of the judgment under appeal, on two assertions that were incorrect both in law and in fact. 126 First, it maintains that the General Court, in paragraph 341 of the judgment under appeal, stated that the Commission was justified in considering that, since the generic perindopril which Teva intended to distribute under the Teva agreement was that supplied by Servier, only the efficiency gains linked to that distribution could have been taken into account for the purposes of an exemption under Article 101(3) TFEU. According to Teva, whether the perindopril was manufactured by Servier or by a third party, Teva’s market entry would have been pro-competitive. Teva submits in that regard that the analysis carried out by the General Court in the present case contradicts that carried out in the judgment of 12 December 2018, Krka v Commission (T‑684/14, EU:T:2018:918, paragraph 243). 127 Second, it argues that the General Court asserts, in paragraph 341 of the judgment under appeal, that, since Servier did not supply Teva with perindopril before the expiry of its patents, the Teva agreement could not be regarded as having allowed that undertaking to enter the market early. However, Teva reiterates that that assertion is incorrect since the General Court ignored the fact that the Teva agreement allowed it to enter the market without any risk of infringing the 339, 340 and 341 patents. 128 The Commission disputes those arguments. Findings of the Court 129 The applicability of the exemption provided for in Article 101(3) TFEU is subject to the fulfilment of four cumulative requirements laid down in that provision. Those requirements are, first, that the arrangement concerned must contribute to improving the production or distribution of the goods or services in question, or to promoting technical or economic progress; second, that consumers must be allowed a fair share of the resulting benefit; third, that it must not impose on the participating undertakings restrictions that are not indispensable; and, fourth, that it must not afford them the possibility of eliminating competition in respect of a substantial part of the products or services in question (judgments of 23 January 2018, F. Hoffmann-La Roche and Others, C‑179/16, EU:C:2018:25, paragraph 97, and of 18 January 2024, Lietuvos notarų rūmai and Others, C‑128/21, EU:C:2024:49, paragraph 100). 130 It is apparent from paragraph 334 of the judgment under appeal that the Commission, in the decision at issue, focused its examination of the Teva agreement under Article 101(3) TFEU on the first of those requirements. In that regard, the Commission rejected the efficiency gains alleged by Teva relating to the early market entry of that undertaking on the ground that, even if the Teva agreement had in fact allowed such entry, that entry would have occurred at the same time as that of the other manufacturers of generic medicines. According to the decision at issue, Teva failed to explain, in such a situation, what efficiencies would have flowed from Teva distributing Servier’s perindopril. 131 On the grounds set out in paragraphs 327 to 344 of the judgment under appeal, the General Court rejected Teva’s complaints in respect of that assessment in the decision at issue. 132 The General Court rejected Teva’s claim that the possibility of it entering the perindopril market in the United Kingdom before the end of the period of protection of Servier’s patents was an efficiency gain. It held, in paragraph 340 of the judgment under appeal, referring to its examination of the plea at first instance relating to the restriction of competition by object, in paragraph 274 of that judgment, that the Teva agreement prevented Teva from entering that market. 133 In addition, the General Court noted, first, in paragraph 341 of the judgment under appeal, that, even if the Teva agreement had in fact allowed Teva thus to enter that market, it would have done so as a non-exclusive distributor of a generic version of the perindopril produced by Servier. In those circumstances, the General Court held that the Commission had validly been entitled to consider that ‘only qualitative efficiency gains linked to the broader or more efficient distribution of [Servier’s] perindopril’ by Teva could be taken into consideration for the purposes of an exemption under Article 101(3) TFEU. However, Teva did not dispute that it had not established the existence of such qualitative efficiency gains. Second, the General Court also held in paragraph 341 of that judgment that Servier did not supply Teva with perindopril before the validity of its patents came to an end, with the result that it could not be considered that the Teva agreement allowed Teva to enter the market during the period of protection provided for by those patents. 134 By its first complaint, Teva submits that that assessment is incorrect, since the pro-competitive effect of Teva’s entry to the perindopril market in the United Kingdom does not depend on whether that perindopril was produced by Servier or by Teva. By its second complaint, which should be addressed at the same time as the first complaint, Teva merely reiterates, in essence, that the Teva agreement allowed it to enter the perindopril market in the United Kingdom before the expiry of Servier’s patents. 135 In that regard, it should be noted at the outset that, according to settled case-law, it is for the party which has restricted competition in a manner contrary to Article 101(1) TFEU and which is relying on an exemption under Article 101(3) TFEU to demonstrate, initially, by means of convincing arguments and evidence, that all the requirements referred to in paragraph 129 of the present judgment are fulfilled (see, to that effect, judgment of 21 December 2023, Royal Antwerp Football Club, C‑680/21, EU:C:2023:1010, paragraph 120 and the case-law cited). 136 As has been held in paragraph 115 of the present judgment, factual assessments in the light of EU law, such as those made by the General Court in the judgment under appeal and referred to in paragraph 99 of the present judgment, do not, save where the facts or evidence have been distorted, which has not been alleged in the present case, constitute a point of law which is subject, as such, to review by the Court of Justice in appeal proceedings. In the present case, it is apparent from the abovementioned assessments that the provisions of the Teva agreement enabled Servier, in practice, to prevent Teva from marketing, in the United Kingdom, without its consent, a generic version of the perindopril composed of the alpha crystalline form of erbumine. In the light of those assessments, the General Court did not err in law in holding, in paragraphs 339 to 341 of the judgment under appeal, that Teva had not established that its possible entry to the perindopril market in the United Kingdom as a distributor of Servier’s perindopril, on the basis of the Teva agreement, would give rise to an efficiency gain satisfying the first requirement referred to in paragraph 129 of the present judgment, since such an entry would not be capable of improving the distribution of the specific product marketed by Teva. 137 As regards the question whether the General Court’s assessment, in paragraph 341 of the judgment under appeal, of the efficiency gains arising from the Teva agreement contradicts the assessment made by the General Court in the judgment of 12 December 2018, Krka v Commission (T‑684/14, EU:T:2018:918), with regard to the pro-competitive effects of the licence agreement concluded between Servier and Krka, it should be recalled, in accordance with what has been stated in paragraph 123 of the present judgment, that, for the reasons set out in paragraphs 341 to 412 of the judgment delivered today in Commission v Krka (C‑151/19 P), the Court of Justice, after upholding the Commission’s appeal in part, definitively rejected Krka’s line of argument challenging the characterisation of agreements concluded with Servier as a restriction of competition by object, inter alia the line of argument by which Krka relied on the pro-competitive effects of the licence agreement concluded with Servier. In the absence of the alleged contradiction, Teva’s first complaint must be rejected. 138 As regards the second complaint, since, as has been held in paragraph 136 of the present judgment, Teva did not, in any event, establish that its possible entry to the perindopril market in the United Kingdom on the basis of the Teva agreement would give rise to an efficiency gain satisfying the first requirement referred to in paragraph 129 of the present judgment, it is sufficient to observe that the fact, alleged in the context of that second complaint, that such an entry would occur in advance of the date of expiry of Servier’s patents, even if it were established, would not support the conclusion that the General Court erred in law as regards its assessment relating to that requirement. 139 The third ground of appeal must therefore be rejected. 140 Since none of the grounds put forward in support of the appeal has been upheld, the appeal must be dismissed in its entirety. Costs 141 Under Article 138(1) of the Rules of Procedure of the Court of Justice, which applies to appeal proceedings by virtue of Article 184(1) of those rules, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. 142 Since the Commission has applied for costs to be awarded against Teva and the latter has been unsuccessful, Teva must be ordered to bear its own costs and to pay those incurred by the Commission. 143 Article 140(1) of the Rules of Procedure, which applies to appeal proceedings by virtue of Article 184(1) thereof, provides that the Member States and institutions which have intervened in the proceedings are to bear their own costs. 144 Consequently, the United Kingdom must bear its own costs. On those grounds, the Court (First Chamber) hereby: 1. Dismisses the appeal; 2. Orders Teva UK Ltd, Teva Pharmaceuticals Europe BV and Teva Pharmaceutical Industries Ltd to bear their own costs and to pay those incurred by the European Commission; 3. Orders the United Kingdom of Great Britain and Northern Ireland to bear its own costs. Arabadjiev Lenaerts Xuereb Kumin Ziemele Delivered in open court in Luxembourg on 27 June 2024. A. Calot Escobar A. Arabadjiev Registrar President of the Chamber * Language of the case: English.