Case T‑677/14

Biogaran

v

European Commission

(Competition — Agreements, decisions and concerted practices — Market for perindopril, a medicinal product intended for the treatment of cardiovascular diseases, in its originator and generic versions — Decision finding an infringement of Articles 101 and 102 TFEU — Agreements intended to delay, or even prevent, entry into the market of generic versions of perindopril — Participation of a subsidiary in the infringement committed by its parent company — Imputation of the infringement — Joint and several liability — Ceiling for the fine)

Summary — Judgment of the General Court (Ninth Chamber), 12 December 2018

Fundamental rights — Charter of Fundamental Rights of the European Union — Principle that offences and penalties must have a proper legal basis — Scope — Foreseeability of the infringing nature of the penalised conduct — Patent dispute settlement agreement between an originator company and a generic undertaking — Licence and supply agreement concluded between an originator company and the generic undertaking — Agreements contrary to competition law — Subsidiary which could not have been unaware of the anticompetitive nature of its conduct and of that of its parent company

Agreements, decisions and concerted practices — Prohibition — Infringements — Agreements and concerted practices constituting a single infringement — Attribution of liability for the entire infringement to a single undertaking — Conditions — Unlawful practices and conduct forming part of an overall plan — Assessment — Criteria — Contribution to the single objective of the infringement — Knowledge or foreseeability of the overall plan of the agreement, decision or concerted practice and of its key elements

Competition — Undertaking — Concept — Economic unit — Attribution of infringements — Parent company and subsidiary undertakings — Subsidiary wholly owned by its parent company — Participation of the subsidiary in the infringing conduct of its parent company — Subsidiary jointly and severally responsible — Infringement of the principle of individual responsibility — None

Agreements, decisions and concerted practices — Adverse effect on competition — Amicable agreement on patents — Agreement concluded between an originator company and a generic medicine undertaking — Agreement containing clauses prohibiting patent challenges and clauses prohibiting the marketing of products — Side deal providing for a transfer of value to the generic undertaking — Classification as an inducive reverse payment — Conditions

Acts of the institutions — Statement of reasons — Obligation — Scope — Decision to apply competition rules — Correction of an error of reasoning during the proceedings before the Court — Not permissible — Additional material intended to supplement a statement of reasons which is already adequate in itself and to respond to the applicant’s arguments — Lawfulness

Judicial proceedings — Application initiating proceedings — Formal requirements — Brief summary of the pleas in law on which the application is based — General reference to other documents not annexed to the application — Reference to the application lodged by another applicant against the same decision adopted in the sphere of competition law — Inadmissibility

See the text of the decision. (see paras 47-51)

See the text of the decision. (see paras 57-61)

Under the first and second subparagraphs of Article 35(3) of the Rules of Procedure of 2 May 1991, the language of the case is to be used in the written and oral pleadings of the parties and in supporting documents, and any supporting documents expressed in another language must be accompanied by a translation into the language of the case. The second subparagraph of Article 7(5) of the Instructions to the Registrar of the General Court provides that where documents annexed to a pleading or procedural document are not accompanied by a translation into the language of the case, the Registrar is to require the party concerned to make good the irregularity if such a translation appears necessary for the purposes of the efficient conduct of the proceedings. It follows from points 64 and 68 of the Practice Directions to the parties before the General Court that, if the defence does not comply with the procedural rules relating to the translation into the language of the case of any documents drafted in a language other than the language of the case, a reasonable period is to be prescribed for the purposes of putting it in order. In the light of those provisions, it must be held that, where documents have been submitted by a party in a language other than the language of the case, without an accompanying translation, and the opposing party has the possibility of requesting the General Court that those documents be put in order, but has not expressly made such a request, but merely challenged the admissibility of those documents on the ground that they were not drafted in the language of the case, it is only if the translation into the language of the case appears necessary for the purposes of the efficient conduct of the proceedings that it is for the Registrar to request the party that submitted those documents to put them in order. (see paras 63-65)

In the context of a pharmaceutical patent settlement agreement concluded between an originator company, as the patent holder, and a generic company, a finding of a restriction of competition by object presupposes that the settlement agreement contains both an inducement in the form of a benefit for the generic company and a corresponding limitation of the generic company’s efforts to compete with the originator company. Where those two conditions are met, a finding of restriction of competition by object within the meaning of Article 101(1) TFEU must be made in view of the harmfulness of that agreement to the proper functioning of normal competition. Thus, the mere presence, in such a settlement agreement, of non-marketing clauses and non-challenge clauses whose scope is limited to that of the patent in question does not — despite the fact that those clauses are, by themselves, restrictive — justify a finding of a restriction of competition sufficiently harmful to be described as a restriction by object, where those agreements are based on the recognition, by the parties, of the validity of the patent. The presence of such clauses is, however, problematic when it is apparent that the generic company’s agreement to those clauses is not based on its recognition of the validity of the patent. Accordingly, where an unjustified reverse payment from the originator company to the generic company occurs in the conclusion of the settlement, the generic company must then be regarded as having been induced by that payment to agree to the non-marketing and non-challenge clauses and it must be concluded that there is a restriction by object. Where an inducement has been found, the parties may no longer rely on their recognition, in the context of the settlement, of the validity of the patent. The fact that the validity of the patent is confirmed by a judicial or administrative body is, in that regard, irrelevant. It is then the inducement, and not the recognition of the validity of the patent by the parties to the settlement, which must be regarded as the real cause of the restrictions of competition introduced by the non-marketing and non-challenge clauses, which — since they are in that case entirely illegitimate — therefore reveal a sufficient degree of harm to the proper functioning of normal competition that a restriction by object may be found. (see paras 112-114, 116, 120, 121, 123)

In the context of a pharmaceutical patent settlement agreement concluded between an originator company, as the patent holder, and a generic company, a finding of a restriction of competition by object presupposes that the settlement agreement contains both an inducement in the form of a benefit for the generic company and a corresponding limitation of the generic company’s efforts to compete with the originator company. In that regard, the presence of a normal commercial agreement linked to a settlement agreement which contains clauses which are by themselves restrictive may constitute, as regards the settlement of a patent dispute, a strong indication of the existence of an inducement and, consequently, of a restriction of competition by object, where that side deal provides for a transfer of value from the originator company to the generic company. However, that strong indication is not sufficient and the Commission must therefore support it with other consistent evidence justifying the conclusion that there is a reverse payment. Such a payment, in the specific context of side deals, corresponds to the part of the payment made by the originator company which exceeds the ‘normal’ value of the asset traded. It follows that, in the light of all the evidence available to it and, as the case may be, the lack of an explanation or the lack of a plausible explanation from the parties to the agreements, the Commission may be justified in finding, following an overall assessment, that the side deal was not concluded at arm’s length, that is to say that the payment made by the originator company exceeds the value of the asset traded, or that the value of the asset transferred to the generic company exceeds the payment made by the latter. The Commission may thus conclude that there is a reverse payment. A reverse payment, if it is not intended to compensate for costs inherent in the settlement, therefore constitutes an inducive benefit. However, the parties to the agreement may still argue that the benefit in question is insignificant, if the amount of that benefit is insufficient to be regarded as a significant inducement to accept the competition-restricting clauses set out in the settlement agreement. (see paras 123, 135, 137, 139, 141, 145-147)

See the text of the decision. (see para. 175)

See the text of the decision. (see para. 178)

The concept of an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed. Accordingly, the term ‘undertaking’, in that context, must be understood as designating an economic unit even if in law that economic unit consists of several natural or legal persons and, on the other hand, that when such an economic entity infringes the competition rules, it falls, according to the principle of personal responsibility, to that entity to answer for that infringement. The Commission is therefore entitled, in application of the concept of ‘undertaking’, to consider that a parent company and its wholly owned subsidiary are jointly and severally liable for the conduct alleged against them, since the acts committed by each are accordingly deemed to have been committed by one and the same undertaking. The fact that the infringement of Article 101 TFEU found by the Commission results, in part, from the conduct of the parent company and, in part, from the conduct of the subsidiary, whereas in the situations of joint and several liability between a parent company and its subsidiary most often brought before the Courts of the European Union the infringement results solely from the conduct of the subsidiary, is not such as to call into question that conclusion. If it is possible to impute to a parent company liability for an infringement committed by its subsidiary and, consequently, to make both companies jointly and severally liable for the infringement committed by the undertaking which they comprise, without infringing the principle of personal responsibility, the same applies a fortiori where the infringement committed by the economic entity comprising a parent company and its subsidiary results from the combined conduct of both those companies. (see paras 212, 216-218)

See the text of the decision. (see paras 230-233)

The effective penalisation of infringements of competition law cannot go so far as to disregard the principle that offences and penalties must have a proper legal basis as enshrined in Article 49 of the Charter of Fundamental Rights. That principle cannot, however, be interpreted as precluding the gradual, case-by-case clarification of the rules on criminal liability by judicial interpretation, provided that the result was reasonably foreseeable at the time the offence was committed, especially in the light of the interpretation put on the provision in the case-law at the material time. The scope of the notion of foreseeability depends to a considerable degree on the content of the text in issue, the field it covers and the number and status of those to whom it is addressed. A law may still satisfy the requirement of foreseeability even if the person concerned has to take appropriate legal advice to assess, to a degree that is reasonable in the circumstances, the consequences which a given action may entail. This is particularly true in relation to persons carrying on a professional activity, who are used to having to proceed with a high degree of caution when pursuing their occupation. Such persons can therefore be expected to take special care in evaluating the risk that such an activity entails. In that respect, a generic company could assume that its parent company, an originator company, by inducing other generic companies to accept non-marketing and non-challenge clauses, by themselves restrictive of competition, rendered the inclusion of such clauses in a patent settlement agreement entirely illegitimate. Such inclusion is no longer based on recognition by the parties to the agreements of the validity of the patent and thus indicates a misuse of the patent, unrelated to its specific purpose. The subsidiary could also assume that the fact that it provided an additional inducement to a generic company, by means of a licence and supply agreement concluded with the latter, was such as to reinforce the restrictive effects of the agreement concluded by its parent company. In those circumstances, the subsidiary could therefore reasonably have foreseen that its conduct was caught by the prohibition laid down in Article 101(1) TFEU. Although, because the agreements at issue were concluded in the form of patent settlements, the unlawful nature of those agreements might not have been evident to an outside observer such as the Commission or lawyers specialising in the fields in question, the same could not be said for the parties to the agreement. (see paras 251, 252, 255, 260)

See the text of the decision. (see paras 274-280)