OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 4 June 2020 ( 1 )

Case C‑591/16 P

H. Lundbeck A/S and

Lundbeck Ltd

v

European Commission

(Appeal — Competition — Agreements, decisions and concerted practices (Article 101 TFEU and Article 53 of the Agreement on the European Economic Area) — Antidepressant medicinal products — Agreements in settlement of patent disputes entered into by a patent-holding originator undertaking and manufacturers of generic medicinal products — Concept of potential competition — Concept of restriction of competition by object — Fines — Foreseeability of the anticompetitive nature of conduct — Sales to be taken into account for the purpose of calculating the amount of the fine)

Table of contents

I. Introduction II. Background A. Facts and administrative procedure 1. Product and patents in dispute 2. Agreements between Lundbeck and the generic manufacturers 3. Commission decision B. Procedure before the General Court III. Procedure before the Court of Justice and forms of order sought by the parties IV. Assessment A. Existence of an infringement of Article 101 TFEU (first to fourth grounds of appeal) 1. Existence of potential competition between Lundbeck and the generic manufacturers (fourth ground of appeal) (a) Alleged existence of legal barriers to entry to the citalopram market arising from Lundbeck’s patents (b) Alleged errors made by the General Court in its assessment of the evidence adduced by the Commission to demonstrate the existence of potential competition between Lundbeck and the generic manufacturers (c) The appellants’ arguments claiming that there was no potential competitive relationship between Lundbeck and each of the generic manufacturers concerned 2. Classification of the agreements between Lundbeck and the generic manufacturers as restrictions of competition by object (first to third grounds of appeal) (a) Classification of agreements not exceeding the scope of a patent as restrictions of competition by object (first ground of appeal) (1) Asymmetry of risks between Lundbeck and the generic manufacturers (2) The ‘counterfactual scenario’ (3) Absence of no-challenge clauses in the agreements at issue (4) Allegation that it was novel for a penalty to be imposed in respect of patent dispute settlements (5) Conclusion (b) Alleged error in that the General Court found that five of the six agreements went beyond the scope of Lundbeck’s patents (second ground of appeal) (c) Alleged error in classifying some of the agreements at issue as restrictions of competition by object even if they are assumed to go beyond the scope of the patents in dispute (third ground of appeal) B. Fines (fifth and sixth grounds of appeal) 1. Confirmation of the fines by the General Court (fifth ground of appeal) (a) The ‘standard for culpability’ required for the imposition of a fine (b) Whether Lundbeck could not have been unaware of the anticompetitive nature of its conduct (c) Principles of legal certainty and non-retroactivity 2. Confirmation by the General Court of the fine calculations (sixth ground of appeal) (a) Sales by Lundbeck taken into account for the purpose of calculating the amount of the fines (b) The gravity percentage applied for the purpose of calculating the amount of the fines C. Conclusion V. Costs VI. Conclusion

I. Introduction

1. A certain degree of tension is often inevitable between competition and intellectual property rights since, in order to encourage research and development, those rights grant certain exclusive privileges to inventors. That principle also applies to patent law. However, in order to promote technical progress and economic development in general, inventions must, after a period of time, fall into the public domain once patent rights expire so that everyone can make use of them.

2. That latter aspect is of particular importance in the field of medicinal products, where the promotion of research by originator undertakings must be reconciled with the public interest in the marketing of generic medicinal products, which ease the financial burden on health insurance funds and help avoid unnecessary tests on humans and animals. ( 2 )

3. While it is true that, during the validity of a patent, the proprietor has the exclusive right to use his or her invention with a view to manufacturing products and putting them into circulation for the first time as well as the right to oppose infringements, ( 3 ) a patent does not afford protection against actions brought to challenge its validity. ( 4 ) Therefore, patent disputes between competitors are part of normal competition in sectors where such exclusive rights exist, ( 5 ) and it is common practice to resolve or avert such disputes by means of settlement agreements.

4. As the European Commission itself acknowledges in the decision at issue in these proceedings, ( 6 ) such patent dispute settlements are in no way unlawful per se and may even be in the public interest as a means of conserving resources and encouraging economic development. However, patent dispute settlements become problematic when they clash with the rules of competition law because their true aim is not to resolve a patent dispute, but to forestall or delay the market entry of potential competitors.

5. In the Commission’s view, which was confirmed by the General Court in the judgment under appeal, ( 7 ) that was precisely the case in relation to six agreements concerning the antidepressant medicinal product citalopram, entered into by the originator undertaking Lundbeck and several manufacturers of generic medicinal products. In its appeal, Lundbeck challenges that analysis and argues that it is based on a series of errors of law and that the agreements at issue were not such as to attract a penalty under competition law.

6. The present case thus arises in the context of the case culminating in the judgment of 30 January 2020, Generics (UK) and Others, ( 8 ) in which the Court set out the criteria for determining whether an agreement in settlement of a dispute between the holder of a pharmaceutical patent and a manufacturer of generic medicinal products is contrary to EU competition law, and the ‘Servier’ cases, currently pending before the Court, in which the Commission found that agreements in settlement of patent disputes infringed EU competition law. ( 9 )

II. Background

A. Facts and administrative procedure

7. H. Lundbeck A/S is a company governed by Danish law which controls a group of companies, including Lundbeck Ltd, established in the United Kingdom (taken together, ‘Lundbeck’ or ‘the appellants’), specialising in the development and distribution of pharmaceuticals for the treatment of disorders in the central nervous system, including depression. ( 10 )

1. Product and patents in dispute

8. Lundbeck’s products include an antidepressant containing the active pharmaceutical ingredient (‘API’) citalopram. Lundbeck first obtained patents for that API itself as well as for alkylation and cyanation manufacturing processes. As regards the European Economic Area (‘EEA’), the protection afforded by those original patents and, where appropriate, the supplementary protection certificates, ( 11 ) expired between 1994 (for Germany) and 2003 (for Austria). In the specific case of the United Kingdom, the original patents expired in January 2002. ( 12 )

9. Over time, Lundbeck developed other, more effective, processes for the production of citalopram, in respect of which it applied for and often obtained patents in several EEA countries as well as through the Patent Cooperation Treaty of the World Intellectual Property Organisation (WIPO) and from the European Patent Office (EPO). In particular, between 2001 and 2003, Lundbeck obtained patents for the production of citalopram by processes using amide and iodo, respectively, and for the production of citalopram by crystallisation and film distillation (‘the patents in dispute’). ( 13 )

10. Lastly, Lundbeck planned to launch a new antidepressant medicinal product, Cipralex, based on the API known as escitalopram (or S-citalopram), by the end of 2002 or the beginning of 2003. That new medicinal product was designed for the same patients as those who could be treated by Lundbeck’s patented medicinal product Cipramil, based on the citalopram API. The escitalopram API was protected by patents valid until at least 2012. ( 14 )

2. Agreements between Lundbeck and the generic manufacturers

11. In 2002, Lundbeck entered into six agreements concerning citalopram (‘the agreements at issue’) with four undertakings active in the production or sale of generic medicinal products (‘the generic manufacturers’).

12. In the first place, Lundbeck entered into a first agreement covering the territory of the United Kingdom with the English undertaking Generics UK Ltd, controlled by Merck KGaA through Merck Generics Holding GmbH (taken together, ‘Merck (GUK)’), which came into effect on 24 January 2002 and expired on 1 November 2003. That agreement essentially stipulated that Merck (GUK) would deliver its stock of generic citalopram to Lundbeck and that Lundbeck would sell citalopram to Merck (GUK) for resale in the United Kingdom and make significant value transfers to Merck (GUK). In total, over the entire term of that agreement, Lundbeck transferred the equivalent of EUR 19.4 million to Merck (GUK). ( 15 )

13. Furthermore, Lundbeck entered into a second agreement with Merck (GUK) covering the EEA, which came into effect on 22 October 2002 and expired on 22 October 2003. Under that second agreement, Lundbeck was to pay Merck (GUK) the sum of EUR 12 million, in exchange for which the latter undertook not to sell or supply pharmaceutical products containing citalopram in the territory of the EEA (with the exception of the United Kingdom) and to use all reasonable efforts to ensure that Natco Pharma Ltd, the producer of the API of its citalopram, ceased to supply citalopram and products containing citalopram in the EEA during the term of the agreement. ( 16 )

14. In the second place, Lundbeck entered into a first agreement concerning the territory of the United Kingdom with Arrow Generics Ltd and Resolution Chemicals Ltd, both controlled by Arrow Group A/S (taken together, ‘Arrow’), which came into effect on 24 January 2002 and expired on 20 October 2003. That agreement essentially stipulated that Arrow would not make, dispose of or use the citalopram that was considered by Lundbeck to infringe its intellectual property rights, in exchange for value transfers from Lundbeck in the amount of 6.8 million pounds sterling (GBP), and would deliver its stock of citalopram to Lundbeck. ( 17 )

15. Furthermore, Lundbeck entered into a second agreement with Arrow concerning the territory of Denmark, which came into effect on 3 June 2002 and expired on 1 April 2003. Under that second agreement, Arrow agreed to cease any importation, manufacture, production, sale or other marketing of products containing the citalopram that, according to Lundbeck, infringed the latter’s intellectual property rights, in exchange for a value transfer from Lundbeck of 500000 United States dollars (USD), and Lundbeck agreed to purchase Arrow’s stock of citalopram for USD 147000. ( 18 )

16. In the third place, Lundbeck entered into an agreement with Alpharma ApS, which later became Xellia Pharmaceuticals ApS and was controlled by Alpharma Inc., itself controlled by A.L. Industrier AS (taken together, ‘Alpharma’). That agreement came into effect on 22 February 2002 and expired on 30 June 2003. It concerned all EU Member States, Norway and Switzerland, and essentially stipulated that Alpharma and its subsidiaries would cancel, cease and desist from any importation, production or sale of pharmaceutical products containing citalopram, in exchange for the transfer of USD 12 million from Lundbeck, and that Alpharma would deliver its stock of generic citalopram to Lundbeck. ( 19 )

17. Finally, in the fourth place, Lundbeck entered into an agreement with Ranbaxy Laboratories Ltd and Ranbaxy (UK) Ltd (taken together, ‘Ranbaxy’), which came into effect on 16 June 2002 and expired on 31 December 2003. It concerned the territory of the EEA and essentially stipulated that Ranbaxy would cancel, cease and desist from any manufacture or sale of citalopram, in exchange for the payment of USD 9.5 million by Lundbeck, and that Lundbeck would sell citalopram tablets to Ranbaxy with a discount of 40% on the ex-factory price for the purpose of their sale on the UK market. ( 20 )

3. Commission decision

18. In the decision at issue, the Commission found that the purpose of the agreements at issue was to exclude the generic manufacturers from the market for the agreed period of time by means of payments made to them by Lundbeck. Accordingly, the Commission classified those agreements as restrictions of competition by object and imposed fines on Lundbeck and the other parties thereto.

19. Since, as regards Lundbeck, the Commission found that the six agreements had given rise to four separate infringements, it received four separate fines. The fine imposed on Lundbeck A/S, totalling EUR 93766000, of which EUR 5306000 jointly and severally with Lundbeck Ltd, can be broken down as follows: – EUR 19893000, of which EUR 5306000 jointly and severally with Lundbeck Ltd, for the two agreements entered into with Merck (GUK), which were considered to have constituted a single and continuous infringement lasting from 24 January 2002 until 1 November 2003; – EUR 12951000 for the two agreements entered into with Arrow, which were considered to have constituted a single and continuous infringement lasting from 24 January 2002 until 20 October 2003; – EUR 31968000 for the agreement entered into with Alpharma, which was considered to be an infringement lasting from 22 February 2002 until 30 June 2003; and – EUR 28954000 for the agreement entered into with Ranbaxy, which was considered to be an infringement lasting from 16 June 2002 until 31 December 2003. ( 21 )

B. Procedure before the General Court

20. By document of 30 August 2013, Lundbeck brought an action before the General Court for the annulment of the decision at issue and, in the alternative, for the cancellation or reduction of the fines imposed on it. Before the General Court, Lundbeck was supported in its form of order by the European Federation of Pharmaceutical Industries and Associations (‘EFPIA’).

21. By the judgment under appeal, the General Court dismissed the action in its entirety and ordered Lundbeck to bear its own costs and to pay the Commission’s costs, while EFPIA was ordered to bear its own costs.

III. Procedure before the Court of Justice and forms of order sought by the parties

22. By document of 18 November 2016, Lundbeck lodged an appeal against the judgment of the General Court, again supported in its form of order by EFPIA.

23. At the same time, the other addressees of the decision at issue also lodged appeals against the judgments of the General Court dismissing their actions against that decision, ( 22 ) and it was decided that all those appeals would be dealt with in a coordinated manner.

24. By order of the President of the Court of 13 December 2016, Lundbeck v Commission, ( 23 ) the confidential version of the decision at issue was given confidential treatment in relation to EFPIA.

25. By document of 10 March 2017, the United Kingdom of Great Britain and Northern Ireland applied for leave to intervene in the present appeal proceedings in support of the form of order sought by the Commission. By order of the President of the Court of 5 July 2017, Lundbeck v Commission, ( 24 ) the United Kingdom was granted leave to intervene and the confidential version of the decision at issue was given confidential treatment in relation to that Member State.

26. The written part of the procedure in the present case was closed on 13 November 2017, after all the written pleadings of the various parties had been lodged. Taken as a whole, those pleadings comprised almost 300 pages excluding annexes, the judgment under appeal and the decision at issue, and thus far exceeded, particularly as regards the pleadings of Lundbeck and the Commission, the length recommended in the Practice Directions to parties concerning cases brought before the Court.

27. By decision of the Court of 27 November 2018, this case was assigned to the Fourth Chamber which is to adjudicate following a joint hearing with the other five appeals brought against the judgments of the General Court dismissing the actions against the decision at issue. ( 25 )

28. Lundbeck claims that the Court should: – set aside the judgment under appeal in its entirety or in part; – annul the decision at issue in so far as it concerns Lundbeck or, in the alternative, annul the fines imposed on it or, in the further alternative, substantially reduce those fines; – order the Commission to pay the legal and other costs incurred by Lundbeck in the appeal proceedings and the proceedings before the General Court; – if necessary, remand the case to the General Court for reconsideration in accordance with the Court’s judgment; – take any other measures that the Court considers appropriate.

29. EFPIA contends that the Court should: – allow the appeal in its entirety or in part; – if necessary, remand the case to the General Court for reconsideration in accordance with the Court’s judgment; – order the Commission to pay the costs incurred by EFPIA in the appeal proceedings and the proceedings before the General Court.

30. The Commission contends that the Court should: – dismiss the appeal in its entirety; – order the appellants to pay the costs.

31. The United Kingdom contends that the Court should: – dismiss Lundbeck’s appeal in its entirety.

32. The parties presented oral argument and answered the questions put to them by the Court at the joint hearing on 24 January 2019.

33. On 30 January 2020, the Court delivered its judgment in Generics (UK) and Others. ( 26 ) On 7 February 2020, on the basis of Article 62(1) of the Rules of Procedure of the Court, the parties to the present proceedings were given the opportunity to provide written comments on the possible impact of that judgment on the grounds of appeal raised in the instant case relating to the existence of potential competition between Lundbeck and the generic manufacturers party to the agreements at issue and the classification of those agreements as restrictions of competition by object. The answers to that question were received by the Court on 6 March 2020.

IV. Assessment

34. By their grounds of appeal, the appellants challenge the General Court’s findings both as to the existence of an infringement of Article 101 TFEU (A) and as to the appropriateness of the fine imposed by the Commission (B).

A. Existence of an infringement of Article 101 TFEU (first to fourth grounds of appeal)

35. Concerning the existence of an infringement of Article 101 TFEU, the appellants submit, by their first to third grounds of appeal, that the General Court erred in law in confirming the Commission’s finding that the agreements at issue amounted to restrictions of competition by object. By their fourth ground of appeal, the appellants assert that the General Court wrongly upheld the Commission’s assessment that, at the time the agreements were concluded, there was a potential competitive relationship between Lundbeck and the generic manufacturers.

36. Since Article 101 TFEU applies solely to sectors open to competition, the classification of an agreement between undertakings as having the object of restricting competition presupposes that there is competition which may be restricted. ( 27 ) Accordingly, in this Opinion I will first deal with the appellants’ ground of appeal relating to the existence of potential competition between Lundbeck and the generic manufacturers (1), before turning to the grounds relating to the classification of the agreements at issue as restrictions of competition by object (2).

1. Existence of potential competition between Lundbeck and the generic manufacturers (fourth ground of appeal)

37. The fourth ground of appeal is divided into several parts.

38. First, the appellants submit that the General Court erred in law by disregarding the fact that Lundbeck’s patents constituted legal barriers to entry to the citalopram market, which prevented there being any competitive relationship between Lundbeck and the generic manufacturers (see (a) below).

39. Next, the appellants claim that the General Court erred in its assessment of the evidence adduced by the Commission to demonstrate the existence of potential competition between Lundbeck and those manufacturers (see (b) below).

40. Lastly, the appellants put forward arguments intended to show that the General Court was wrong to confirm the Commission’s findings as to the existence of a potential competitive relationship between Lundbeck and each of the generic manufacturers concerned (see (c) below).

(a) Alleged existence of legal barriers to entry to the citalopram market arising from Lundbeck’s patents

41. According to the appellants and EFPIA, the General Court erred in law by failing to acknowledge that Lundbeck’s patents gave rise, on account of the presumption of validity they enjoy, to legal barriers precluding the market entry of the generic manufacturers and thus the existence of any potential competition between Lundbeck and those manufacturers. The possibility of an ‘at risk’ launch of a generic product on the market, which may result in an action for infringement being brought by the manufacturer of the originator medicinal product, arguing that patent rights still covering the latter preclude the market entry of the generic product, cannot, claim the appellants, be regarded as a real and concrete possibility of joining the market. Thus, where exclusive rights are involved, it is necessary to show that undertakings which may be classed as potential competitors have had the opportunity to enter the market lawfully, that is to say, without infringing any patent rights of undertakings present on the market. Therefore, by not requiring the Commission to prove that the generic manufacturers could have entered the market without infringing Lundbeck’s patents, the General Court disregarded the rules relating to the burden of proof.

42. The Commission contends, as a preliminary point, that some of the patents in dispute had not yet been granted and were still at the application stage or the stage of examination by the competent authorities when a number of the agreements at issue were concluded. ( 28 )

43. However, there is no need to examine that objection further since, in any event, the appellants’ line of argument that the patents in dispute constituted insurmountable legal barriers to market entry for the generic manufacturers cannot succeed, even if those patents had already been granted when the agreements at issue were concluded.

44. Thus, in the judgment under appeal, the General Court rejected Lundbeck’s arguments in that respect, finding, inter alia, that they were based on the incorrect premiss that there was no doubt that the patents in dispute were valid and had been infringed by each of the competing generic products. The General Court thus stated that, whilst patents are indeed presumed valid until they are expressly revoked or invalidated by a competent authority or court, that presumption of validity cannot be equated with a presumption of illegality of generic products validly placed on the market which the patent holder deems to be infringing the patent. Accordingly, an at risk entry is not unlawful in itself and it would on the contrary have been for Lundbeck to prove, in the event that generics entered the market, that those generics infringed one of its process patents and to defend itself against any claims of invalidity of those patents raised by the generic manufacturers. Therefore, the General Court held that the Commission did not err in finding that Lundbeck’s process patents did not constitute insurmountable barriers for the generic manufacturers. ( 29 )

45. Contrary to the appellants’ arguments, those findings are not vitiated by any error of law.

46. It is indeed true that, in order to determine whether an undertaking outside a given market is a potential competitor of the undertakings established on that market, it is necessary to examine whether the relevant market has insurmountable barriers to entry ( 30 ) and whether the undertakings that may be classed as potential competitors of the undertakings established on that market have real and concrete possibilities of competing with the latter. ( 31 )

47. However, as the Court recently found in its judgment in Generics (UK) and Others, in a situation such as the present one, involving an assessment of the potential competitive relationship between, on the one hand, a manufacturer of originator medicinal products holding a process patent for the production of an active substance in the public domain, and, on the other, manufacturers of generic medicinal products who are taking steps to enter the market of the medicinal product containing that active substance, the existence of a patent protecting the manufacturing process of that substance cannot, as such, be regarded as an insurmountable barrier.

48. Thus, the existence of such a process patent does not mean that a manufacturer of generic medicinal products who has in fact a firm intention and an inherent ability to enter the market, and who, 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 the originator medicinal product concerned. ( 32 )

49. The existence of a patent for a medicinal product does not constitute an insurmountable barrier to market entry for a manufacturer of a generic version of that product because, among other things, the presumption of validity of patents is merely the automatic consequence of the registration of a patent and its subsequent issue to its holder, and therefore sheds no light on the outcome of any dispute relating to the validity of that patent. ( 33 ) Accordingly, the appellants are wrong to claim that the possibility of the future invalidation of a patent is irrelevant for the purpose of establishing a potential competitive relationship between the holder and other economic operators.

50. It is indeed true that, as the appellants point out, when granted by a public authority, an intellectual property right is normally assumed to be valid and an undertaking’s ownership of that right is assumed to be lawful. ( 34 ) Consequently, patents are assumed valid until they are expressly revoked or invalidated by a competent authority or court. Nevertheless, such a presumption of validity cannot, as the General Court correctly held in the judgment under appeal, be equated with a presumption of illegality of generic products validly placed on the market which the patent holder deems to be infringing that patent. ( 35 )

51. The uncertainty as to the validity of patents protecting an originator medicinal product and as to whether generic versions of that product infringe those patents is, on the contrary, a fundamental characteristic of competitive relationships in the pharmaceutical sector. ( 36 ) Disputes and legal proceedings in that context thus constitute evidence of the existence of a competitive relationship between the operators concerned. ( 37 )

52. Thus, as the Court made clear in the case-law to which the General Court rightly referred in the judgment under appeal, ( 38 ) the purpose of a patent is indeed to ensure that the proprietor has the exclusive right to use an invention with a view to manufacturing products and putting them into circulation for the first time, as well as the right to oppose infringements. ( 39 ) However, that purpose cannot be interpreted as also affording protection against actions brought in order to challenge the patent’s validity, in view of the fact that it is in the public interest to eliminate obstacles to economic activity which may arise where a patent was granted in error. ( 40 )

53. Therefore, it is an integral part of patent law that, despite the presumption that patents are valid, there can be certainty as to that validity and as to whether competing products infringe a patent only once those matters have been examined by the competent authorities and courts.

54. Against that background, disputes and legal proceedings between manufacturers of originator medicinal products and manufacturers of generic versions of those products often form part of the preparations for the market entry of generics. Moreover, since, in order to obtain a marketing authorisation (‘MA’) for a generic medicinal product, it is not necessary to show that that product does not infringe any patent rights of the manufacturer of the originator medicinal product, ( 41 ) uncertainty as to the validity of the patent and as to whether the generic medicinal product infringes it may persist even after the market entry of such a product.

55. Consequently, it cannot be argued that an at risk entry of a generic product to the market, which may result in an action for infringement being brought by the holder of a patent for the originator medicinal product, does not constitute a real and concrete possibility for a generic manufacturer to penetrate the market where patent rights over the originator medicinal product still exist.

56. As the General Court rightly pointed out in the judgment under appeal, ( 42 ) that is all the more true in a situation such as that of the present case, where the patents in dispute are not compound patents protecting the actual API of the originator medicinal product, but rather process patents protecting certain methods of manufacturing that API. Consequently, unlike a compound patent, those process patents — irrespective of whether or not they are valid — do not prevent the generic manufacturers from entering the market with the relevant API manufactured under other processes. In other words and conversely, in a situation where the patent for a medicinal product’s API has expired and an originator undertaking holds only process patents, the entry of generic versions of the medicinal product in question infringes solely the patent rights of that originator if it is established that the process patents at issue are both valid and infringed by each of the potential entrants. ( 43 )

57. In those circumstances, it cannot be argued, as the appellants suggest, that in order to demonstrate the existence of a competitive relationship between the holder of a patent for a medicinal product and a manufacturer of a generic version of that product, the Commission is ‘required to affirmatively prove’ that the generic product in question does not infringe the patent concerned, that is to say, in the present case, that the processes used by the generic manufacturers to produce citalopram did not infringe the patents in dispute held by Lundbeck.

58. It is not for the Commission, by assessing the strength of the patents concerned or whether generic products infringe them, to make predictions concerning the outcome of disputes between patent holders and generic manufacturers, in order to assess the competitive relationships between those operators for the purpose of applying competition law. As the General Court summarised, in essence, in paragraph 159 of the judgment under appeal, requiring the Commission to prove that the generic manufacturers would certainly or very probably have been successful in patent proceedings with Lundbeck and would certainly or very probably have entered the market with their products would, moreover, be to confuse actual and potential competition and to ignore the fact that Article 101 TFEU also precisely protects the latter. ( 44 )

59. Admittedly, a competition authority should not disregard any question relating to patent law which is capable of influencing the finding that such a competitive relationship exists, since any patents protecting an originator medicinal product or one of its manufacturing processes undeniably form part of the economic and legal context of the competitive relationships between the holders of those patents and the manufacturers of generic medicinal products. However, the assessment of the rights conferred by a patent, to be carried out by the competition authority, must not consist of an examination of the strength of the patent or of the likelihood of a dispute between the patent holder and a manufacturer of generic medicinal products being brought to an end with a finding that the patent is valid and has been infringed. That assessment must rather have regard to the question of whether, notwithstanding the existence of that patent, the manufacturer of generic medicinal products has real and concrete possibilities of entering the market at the relevant time. ( 45 )

60. To that effect, account must be taken not only of the fact that a process patent does not prevent the market entry of products manufactured under other processes, but also, inter alia, of the following: that the uncertainty as to the validity of patents covering medicinal products is a fundamental characteristic of the pharmaceutical sector; that the presumption of validity of a patent for an originator medicinal product does not amount to a presumption that a generic version of that product properly placed on the market is illegal; that a patent does not guarantee protection against actions seeking to contest its validity; and that such actions, and, in particular, the ‘at risk’ launch of a generic medicinal product, and the consequent court proceedings, commonly take place in the period before or immediately after the market entry of such a generic medicinal product. ( 46 )

61. It follows that continued uncertainty as to the lawfulness of the marketing of a generic medicinal product under patent law in no way precludes a finding that the manufacturer of that generic product has real and concrete possibilities of entering the market in question and that there is, therefore, a potential competitive relationship between that manufacturer and the holder of a patent for the originator medicinal product for the purpose of the application of Article 101 TFEU.

62. Consequently, the appellants cannot argue that the existence of patents protecting a particular medicinal product constitutes a legal barrier excluding all competition in the same way as exclusive rights recognised as constituting such barriers in previous cases, ( 47 ) as, moreover, the General Court correctly explained in the judgment under appeal, ( 48 ) contrary to the appellants’ assertions.

63. Similarly, paragraph 29 of the Commission’s Guidelines on the application of Article 101 of the TFEU to technology transfer agreements, ( 49 ) relied on by the appellants, indeed states that the parties to an agreement are not considered to be competitors when a technology right cannot be exploited without infringing another valid technology right. However, that same paragraph states that, in practice, there will be cases where there is no certainty whether a particular technology right is valid and infringed, which is precisely the case with patents such as those at issue in this case.

64. It follows from the foregoing that the General Court did not err in finding that the patents in dispute did not constitute insurmountable barriers to the entry of the generic manufacturers to the citalopram market and that, in order to demonstrate the existence of a potential competitive relationship between Lundbeck and those manufacturers, the Commission was not required to show that the latter were able to enter the market without infringing any of Lundbeck’s patent rights.

65. The first part of the fourth ground of appeal must therefore be rejected.

(b) Alleged errors made by the General Court in its assessment of the evidence adduced by the Commission to demonstrate the existence of potential competition between Lundbeck and the generic manufacturers

66. By the second and third parts of their fourth ground of appeal, which should be considered together, the appellants claim that the General Court erred in its assessment of the evidence purporting to show the existence of potential competition between Lundbeck and the generic manufacturers when the agreements at issue were concluded.

67. The Commission contends that, by that line of argument, the appellants seek to call into question the General Court’s findings of fact and to have the Court of Justice re-examine the evidence submitted to the General Court, which is inadmissible in the context of an appeal.

68. That objection must, however, be qualified.

69. Thus, it is indeed true that the appellants put forward a number of arguments relating to the General Court’s appraisal of the facts that are inadmissible at the appeal stage, save where the clear sense of the evidence is distorted, which in this case is neither alleged nor apparent. ( 50 )

70. Nevertheless, it must be noted that the nub of the appellants’ arguments concerns the methodology applied by the Commission and the General Court to arrive at the finding that there was potential competition between Lundbeck and the generic manufacturers when the agreements at issue were concluded, which is moreover illustrated by the Commission’s own responses to the appellants’ claims. Accordingly, these are points of law subject to review by the Court on appeal.

71. The appellants thus assert that the General Court was wrong to endorse the Commission’s approach of relying primarily on evidence of Lundbeck’s subjective assessment of the strength of its patents in order to conclude that there was potential competition between Lundbeck and the generic manufacturers, thereby failing to take account of a great deal of objective evidence capable of demonstrating that no such potential competition existed.

72. In so doing, the General Court arbitrarily and citing contradictory reasons refused to take account of evidence subsequent to the conclusion of the agreements at issue when to do so would have been advantageous to the appellants, while it did not hesitate to rely on such subsequent evidence to draw conclusions to the appellants’ disadvantage.

73. That argument cannot, however, succeed.

74. The appellants’ claims are based, first, on a biased and misleading interpretation of the judgment under appeal.

75. As the Commission rightly points out, the General Court expressly stated, in paragraph 142 of the judgment under appeal, that the appellants were wrong to submit that the Commission relied ‘almost exclusively’ on subjective assessments by Lundbeck of the strength of its patents in order to establish the existence of potential competition between Lundbeck and the generic manufacturers.

76. The General Court further found, again in paragraph 142 of the judgment under appeal, that the Commission had carried out a careful examination, as regards each of the generic undertakings concerned, of the real concrete possibilities they had of entering the market, relying on objective evidence such as, in particular, the investments already made, the steps taken in order to obtain an MA and the supply contracts concluded with their API suppliers. In addition, in paragraph 144 of the judgment under appeal, the General Court also relied on other objective evidence, such as the very existence of the agreements at issue and the payments made by Lundbeck to the generic manufacturers, in order to conclude that the Commission had demonstrated to the requisite legal standard that there was potential competition between those operators.

77. Such an approach is consistent with the criteria laid down by the Court for the purpose of assessing potential competition between the holder of a patent for a medicinal product and a manufacturer of a generic version of that product.

78. In order to decide whether a potential competitive relationship exists between such operators, it is necessary to determine whether, at the time the agreements at issue were concluded, the generic manufacturer had taken sufficient preparatory steps, in administrative, judicial and commercial terms, to enable it to enter the market concerned within such a period of time as would impose competitive pressure on the manufacturer of originator medicinal products and thus establish its firm intention and inherent ability to enter that market notwithstanding the existence of process patents still held by that manufacturer. ( 51 )

79. Moreover, in order to establish the existence of potential competition between a generic manufacturer and an originator undertaking, account must be taken of the latter’s perception of the risk posed by the former to its commercial interests, as evidenced in particular by the very conclusion of an agreement between those operators and the readiness of the originator undertaking to make value transfers to the generic manufacturer in return for postponing its market entry. ( 52 )

80. Secondly, it follows from the foregoing that, in contrast to what the appellants appear to claim, the General Court’s approach of relying, among a body of evidence, also on evidence of Lundbeck’s perception of the competitive pressure exerted by the generic manufacturers, in order to find that there was a potential competitive relationship, does not entail any methodological error. On the contrary, the perception of the established operator is a factor that is relevant to the assessment of the existence of a competitive relationship between that party and an undertaking outside the market. ( 53 )

81. Accordingly, the General Court did not err when it took into account, among other things, particularly in paragraph 145 of the judgment under appeal which the appellants call into question, the fact that Lundbeck doubted the validity of its patents in order to conclude that the Commission had established to the requisite legal standard that there was potential competition between Lundbeck and the generic manufacturers.

82. Nevertheless, the appellants submit, thirdly, that the General Court erred in finding, in the light of the documents it relied on, that Lundbeck doubted the validity of its patents, when those documents had been drawn up after the conclusion of the agreements at issue. According to the appellants, the General Court thereby incorrectly, inconsistently and arbitrarily admitted evidence subsequent to the conclusion of those agreements to the disadvantage of the appellants, while it refused to take account of such subsequent evidence when adduced to the appellants’ advantage.

83. That argument is, however, also unfounded.

84. Thus, it is true that the General Court cannot endorse a finding of infringement of EU competition law where it is in possession of evidence capable of invalidating such a finding. ( 54 ) Nonetheless, it is also settled case-law that the prevailing principle under EU law is that evidence may be freely adduced and that the only relevant criterion for the purpose of assessing the evidence adduced relates to its credibility. ( 55 ) According to the generally applicable rules on evidence, the credibility and, therefore, the probative value of a document depend on its origin, the circumstances in which it came into being, the person to whom it is addressed and the soundness and reliable nature of its contents. ( 56 )

85. In the present case, the assessment of the evidence by the General Court, challenged by the appellants, is in line with those principles.

86. Thus, the General Court correctly stated, in paragraphs 139 and 141 of the judgment under appeal, that the Commission was right to rely, in order to evaluate the competitive situation between the parties to the agreements at issue when those agreements were concluded, on documents reflecting those parties’ perception of the strength of the patents in dispute at that time. It is solely on the basis of the information available to them at the time and their perception of the market at that time that they decided to adopt a particular course of conduct and concluded the agreements at issue. It is therefore correct, as the General Court also stated in paragraph 141 of the judgment under appeal, that evidence subsequent to the conclusion of the agreements at issue may be taken into account where it is capable of clarifying the parties’ positions at the relevant time.

87. Consequently, contrary to the appellants’ claims, the General Court did not err or reverse the burden of proof when it relied, in paragraph 254 of the judgment under appeal, on evidence dating from the period after the conclusion of the agreements at issue in order to find that Lundbeck had doubts about the validity of the patents in dispute, stating that Lundbeck had not provided any evidence capable of explaining how, hitherto, its assessment of that question would have been different.

88. The documents whose consideration by the General Court is called into question by the appellants were internal documents of Lundbeck. ( 57 ) They were not, therefore, documents drawn up after the conclusion of the agreements at issue for the purpose of Lundbeck’s defence in the proceeding before the Commission, which would have been a factor liable to undermine their credibility. ( 58 ) Accordingly, the General Court was able to find, without erring or reversing the burden of proof, that in the absence of evidence showing that Lundbeck had reasons to alter radically its position in that regard after the conclusion of the agreements at issue, it was credible that those documents also reflected Lundbeck’s perception of the strength of its patents at the time those agreements were concluded.

89. Furthermore, the appellants are also wrong to submit that the General Court erred where it refused to take into account, in paragraphs 136 and 143 to 146 of the judgment under appeal, the evidence adduced by Lundbeck to show that the generic manufacturers had infringed its patents, that it had been granted injunctions or other forms of interim relief in infringement proceedings, or that the EPO had confirmed the crystallisation patent in all relevant aspects in 2009.

90. Contrary to the appellants’ assertion, the General Court did not refuse to take that evidence into account solely because it was subsequent to the conclusion of the agreements at issue. The real reason for that refusal was instead that the evidence was simply not relevant for the purpose of assessing the competitive relationships between Lundbeck and the generic manufacturers at the time those agreements were concluded, even though it concerned objective facts and not subjective statements made in tempore suspecto. Thus, as the General Court rightly found, that evidence did not alter the fact that, at the time the agreements were concluded, Lundbeck perceived the generic manufacturers as a threat, all of those operators doubted the validity of the crystallisation patent, and it could not be ruled out that a national court might declare the latter invalid.

91. Contrary to the view taken by the appellants, irrespective of whether it is the case here, the fact that the perception of a given state of affairs by an operator when an agreement is concluded subsequently proves to be unfounded does not preclude that perception from being taken into account for the purpose of assessing potential competition at the relevant time. The appellants’ notion that operators might ‘wrongly’ consider themselves ‘subjectively’ to be potential competitors at a given time, when it might subsequently transpire that, ‘objectively’, they were in fact not potential competitors at that time, is unfounded. That notion fails to take account of the fact that operators necessarily act, at a given time, on the basis of their perception of affairs as they stand at that time and that those actions in turn shape the state of affairs by contributing to the existence or the absence of potential competition. Therefore, if, based on a body of evidence, it can be concluded that a potential competitive relationship exists at a given time, a subsequent event or fact cannot retrospectively invalidate the existence of such potential competition at the relevant time.

92. Moreover, and in any event, in order to conclude that there was potential competition in this case, the General Court relied on a number of factors, not only on the possibility of the crystallisation patent being found to be invalid or the perception of the parties in that regard. Likewise, it is not necessary to determine whether the General Court was right to find, in paragraph 146 of the judgment under appeal, that, at the time the agreements at issue were concluded, no interim measure had been obtained by Lundbeck, which is disputed by the appellants. In any event, the existence of such interim measures is not such as to invalidate the finding that there was potential competition between an originator undertaking and generic manufacturers against which the former had obtained such measures. ( 59 )

93. It follows from the foregoing considerations that the General Court did not commit any methodological errors in its assessment of the evidence adduced by the Commission to demonstrate the existence of potential competition between Lundbeck and the generic manufacturers at the time the agreements at issue were concluded.

94. The second and third parts of the fourth ground of appeal must therefore also be rejected.

(c) The appellants’ arguments claiming that there was no potential competitive relationship between Lundbeck and each of the generic manufacturers concerned

95. By the fourth to seventh parts of their fourth ground of appeal, the appellants submit that the General Court erred in upholding, in paragraphs 207 to 330 of the judgment under appeal, the Commission’s findings as to the existence of a potential competitive relationship between Lundbeck and each of the generic manufacturers in question in each of the territories concerned by the agreements at issue.

96. The Commission again contends that this line of argument is inadmissible because it seeks to call into question the General Court’s findings of fact and to have the Court of Justice re-examine the evidence submitted to the General Court. However, although the appellants put forward matters of a factual nature which fall to the General Court alone to examine, it is apparent from their arguments that they also take issue with a number of methodological errors allegedly made by the General Court in its consideration of the existence of potential competition between Lundbeck and each of the generic manufacturers, which is permitted at the appeal stage.

97. Nevertheless, the appellants’ arguments cannot succeed on the merits since they largely overlap with the methodological criticisms already refuted in my examination of the previous parts of this ground of appeal and, as to the remainder, are also unfounded.

98. Thus, the appellants claim, first, that the General Court was wrong to accept that there was potential competition between Lundbeck and Merck (GUK) in the United Kingdom and throughout the EEA, between Lundbeck and Arrow in the United Kingdom and Denmark, between Lundbeck and Alpharma in the EEA, and between Lundbeck and Ranbaxy in the EEA, without requiring the Commission to prove that those generic manufacturers could have entered the market with non-infringing citalopram, that is to say, citalopram manufactured using processes other than those protected by the patents in dispute held by Lundbeck. Similarly, the appellants restate the view that it would be wrong, due to the presumption of validity enjoyed by patents, to regard the possibility of challenging that validity as an expression of the existence of potential competition.

99. However, as stated above in my examination of the first part of this ground of appeal, in order to demonstrate the existence of a competitive relationship between the holder of a patent for a medicinal product and a manufacturer of a generic version of that product, the Commission is not required to prove that the generic version does not infringe the patent concerned or that the patent would have been found to be invalid in legal proceedings, and the ‘at risk’ entry of a generic product to the market as well as a challenge to the validity of a patent may, on the contrary, be regarded as real and concrete possibilities of competing with the patent holder. ( 60 )

100. Secondly, the appellants submit that the General Court was wrong to find that Merck (GUK) and Arrow were competitors of Lundbeck on the basis of subjective evidence and disregarding subsequent objective evidence. In so far as those arguments are not an attempt to have the Court of Justice re-examine factual evidence previously considered by the General Court but are rather a methodological critique of the General Court’s assessment of those facts, they have already been rejected in the examination of the second and third parts of this ground of appeal above. ( 61 )

101. Thirdly and lastly, the appellants state that the General Court was wrong to uphold the Commission’s findings as to the existence of potential competition between Lundbeck and the generic manufacturers when, in some of the countries concerned by the agreements at issue, those manufacturers had applied for or obtained MAs for their products only during the term of those agreements or after their expiry.

102. In that regard, it should be noted that the General Court conducted a detailed examination, in particular in paragraphs 168 to 182 of the judgment under appeal, of whether the fact that a generic manufacturer does not yet have an MA for the market of a certain country precludes the existence of potential competition between that manufacturer and the holder of a patent for the originator medicinal product already on sale on the relevant geographic market. In addition, in those paragraphs, the General Court analysed the situation of each of the generic manufacturers party to the agreements at issue in terms of MAs for the geographic markets concerned by those agreements.

103. The General Court thus found, first of all, that the fact that a generic manufacturer does not yet have an MA for its product in a given State does not preclude the existence of potential competition between that manufacturer and an originator undertaking already active in the relevant geographic area, since potential competition includes inter alia the activities of generic manufacturers seeking to obtain MAs as well as all the administrative and commercial steps required in order to prepare for entry to the market. ( 62 ) As the General Court also stated, although the success of the procedure to obtain an MA is indispensable in order for effective competition to exist, the path to obtaining such an MA, when it is taken by an undertaking which has for a long time been seriously preparing its market entry, constitutes potential competition. ( 63 )

104. Similarly, in paragraphs 163 and 232 of the judgment under appeal, the General Court noted that the Commission does not need to demonstrate with certainty that the entry of the generic manufacturers to the market would have taken place in each of the countries concerned by the agreements at issue before the expiry of those agreements in order to be able to establish the existence of potential competition, since potential competition does not require the demonstration of certain market entry, but merely the existence of real and concrete possibilities in that respect.

105. The appellants do not put forward any evidence to contradict those considerations, which, moreover, are not vitiated by any error of law.

106. A refusal to recognise the existence of a potential competitive relationship between the holder of a patent for a medicinal product and the manufacturer of a generic version of that product, which, moreover, has been found to have a firm intention and an inherent ability to enter the market, simply because that manufacturer does not yet have an MA, would amount to precluding any potential competition and thereby preclude competition law from being applied during the preparatory stage of the market entry of generic medicinal products, which includes the steps taken to obtain an MA. Such a position would run completely counter to the effectiveness of Article 101 TFEU, since it would mean that the preparations of future market entrants could be halted or delayed by means of exclusion agreements, so that the market entry of such operators and, therefore, actual competition could never materialise.

107. Next, the General Court found that, in the present case, not only had the generic manufacturers been seriously preparing their market entry for a long time, but they also already had MAs or had taken steps to obtain them in the short or medium term. Against that background, the General Court specifically examined the individual situation of the generic manufacturers concerned and concluded that each of them had real and concrete possibilities of obtaining MAs and thus entering the citalopram market in several EEA countries, particularly by means of the mutual recognition procedure laid down in Directive 2001/83, ( 64 ) within a sufficiently short period to exert competitive pressure on Lundbeck. ( 65 )

108. The appellants do not dispute the facts on which the General Court relied to reach that conclusion or claim that those facts were distorted; they merely assert that, in some of the countries concerned by the agreements at issue, the generic manufacturers applied for or obtained MAs for their products only during the term of those agreements or after their expiry.

109. Following that same line of argument, the appellants submit, in their answer to my question concerning the impact of the Court’s judgment in Generics (UK) and Others ( 66 ) on these proceedings, ( 67 ) that the test established by the Court in that judgment to determine whether potential competition exists between the holder of a patent for a medicinal product and generic manufacturers of that product is not satisfied here.

110. However, as has just been found, the lack of an MA is not capable of invalidating the finding that there was potential competition between Lundbeck and the generic manufacturers. This holds all the more because, as the Commission rightly pointed out at the hearing in the present case, it is impossible to ascertain whether or not it was precisely the agreements at issue themselves that dissuaded those manufacturers from expediting the steps required to obtain an MA for their products in the States concerned by those agreements.

111. Contrary to the appellants’ assertions, that is also consistent with the findings made by the Court in paragraphs 43 and 44 of Generics (UK) and Others. ( 68 ) In those paragraphs, the Court simply stated that, in order to assess whether the patent holder and a manufacturer of generic medicinal products are potential competitors of each other in circumstances similar to those in this case, it is necessary to determine whether that manufacturer had, at the relevant time, 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 patent holder. Those steps may include, inter alia, measures taken by the manufacturer to put itself in a position to have, within that period, the required MAs.

112. However, as I have just noted, the appellants do not call into question the findings of fact relied on by the General Court to conclude that the generic manufacturers had real and concrete possibilities of obtaining MAs and thus entering the citalopram market in several EEA countries within a sufficiently short period to exert competitive pressure on Lundbeck.

113. In those circumstances, the fourth to seventh parts of the fourth ground of appeal must also be rejected, as must that ground of appeal in its entirety.

2. Classification of the agreements between Lundbeck and the generic manufacturers as restrictions of competition by object (first to third grounds of appeal)

114. By their first three grounds of appeal, the appellants claim that the General Court erred in classifying the agreements at issue as restrictions of competition by object.

115. First of all, in their first ground of appeal, the appellants submit that the General Court was wrong to uphold the Commission’s assessment that those agreements would be restrictive of competition by object even if the restrictions provided for fell within the scope of the patents in dispute, that is to say, even assuming that the agreements prevented only the market entry of generic citalopram deemed potentially to infringe those patents by the parties to the agreements and not that of every type of generic citalopram. ( 69 )

116. Next, in their second ground of appeal, the appellants argue that the General Court erred in finding that five of the six agreements at issue went beyond the scope of the patents in dispute, that is to say, they prohibited the generic manufacturers from selling all types of generic citalopram, not only citalopram manufactured using the processes protected by the patents in dispute.

117. Finally, by their third ground of appeal, the appellants state that even if the Court of Justice were to find that some of the agreements at issue went beyond the scope of the patents in dispute by prohibiting the sale of all generic citalopram, the General Court was nevertheless wrong to conclude that those agreements constituted restrictions of competition by object.

(a) Classification of agreements not exceeding the scope of a patent as restrictions of competition by object (first ground of appeal)

118. According to the appellants, the General Court erred in law in holding that the agreements at issue were restrictive of competition by their very object even assuming that the restrictions they imposed on the generic manufacturers did not go beyond the scope of the patents in dispute. Thus, the appellants maintain that an agreement imposing restrictions comparable to those that the patent holder could have obtained through court rulings cannot, by its very nature, be regarded as harmful to competition. Such an agreement merely reflects the patent holder’s prerogative to keep infringing products out of the market.

119. A patent settlement agreement cannot, a fortiori, constitute a restriction of competition by object since the settlement of patent litigation is a legitimate and common means of averting disputes.

120. Lastly, the fact that the patent holder has made a significant value transfer to the generic manufacturer that signed the agreement in question cannot in that context, contrary to the General Court’s findings, be relevant for the purpose of classifying an agreement as a restriction of competition by object.

121. The General Court rejected that line of argument in the judgment under appeal, explaining that there may indeed be legitimate patent dispute settlement agreements, even those providing for payments from the patent holder to a generic manufacturer. However, according to the General Court, where such a payment is combined with an exclusion of competitors from the market or a limitation of the incentives to seek market entry, it is possible to consider that that limitation does not arise exclusively from the parties’ assessments of the strength of the patent but rather was obtained by means of that payment and therefore constitutes a buying-off of competition.

122. The General Court further recalled that, under Article 101 TFEU, each economic operator must determine independently the policy it intends to follow on the market. Accordingly, the General Court endorsed the Commission’s assessment that patent dispute settlement agreements are caught by the prohibition laid down in that provision where they contain significant reverse payments that reduce or eliminate any incentive for the generic manufacturers to enter the market for a certain period, without, however, resolving the underlying patent dispute. In such cases, the value transfer replaces the autonomous assessment, by the parties, of the strength of the originator undertaking’s patents and the assessment of their chances of succeeding in the event of litigation.

123. Consequently, the General Court held that, by concluding the agreements at issue, the appellants had exchanged the uncertainty as to the outcome of such litigation for the certainty that the generic manufacturers would not enter the market, in return for significant reverse payments, thus eliminating all competition, even potential competition, on the market, during the term of those agreements. ( 70 )

124. The General Court therefore found that the ‘scope of the patent test’, according to which contractual restrictions falling within the patent holder’s temporal, territorial and material rights do not infringe competition law, could not be upheld. In the General Court’s view, that test leads to a presumption that a generic medicinal product infringes the originator undertaking’s patent, when the question whether the generic medicinal product infringes any patents is an unresolved issue. Furthermore, according to the General Court, it is based on the premiss that any patent invoked in the context of a settlement agreement will be held valid if its validity is challenged, although there is no basis in law or in practice for that outcome.

125. Thus, according to the General Court, the fact that some restrictions contained in the agreements at issue were regarded by the Commission as potentially falling within the scope of Lundbeck’s patents meant only that the appellants could have obtained comparable restrictions through court rulings enforcing their patents, assuming that they succeeded in actions brought before the competent national courts. Therefore, even if the agreements at issue also contained restrictions potentially falling within the scope of the appellants’ patents, those agreements went beyond the specific subject matter of their intellectual property rights, which indeed included the right to oppose infringements, but not the right to conclude agreements by which actual or potential competitors were paid not to enter the market. ( 71 )

126. Contrary to the appellants’ arguments, those considerations are not vitiated by any error of law.

127. As the Court explained in its judgment in Generics (UK) and Others, ( 72 ) agreements whereby a generic manufacturer recognises the validity of a patent and gives an undertaking, in return for a value transfer from the patent holder, not to challenge it and not to enter the market, are liable to restrict competition. This is because challenging the validity of patents, particularly by means of an ‘at risk’ market entry, is part of normal competition in sectors where exclusive rights to technologies exist.

128. Thus, it is indeed possible for a generic manufacturer to decide independently not to enter the market and to conclude a patent dispute settlement agreement in that context. However, Article 101 TFEU requires operators to determine their conduct on the market independently and prohibits them from knowingly substituting practical cooperation between them for the risks of competition. Accordingly, a patent dispute settlement agreement is akin to a restriction of competition by object if the value transfer from the patent holder to the generic manufacturer has no explanation other than the common commercial interest of the parties not to engage in competition on the merits.

129. If the sole consideration for that transfer is the generic manufacturer’s undertaking not to enter the market and challenge the patent, this indicates, in the absence of any other plausible explanation, that it is not its perception of the patent’s strength but the prospect of the value transfer that prompted it to refrain from entering the market and challenging the patent.

130. Consequently, it cannot be maintained that entering into such an agreement falls within the exercise, by the patent holder, of its prerogatives stemming from the object of the patent, or that the conclusion of that agreement represents, on the part of the manufacturers of generic medicinal products, no more than their recognition of the patent rights, presumed to be valid, of the holder of that patent. Since the presumption of validity of a patent sheds no light on the outcome of any dispute relating to that validity, an agreement whereby the parties eliminate uncertainty in that regard by means of a value transfer to the generic manufacturer is akin to eliminating potential competition which would have existed were it not for that agreement. ( 73 )

131. None of the arguments put forward by the appellants in these proceedings is capable of demonstrating that the General Court was wrong to confirm the Commission’s assessment that, in the present case, the agreements at issue constituted such restrictions of competition designed to secure the generic manufacturers’ undertaking not to compete during the agreed period in return for a payment from Lundbeck, the sole consideration for which was that undertaking.

(1) Asymmetry of risks between Lundbeck and the generic manufacturers

132. First, the Court has indeed held that, in order to conclude that an agreement in settlement of a patent dispute between the patent holder and a generic manufacturer, involving a value transfer from the former to the latter, constitutes a restriction of competition by object, it must be apparent from the analysis of the agreement that that value transfer has no explanation other than the generic manufacturer’s undertaking not to compete with its product during the agreed period. It must therefore be apparent that the transfer is not justified in the light of legitimate objectives of the parties to the agreement, such as compensation for the costs associated with the dispute, the actual supply of goods or services, or the discharge of financial undertakings given by the patent holder. Moreover, according to the Court, if that is the case, it is still necessary to determine whether the value transfer to the generic manufacturer was sufficiently large actually to act as an incentive to it to refrain from entering the market concerned. ( 74 )

133. However, the appellants do not adduce any evidence that might demonstrate that, in the present case, the value transfers from Lundbeck to the generic manufacturers were made in exchange for any consideration from the latter aside from their undertaking not to enter the market. Similarly, the appellants do not put forward any evidence that might cast doubt on the General Court’s finding that, in this instance, the amounts of the reverse payments provided for in the agreements at issue were sufficiently high to allow the generic manufacturers to accept the limitations on their autonomy and to reduce their incentives to enter the market. Thus, the General Court held that it was apparent from the material in the file that those manufacturers would not have agreed to stay out of the market unilaterally, after having taken significant steps and having made significant investments, in the absence of the payments to them from Lundbeck. ( 75 )

134. Instead of adducing even minimal concrete evidence that might provide an alternative explanation for those payments to the explanation accepted by the Commission and the General Court, the appellants simply submit that those payments are ascribable to the asymmetry of risks between Lundbeck and the generic manufacturers. Thus, if the generic manufacturers had entered the market in breach of Lundbeck’s patents, the damages that Lundbeck could have obtained following successful legal proceedings would never have been sufficient to compensate for the losses sustained, which would explain its readiness to make the payments at issue.

135. However, as the General Court rightly pointed out in paragraphs 379 to 387 of the judgment under appeal, the fact that the conclusion of an agreement is a rational and cost-effective course of action in economic and commercial terms for the parties does not mean that such an agreement falls outside the scope of Article 101 TFEU. Similarly, it is for public authorities and not private undertakings to ensure compliance with statutory requirements. ( 76 ) It is therefore not for such undertakings to redress alleged legislative inadequacies by means of anticompetitive agreements and thus take the law into their own hands. ( 77 ) Accordingly, ‘asymmetry of risks’ such as that claimed by the appellants, like possible shortcomings in national patent law, cannot, even if proven, justify agreements whereby an economic operator pays its competitors to stay out of the market.

(2) The ‘counterfactual scenario’

136. Secondly, the appellants claim that the General Court erred in law by refusing, in paragraphs 472 and 473 of the judgment under appeal, to examine the ‘counterfactual scenario’, that is to say, the situation that would have arisen had it not been for the agreements at issue. According to the appellants, such an examination would have shown that the generic manufacturers refrained from entering the market not on account of the existence of those agreements, but quite simply on account of the existence of Lundbeck’s patents.

137. The appellants further insist on this point in their answer to my question concerning the impact of the judgment of the Court in Generics (UK) and Others ( 78 ) on these proceedings, ( 79 ) maintaining that, in that judgment, the Court acknowledged the importance of the counterfactual analysis and of taking into account the pro-competitive effects of the agreements under consideration, which would not have existed in the absence of those agreements, when applying Article 101 TFEU.

138. However, it should be noted, first of all, that in paragraph 37 of the judgment in Generics (UK) and Others, relied on by the appellants, the Court merely stated that, for the purpose of analysing the existence of a potential competitive relationship between economic operators, it is necessary to determine whether, in the absence of the agreement, there would have existed real and concrete possibilities for an undertaking outside the market to compete with the undertaking already established there.

139. Irrespective of whether such an analysis may bear similarities to a ‘counterfactual’ analysis of what would have occurred in the absence of an agreement and whether it is necessary to conduct such a counterfactual analysis in cases involving agreements constituting restrictions of competition by object, suffice it to note that, in the judgment under appeal, the General Court carried out a detailed examination of whether the generic manufacturers had real and concrete possibilities of entering the market at the time the agreements at issue were entered into, so that it can be concluded that such possibilities were eliminated by those agreements. ( 80 )

140. Moreover, it is incorrect to state, as the appellants do, that a counterfactual analysis would have shown that the generic manufacturers refrained from entering the market not as a result of the agreements at issue, but as a result of the existence of Lundbeck’s patents which prevented entry to the market with infringing products. That argument disregards the fact that, at the time the agreements at issue were concluded, there was uncertainty as to the validity of the patents in dispute and the infringing nature of the generic manufacturers’ products. However, as the Court held in Generics (UK) and Others, ( 81 ) it is precisely that uncertainty which contributes, for as long as it lasts, to the existence of a situation of at least potential competition between the holder of a patent for a medicinal product and a manufacturer wishing to enter the market with a generic version of that product.

141. Accordingly, if it is established that an agreement seeks to eliminate that uncertainty, it may be concluded that it constitutes a restriction of competition by object, since it substitutes a concerted situation that is the result of practical cooperation between the parties for a situation in which the parties independently manage the risks and opportunities arising from that uncertainty. ( 82 ) It was precisely by means of an analysis of that point that the General Court reached the conclusion that the agreements at issue in the present case constituted restrictions of competition by object. ( 83 )

142. As regards, lastly, the taking into account of any pro-competitive effects of an agreement, it is indeed true that the Court held, in paragraph 103 of the judgment in Generics (UK) and Others, ( 84 ) relied on by the appellants, that such effects must, as elements of the context of that agreement, be duly taken into account for the purpose of its characterisation as a restriction of competition by object, in so far as they are capable of calling into question the overall assessment of whether the concerted practice concerned revealed a sufficient degree of harm to competition and, consequently, of whether it should be characterised as a restriction of competition by object.

143. However, in the instant case, the appellants do not claim, in their pleadings in the present appeal proceedings, that the agreements at issue had pro-competitive effects which would have been capable of calling into question the General Court’s analysis regarding the characterisation of those agreements as restrictions of competition by object.

(3) Absence of no-challenge clauses in the agreements at issue

144. Thirdly, the appellants submit, in their answer to my question concerning the impact of the judgment in Generics (UK) and Others on these proceedings, ( 85 ) that the Court’s analysis in that judgment, according to which agreements such as those at issue in that case may constitute restrictions of competition by object, was based primarily on the existence in those agreements of no-challenge clauses applying to the patents in dispute. In so far as the agreements at issue here did not contain such no-challenge clauses, the General Court erred in classifying them as restrictions of competition by object. The absence of no-challenge clauses in the agreements at issue shows that the generic manufacturers refrained from challenging the patents in dispute as a result not of those agreements, but as a result of the generic manufacturers’ autonomous assessment of the strength of Lundbeck’s patents.

145. However, that line of argument must also fail.

146. Thus, irrespective of whether the agreements at issue in Generics (UK) and Others contained explicit no-challenge clauses applying to the patent concerned or whether the obligation not to challenge that patent resulted solely from the context and general scheme of those agreements, ( 86 ) the fact remains that, in any event, the absence of explicit no-challenge clauses in the agreements at issue in this case is not a factor capable of calling into question the General Court’s assessment that those agreements constituted restrictions of competition by object.

147. Thus, the appellants do not put forward any arguments capable of casting doubt on the General Court’s finding in paragraphs 398 and 399 of the judgment under appeal that, even though the agreements at issue did not contain no-challenge clauses, the generic manufacturers had no incentive to challenge Lundbeck’s patents after concluding those agreements, since the reverse payments broadly corresponded to the profits they could have expected to make if they had entered the market or to the damages they could have obtained if they had succeeded in litigation against Lundbeck, and that even if those payments were less than the expected profits, they nevertheless constituted a certain and immediate profit, which those manufacturers obtained without necessitating the risks that market entry would have entailed.

148. Those considerations are all the more valid since it follows from the facts analysed by the General Court that, under the agreements at issue, Lundbeck’s payments to the generic manufacturers had to be made, at least in part, in instalments over the term of those agreements. ( 87 ) It is unlikely, in view of the general scheme of the agreements, that they would have started from the premiss that Lundbeck would continue to pay the generic manufacturers for their undertakings if they also brought actions challenging the validity of the patents in dispute.

149. Moreover, for the same reasons, Lundbeck’s argument that the agreements at issue did not prevent the generic manufacturers from entering the market with non-infringing products is wholly unconvincing. First of all, that argument is again based on the incorrect premiss that it was established that the products of the generic manufacturers in question infringed Lundbeck’s patents, when that was in fact unclear. ( 88 ) In addition, it is simply unlikely that the generic manufacturers retained an incentive to enter the market with citalopram of any kind when they were moreover being paid by Lundbeck not to call into question the validity of the patents it still held relating to that compound. ( 89 )

(4) Allegation that it was novel for a penalty to be imposed in respect of patent dispute settlements

150. Fourthly, the appellants submit that since the agreements at issue pursued the legitimate objective of settling a patent dispute, they cannot simply be treated as undisguised market exclusion agreements revealing a sufficient degree of harm to competition to be classified as restrictions of competition by object. This is all the more so because, at the time the agreements at issue were concluded, there was a great deal of uncertainty as regards how patent settlement agreements would be assessed under competition law.

151. That line of argument is not convincing either.

152. Thus, as the General Court correctly found in the judgment under appeal, ( 90 ) it follows from the case-law of the Court of Justice that neither the fact that an agreement pursues the legitimate objective of settling a dispute ( 91 ) nor the fact that it concerns an intellectual property right ( 92 ) shields such an agreement from the full application of the rules of EU competition law. The judgments relied on by the appellants in that regard are not capable of supporting the view that, in general, agreements in the field of intellectual property are not capable of restricting competition. ( 93 )

153. Moreover, the appellants do not put forward any evidence capable of invalidating the General Court’s findings confirming the Commission’s conclusion that, in the present case, the agreements at issue did not serve to bring an end to the underlying patent disputes between the parties to those agreements. ( 94 ) The mere fact that the term of the agreements at issue was dependent on the outcome of a test case between Lundbeck and another manufacturer of generic medicinal products in the United Kingdom does not demonstrate that those agreements resolved the underlying patent disputes, when they simply put those disputes on hold for the agreed period.

154. Furthermore, the appellants cannot rely on an alleged lack of experience in the penalties imposed under competition law in respect of agreements similar to those at issue here, or on the fact that the Konkurrence- og Forbrugerstyrelsen (Authority for the protection of competition and consumers, Denmark) (‘KFST’) and the Commission themselves harboured doubts, at the outset, as to the legal characterisation of those agreements, in order to argue that the latter cannot be treated as restrictions of competition by object.

155. Contrary to the appellants’ view, the fact that this is the first case in which the Commission has applied Article 101 TFEU to patent dispute settlement agreements between an originator undertaking and generic manufacturers in the pharmaceutical field does not mean that those agreements cannot be characterised as restrictions of competition by object for the purpose of that provision.

156. As the General Court correctly stated in paragraphs 438 and 774 of the judgment under appeal, it is not necessary, in order to classify an agreement as a restriction of competition by object, that the same type of agreement has been found unlawful in the past. The role of experience and, therefore, foreseeability in that regard do not, as the General Court correctly explained, concern the specific category of an agreement in a particular sector, but the fact that it is established that certain forms of collusion, such as the exclusion of competitors from the market, are, in general and in view of the experience gained, so likely to have negative effects on competition that it is not necessary to demonstrate that they had such effects in the particular case at hand.

157. Furthermore, the General Court was also right to point out, in paragraphs 752 and 775 of the judgment under appeal, that the case-law does not require that an agreement be prima facie or undoubtedly sufficiently harmful to competition, without a detailed examination of its content, its purpose and the legal and economic context in which it occurs, in order to be regarded as a restriction of competition by object for the purpose of Article 101 TFEU. ( 95 )

(5) Conclusion

158. It follows from the above considerations that the appellants have not put forward any arguments capable of demonstrating that the General Court was wrong to confirm the Commission’s conclusion that the agreements at issue constituted restrictions of competition by object, even assuming that they imposed on the generic manufacturers restrictions that Lundbeck could also have obtained by means of legal proceedings based on the patents in dispute if the validity of those patents and the infringing nature of the generic products had been established. The first ground of appeal must therefore be dismissed.

(b) Alleged error in that the General Court found that five of the six agreements went beyond the scope of Lundbeck’s patents (second ground of appeal)

159. In their second ground of appeal, the appellants submit that the General Court erred in finding that five of the six agreements at issue went beyond the scope of Lundbeck’s patents, in so far as they prohibited not only the sale of citalopram that potentially infringed the processes protected by the patents in dispute, but the sale of any kind of citalopram, regardless of how it was produced.

160. It should be noted at the outset that this ground of appeal is both ineffective and inadmissible.

161. Thus, it is apparent from the Court’s settled case-law that arguments directed against grounds of a decision of the General Court included purely for the sake of completeness cannot lead to the annulment of that decision and are therefore ineffective. ( 96 )

162. In the present case, the General Court expressly noted, in paragraphs 539 to 541 of the judgment under appeal, that the appellants’ arguments alleging that the decision at issue was incorrect in that it wrongly concluded that the agreements at issue contained restrictions going beyond those inherent in the exercise of the rights their patents conferred on them was ineffective.

163. According to the General Court, even if the agreements at issue had not exceeded the scope of the appellants’ patents, those agreements would still have constituted restrictions of competition by object for the purpose of Article 101 TFEU, since they consisted in agreements intended to delay the market entry of the generic manufacturers, in exchange for significant reverse payments, which transformed the uncertainty in relation to that market entry into the certainty that it would not take place during the term of the agreements at issue.

164. Accordingly, it was only in the alternative that the General Court examined, in paragraphs 542 to 705 of the judgment under appeal, the appellants’ arguments claiming that the Commission had erred in finding that the restrictions imposed by the agreements at issue went beyond the scope of the patents in dispute. ( 97 )

165. That the Commission took account of the fact that the agreements at issue contained restrictions going beyond the scope of the patents in dispute both when finding that those agreements were anticompetitive and when determining the amount of the fines does not, moreover, call into question the ineffectiveness of those arguments at first instance. The General Court clearly pointed out that that issue had been a relevant, but not decisive, factor in the decision at issue in establishing the existence of a restriction by object for the purpose of Article 101 TFEU and in determining the level of the fines. ( 98 )

166. It must also be noted, as the Commission does, that, in any event, the second ground of appeal is inadmissible.

167. It is true that the appellants claim that their line of argument consists of alleging that the General Court erred in law by failing to apply the appropriate legal test when examining whether the restrictions imposed by the agreements at issue went beyond the scope of the patents in dispute. Thus, they submit that the General Court should have examined, with reference to the principles of contract law in each of the legal systems concerned by the agreements at issue, whether prohibiting the generic manufacturers from entering the markets concerned with any type of citalopram, not only the citalopram considered by Lundbeck to infringe its patents, actually reflected the meeting of minds between Lundbeck and the generic manufacturers.

168. However, under cover of that line of argument, the appellants actually seek to have the Court of Justice re-examine the General Court’s interpretation of the wording of the agreements and of the facts surrounding their conclusion, which is — save where the clear sense of the facts is distorted, which in this case is neither alleged nor apparent — inadmissible at the appeal stage. ( 99 )

169. It follows that the second ground of appeal must be rejected, without there being any need to consider the substance of the arguments put forward to support it by the appellants.

(c) Alleged error in classifying some of the agreements at issue as restrictions of competition by object even if they are assumed to go beyond the scope of the patents in dispute (third ground of appeal)

170. By their third ground of appeal, the appellants claim that even if the Court were to find that some of the agreements at issue went beyond the scope of the patents in dispute by prohibiting the sale of any generic citalopram, the General Court was nevertheless wrong to conclude that those agreements constituted restrictions of competition by object.

171. In support of that claim, the appellants refer to the arguments put forward in support of the first ground of appeal. Thus, they submit that the General Court erred in classifying the agreements at issue as restrictions of competition by object, since it took insufficient account of the context of those agreements, notably the asymmetry of risks between Lundbeck and the generic manufacturers, failed to examine the counterfactual scenario, and wrongly concluded that the agreements were sufficiently harmful to competition to be classified as restrictions of competition by object, particularly in view of the initial doubts that the KFST and the Commission themselves had in that regard.

172. However, since those arguments have already been rejected in the examination of the first ground of appeal above, ( 100 ) the third ground of appeal must also fail.

B. Fines (fifth and sixth grounds of appeal)

173. By their fifth and sixth grounds of appeal, the appellants submit that the General Court erred in upholding the fines imposed by the Commission as a matter of principle (1) and as regards their method of calculation (2).

1. Confirmation of the fines by the General Court (fifth ground of appeal)

174. In their fifth ground of appeal, the appellants argue that the General Court was wrong to confirm that the Commission was entitled to impose fines on Lundbeck in this case. Thus, first of all, the General Court did not apply the correct test to determine whether a fine could be imposed here (a). Next, the General Court erred in upholding the Commission’s finding that Lundbeck could not have been unaware of the anticompetitive nature of its conduct (b). Last, the General Court disregarded the principles of legal certainty and non-retroactivity by confirming the imposition of a penalty exceeding the level of a symbolic fine (c).

(a) The ‘standard for culpability’ required for the imposition of a fine

175. The appellants submit that the General Court did not apply the correct test regarding the ‘standard for culpability’ required for the imposition of a fine under competition law. Thus, the General Court did indeed state, in paragraph 762 of the judgment under appeal, that, according to the case-law of the Court of Justice, the imposition of such a fine is possible only if an undertaking ‘cannot be unaware of the anticompetitive nature of its conduct’. However, the General Court did not then apply that test to determine Lundbeck’s culpability; on the contrary, it simply stated in paragraph 777 of the judgment under appeal that the agreements at issue ‘could reasonably have been perceived’ by Lundbeck as being in breach of Article 101 TFEU, thus incorrectly lowering the standard for culpability required for the imposition of a fine.

176. As a preliminary point, it should be noted that it is clear from the case-law of the Court of Justice, cited by the General Court in paragraph 762 of the judgment under appeal, that, with regard to whether an infringement of competition law has been committed intentionally or negligently and is therefore liable to be penalised by the imposition of a fine in accordance with Article 23 of Regulation (EC) No 1/2003, ( 101 ) that condition is satisfied where the undertaking concerned cannot be unaware of the anticompetitive nature of its conduct, whether or not it is aware that it is infringing the competition rules of the Treaty. In particular, the fact that the undertaking concerned has characterised wrongly in law its conduct upon which the finding of the infringement is based cannot have the effect of exempting it from imposition of a fine. ( 102 )

177. That stated, it must be held that, in the judgment under appeal, the General Court did not fail to apply the test established by the case-law.

178. First of all, it should be pointed out, as the Commission did, that contrary to the appellants’ assertions, the fact that it must be established that an undertaking ‘could not have been unaware’ of the anticompetitive nature of its conduct does not mean that the Commission is required to show with certainty that that undertaking was aware of that anticompetitive nature. In other words, it is not necessary to prove that the undertaking in question knew that its conduct was anticompetitive. On the contrary, it is sufficient for the Commission to adduce evidence showing that, in the given circumstances, a diligent economic operator could reasonably have been expected to be aware of the anticompetitive nature of its conduct.

179. The appellants are therefore playing with words when they claim that the General Court failed to apply that standard of proof in the present case by noting, in paragraph 777 of the judgment under appeal, that the restrictions on competition set out by the agreements at issue ‘could reasonably have been perceived’ by the parties as being in contrary to Article 101 TFEU. In contrast to the appellants’ assertions, it does not in fact follow from that wording that the General Court was satisfied with a standard of proof whereby it was sufficient that it ‘was possible’ that Lundbeck was aware of the anticompetitive nature of its conduct. Furthermore, in paragraphs 832 and 833 of the judgment under appeal, the General Court clearly stated that Lundbeck ‘could not have been unaware’ that the agreements at issue were capable of infringing Article 101 TFEU and that it ‘was aware’ of the potentially infringing nature of those agreements.

180. The first part of the fifth ground of appeal must therefore be rejected.

(b) Whether Lundbeck could not have been unaware of the anticompetitive nature of its conduct

181. The appellants also submit that the General Court failed to apply the standard of proof required for the imposition of a fine, since the evidence relied on by the General Court is not capable of demonstrating that Lundbeck could not have been unaware of the anticompetitive nature of its conduct.

182. Thus, in so far as the agreements at issue cannot be treated in the same way as mere market sharing or market exclusion agreements, but instead involved the implementation of intellectual property rights in pursuit of a legitimate aim, their anticompetitive nature was much more difficult to grasp than that of undisguised market sharing agreements. Notwithstanding this, in paragraph 776 of the judgment under appeal, the General Court relied on only two documents to establish Lundbeck’s culpability, even though it can in no way be inferred from those documents that Lundbeck could not have been unaware of the anticompetitive nature of its conduct. According to the appellants, the General Court therefore manifestly distorted the evidence and failed to provide a sufficient explanation as to why it confirmed Lundbeck’s culpability.

183. Those arguments are without substance.

184. In the first place, it follows from the considerations set out above that the appellants have no basis for claiming that the agreements at issue did not constitute market exclusion agreements, and that the backdrop to those agreements concerning patents cannot serve as a pretext for shielding them from the full application of the rules of competition law. ( 103 )

185. In the second place, it must be stated that it is not apparent how the General Court distorted the three documents (not two, as the appellants stated) cited in paragraph 776 of the judgment under appeal when it took those documents into account in its examination of whether Lundbeck could not have been unaware of the anticompetitive nature of its conduct: – thus, first, in paragraph 776 of the judgment under appeal, the General Court refers to recital 190 of the decision at issue to support its assertion that some generic manufacturers were indeed aware of the infringing nature of agreements similar to the agreements at issue and refused to enter into such agreements for that reason. Recital 190 of the decision at issue cites an email from NM Pharma to Lundbeck, filed in a Lundbeck document entitled ‘Generic citalopram update 04 09 2002’, which shows that NM Pharma declined Lundbeck’s invitation to a meeting, stating that its ‘Antitrust Policy’ prevented it from engaging in further discussions with Lundbeck. Accordingly, the General Court did not distort that document by relying on it as evidence to support the finding that Lundbeck could not have been unaware of the anticompetitive nature of its conduct; – secondly, in paragraph 776 of