Case T-321/05

AstraZeneca AB and AstraZeneca plc

v

European Commission

(Competition – Abuse of dominant position – Market in anti-ulcer medicines – Decision finding an infringement of Article 82 EC – Market definition – Significant competitive constraints – Abuse of procedures relating to supplementary protection certificates for medicinal products and of marketing authorisation procedures for medicinal products – Misleading representations – Deregistration of marketing authorisations – Obstacles to the marketing of generic medicinal products and to parallel imports – Fines)

Summary of the Judgment

1. Procedure – Request for confidential treatment – Criteria

2. Competition – Dominant position – Relevant market – Definition – Purpose

(Art. 82 EC; Commission Notice 97/C 372/03, points 2 and 7)

3. Competition – Administrative procedure – Commission decision finding an infringement – Decision requiring a complex economic or technical assessment – Judicial review – Limits

(Arts 81 EC and 82 EC)

4. Competition – Dominant position – Relevant market – Definition – Criteria – Pharmaceutical products

(Art. 82 EC)

5. Competition – Dominant position – Relevant market – Definition – Criteria – Pharmaceutical products

6. Competition – Administrative procedure – Commission decision finding an infringement – Evidence which has to be gathered

(Arts 81 EC and 82 EC)

7. Competition – Administrative procedure – Commission decision – Duty to state reasons – Scope

(Arts 81 EC, 82 EC and 253 EC)

8. Competition – Dominant position – Relevant market – Definition – Criteria – Demand substitutability of the products – Launch of a new product

(Art. 82 EC; Commission Notice 97/C 372/03, paras 15 to 19)

9. Competition – Dominant position – Relevant market – Definition – Criteria – Identification of the competitive constraints exercised over a product

(Art. 82 EC; Commission Notice 97/C 372/03, para. 3)

10. Competition – Dominant position – Holding of a very large market share an indicator – Pharmaceutical undertaking

(Art. 82 EC)

11. Competition – Dominant position – Existence – Evidence – Level of prices charged – Pharmaceutical undertaking – Effect of coverage by social security on prices of medicinal products

(Art. 82 EC)

12. Competition – Dominant position – Abuse – Concept – Need for a causal link between a dominant position and the abuse of that position – No such link necessary

(Art. 82 EC)

13. Competition – Dominant position – Existence – Evidence – Existence and use of intellectual property rights

(Art. 82 EC)

14. Competition – Dominant position – Existence – Evidence – Pharmaceutical undertaking – First‑mover status on a market – Financial strength of the undertaking

(Art. 82 EC)

15. Competition – Dominant position – Abuse – Submission of misleading information to the authorities – Information which makes the grant of an exclusive right possible – Whether abusive – Criteria for assessment

(Art. 82 EC)

16. Competition – Dominant position – Abuse – Submission of misleading information to the authorities – Information which makes the grant of an exclusive right possible – Whether abusive – Criteria for assessment

(Art. 82 EC)

17. Competition – Dominant position – Abuse – Concept – Start of the implementation of an abusive practice – Pharmaceutical undertaking – Submission of misleading information to the authorities

(Art. 82 EC)

18. Competition – Dominant position – Abuse – Submission of misleading information to the authorities – Information which makes the grant of an exclusive right possible – Whether abusive – Criteria for assessment

(Art. 82 EC)

19. Competition – Dominant position – Abuse – Anticompetitive effects of behaviour produced in the absence of a dominant position – Not relevant

(Art. 82 EC)

20. Competition – Dominant position – Abuse – Proof – Burden of proof – Presumption of innocence

(Art. 6(2) EU; Art. 82 EC)

21. Competition – Dominant position – Abuse – Obligations on the dominant undertaking – Pharmaceutical undertaking – Submission of misleading information to the authorities – Information which makes the grant of an exclusive right possible

(Art. 82 EC)

22. Competition – Dominant position – Abuse – Submission of misleading information to the authorities – Information which makes the grant of an exclusive right possible – Whether abusive – Pharmaceutical undertaking

(Art. 82 EC)

23. Competition – Dominant position – Abuse – Deregistration of marketing authorisations for pharmaceutical products – Deregistration preventing manufacturers of generic medicinal products from benefiting from the abridged procedure

(Art. 82 EC; Council Directive 65/65, Art. 4, third para., point 8, second para., (a)(iii))

24. Competition – Dominant position – Abuse – Concept – Use of regulatory procedures in such a way as to delay the entry of competitors on the market – Whether abusive – Criteria for assessment

(Art. 82 EC)

25. Competition – Dominant position – Abuse – Concept – Compliance of abusive conduct with other legal rules – Not relevant

(Art. 82 EC)

26. Competition – Dominant position – Abuse – Deregistration of marketing authorisations for pharmaceutical products – Deregistration preventing manufacturers of generic medicinal products from benefiting from the abridged procedure – Inapplicability of the case-law on essential facilities

(Art. 82 EC)

27. Competition – Dominant position – Abuse – Objective justification – Burden of proof

(Art. 82 CE)

28. Competition – Dominant position – Abuse – Obligations on the dominant undertaking – Pharmaceutical undertaking – Competition on the basis of merit – Scope

29. Competition – Dominant position – Abuse – Imputability – Parent company and subsidiaries – Economic unit

(Art. 82 EC)

30. Procedure – Application initiating proceedings – Formal requirements

(Rules of Procedure of the General Court, Art. 44(1))

31. Competition – Dominant position – Abuse – Single and continuous infringement – Classification – Criteria

(Art. 82 EC)

32. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Abuse of dominant position – Pharmaceutical undertaking – Submission of misleading information to the authorities which makes the grant of an exclusive right possible – Deregistration of marketing authorisations for pharmaceutical products

(Art. 82 EC)

33. Competition – Fines – Amount – Determination – Criteria – Object and effects of the infringement

(Arts 81 EC and 82 EC)

1. In an action for annulment brought against a Commission competition decision, the Court may grant an application by the applicant for confidential treatment of information that does not appear in the non-confidential version of the contested decision, published on the internet site of the Directorate-General for Competition of the Commission and which is therefore accessible to the public. However, an application for confidential treatment concerning information which appears in the non-confidential version of the contested decision must be dismissed. That information has in any event lost any confidential character it may have had, because it has been accessible to the public.

(see para. 25)

2. In the context of the application of Article 82 EC, the definition of the relevant market is carried out in order to define the boundaries within which it must be assessed whether a given undertaking is able to behave, to an appreciable extent, independently of its competitors, its customers and, ultimately, consumers.

For the purposes of investigating the possibly dominant position of an undertaking, the possibilities of competition must be judged in the context of the market comprising the totality of the products which, with respect to their characteristics, are particularly suitable for satisfying constant needs and are only to a limited extent interchangeable with other products; those possibilities of competition must also be assessed in the light of the competitive conditions and of the structure of supply and demand. The relevant product market therefore comprises all those products or services which are regarded as substitutable by consumers, by reason of the products’ characteristics, their prices and their intended use.

(see paras 30-31)

3. Although as a general rule the Community judicature undertakes a comprehensive review of the question as to whether or not the conditions for the application of the competition rules are met, the review of complex economic appraisals made by the Commission is necessarily limited to checking whether the relevant rules on procedure and on stating reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers.

Likewise, in so far as the Commission’s decision is the result of complex technical appraisals, those appraisals are in principle subject to only limited review by the Court, which means that the Court cannot substitute its own assessment of matters of fact for the Commission’s.

However, while the Community judicature recognises that the Commission has a margin of assessment in economic or technical matters, that does not mean that it must decline to review the Commission’s interpretation of economic or technical data. In order to take due account of the parties’ arguments, the Community judicature must not only establish whether the evidence put forward is factually accurate, reliable and consistent but must also determine whether that evidence contains all the relevant data that must be taken into consideration in appraising a complex situation and whether it is capable of substantiating the conclusions drawn from it.

(see paras 32-33)

4. In the context of a procedure in respect of an abuse of a dominant position in the pharmaceutical field, for the purposes of defining the relevant market, the Commission may base its assessment inter alia on the greater efficacy of the pharmaceutical product concerned, the different therapeutic use of that product from that of other pharmaceutical products, the trend of asymmetrical substitution that characterises the growth in sales of that product and the corresponding decrease or the stagnation in sales of the other products, and price indicators, such as they result from the regulatory framework in force.

As regards therapeutic use, for the purposes of defining the relevant market, it is necessary to take account of differences between medicines’ modes of action where they give rise to different therapeutic uses and to disregard them where the medicines in question have a similar therapeutic use.

As regards price indicators, the specific features which characterise competitive mechanisms in the pharmaceutical sector do not negate the relevance of price-related factors in the assessment of competitive constraints, although those factors must be assessed in their specific context. In the pharmaceutical sector, competitive relationships respond to mechanisms which differ from those determining competitive interactions normally present in markets which are not so heavily regulated. In this respect, the Commission cannot maintain that, in principle, the ability of an undertaking to maintain its prices above the reimbursement level, where demand tends to be more elastic, constitutes in itself evidence of an absence of any significant competitive constraint, without examining the extent to which the price of other potentially substitutable products is reimbursed by the national health insurance system. Moreover, the circumstance that prescribing doctors are essentially guided by the therapeutic use of products does not make price-based indicators wholly irrelevant, since the latter may also be evidence of the competitive constraints on the relevant products.

The evidence referred to above constitutes a body of relevant data that is sufficient to establish the conclusion that other pharmaceutical products do not exercise, during the period of time examined, a significant competitive constraint over the product concerned. In those circumstances, the Commission does not commit a manifest error of assessment in finding that the relevant product market is composed solely of that pharmaceutical product.

(see paras 61, 153, 182-183, 203, 219-222)

5. In the context of a procedure in respect of an abuse of a dominant position in the pharmaceutical sector, for the purposes of defining the relevant market, the Commission is entitled to take the view that the differentiated therapeutic use of two pharmaceutical products designed to treat the same conditions is a factor supporting the conclusion that the relevant market does not include one of those products.

The fact that two pharmaceutical products are prescribed to treat the same conditions, or that both constitute first-line treatments, is of limited relevance, since it does not make it possible to determine whether, in the light of the differentiated therapeutic use of the two products, one of which is used to treat the severe forms and the other the less serious forms of the same conditions, one exercises a significant competitive constraint over the other.

(see paras 69, 71-73)

6. In a procedure initiated in respect of infringement of the competition rules, it is important that the Commission bases its assessment on all the relevant data that must be taken into consideration in a specific case. That implies inter alia that the Commission is required to examine with particular attention the relevant arguments and evidence submitted to it by the undertakings involved in the administrative procedure. However, it cannot be inferred from this that the Commission must rely solely on the evidence that it has gathered as a result of its own investigations. It is permissible for the Commission to rely on evidence submitted by the parties to the administrative procedure, provided that that evidence is reliable and relevant, the onus being on the Commission, if necessary, to supplement it with other evidence where the information submitted by the parties to the administrative procedure proves to be insufficient or defective.

(see paras 78-79)

7. In a procedure in respect of infringement of the competition rules, the Commission is obliged to set out the reasons for not using certain data in a study only to the extent that the parties to the administrative procedure have put forward arguments during that procedure that were specifically based on those data and where it is apparent that those data are relevant. The Commission cannot in any event be required to set out systematically the reasons why it does not use or rejects certain data from a study, since it is sufficient that it states the reasons on which its decision is based, mentioning the facts and points of law which provide the legal basis for the measure and the considerations which have led it to adopt its decision. That applies all the more given that the Commission is not required to discuss all the issues of fact and of law which have been raised by a party during the administrative procedure.

(see para. 81)

8. According to paragraphs 15 to 19 of the Commission’s notice on the definition of the relevant market for the purposes of Community competition law, the Commission assesses demand substitutability in the light of a theoretical approach which presupposes a small (in the range 5% to 10%) but permanent relative price increase in the product on the basis of which the relevant market is defined and which evaluates whether that hypothetical increase could be applied profitably by the hypothetical monopolist of the relevant product. According to that economic test, if substitution were enough to make such a price increase unprofitable because of the resulting loss of sales, substitutes must be regarded as exercising a significant competitive constraint over the relevant product. As regards the specific case of the launch of a new product, it is often the case that the sales development of such a product substituting, even partly, for an existing product takes a certain amount of time, and accordingly, that those sales develop gradually.

In accordance with that theoretical framework, in order to assess whether an existing product exercises a significant competitive constraint over a new product, it is necessary to consider whether, account being taken at the same time of the gradual growth in sales of the new product, a small increase in the price of the new product would lead to a shift in demand towards the existing product in such a way that that price increase would not be profitable, in view of the income which would have been generated had that increase not taken place. The gradual nature of the growth in sales of the new product would not necessarily disappear if that price increase were profitable and, consequently, if it were concluded that the existing product does not exercise a significant competitive constraint over the new product.

Consequently, the Commission is entitled to take the view that, in principle, the gradual nature of the increase in sales of a new product substituting for an existing product cannot, in itself, suffice to conclude that the existing product exercises a significant competitive constraint over the new one.

(see paras 87-90)

9. In a procedure in respect of abuse of a dominant position, the definition of the relevant market consists in identifying the significant competitive constraints on the product concerned during the relevant period and is therefore not concerned with the competitive constraints that that product might have exercised over other products. The concept of relevant market is different from other definitions of market often used in other contexts, such as the area where the companies sell their products or, more broadly, the industry or sector to which the companies belong. The fact that a product is the primary competitive focus of another product does not therefore mean that the former exercises a significant competitive constraint over the latter.

The fact that the absence or insignificance of those competitive constraints is due to the regulatory framework which determines the conditions of the competitive interactions between products and the extent to which they take place does not affect the relevance that should be ascribed, in the context of market definition, to the finding that those competitive constraints are non-existent or insignificant. Where it is established that a group of products is not subject to a significant extent to competitive constraints from other products, so that that group may be considered to form a relevant product market, the type or nature of the factors that shield that group of products from any significant competitive constraint is of only limited relevance, since the finding of an absence of such competitive constraints leads to the conclusion that an undertaking in a dominant position on the market thus defined would be able to affect the interests of consumers on that market by preventing, through abusive behaviour, the maintenance of effective competition.

(see paras 97, 174-175)

10. The position of an undertaking on the market of a pharmaceutical product can be determined by taking into account a number of factors, such as the importance of intellectual property rights and other rights of a regulatory nature, the advantages associated with its first-mover status, the relevance of price as a parameter of competition, the relevance of the presence of monopsony purchasers and of regulated price systems, and the relevance of research and development investment, promotional activities and financial resources. The Commission may not however disregard the importance that has to be attached to that undertaking’s generally very large market share throughout the entire relevant period in all the countries concerned.

Similarly, the fact that innovation is an essential parameter of competition in the pharmaceutical sector does not call in question the relevance that must be attached to that undertaking’s very high market share, as assessed in its context.

(see paras 244-245, 254)

11. The health systems which characterise markets for pharmaceutical products tend to reinforce the market power of pharmaceutical companies, since costs of medicines are fully or largely covered by social security systems, which to a significant extent makes demand inelastic. That is more particularly the case where a pharmaceutical undertaking, which is the first to offer a new product with an added therapeutic value in relation to existing products, is able to obtain a higher reimbursement level than that which will subsequently be granted to ‘me-too’ products. Vis-à-vis undertakings which enjoy first-mover status, the reimbursements paid by social security systems are set at relatively high levels in comparison with ‘me-too’ products and enable the pharmaceutical company which enjoys such status to set its price at a high level without having to worry about patients and doctors switching to other less costly products.

It matters little that the ability of a pharmaceutical undertaking to maintain a particularly high market share while charging significantly higher prices is made possible or favoured by social security systems, that circumstance having no bearing on the finding that that undertaking is able to maintain higher revenues than those of its competitors without the various players in the pharmaceutical product markets, namely patients, prescribing doctors, national social security systems and its competitors, being able to challenge that privileged position during the periods selected by the Commission for the purposes of determining dominance.

Since prices are influenced by decisions of public authorities as regards reimbursement levels or maximum prices, those prices are not the result of normal market forces. It is not therefore possible to argue that the level of a price set in such a context is competitive, since it has been set in the absence of competitive mechanisms for ascertaining where such a competitive level lies.

(see paras 262-263, 265)

12. A finding of market power, that is to say the ability of an undertaking to behave to an appreciable extent independently of its competitors, its customers and, ultimately, consumers, in the sense that it is in particular able to maintain prices at a higher level while retaining a much higher market share than those of its competitors, is not conditional on the ability of the undertaking to make use of that market power in such as way as to prevent effective competition from being maintained. As far as concerns practices intended to exclude or reduce competition, in order to be classified as an abuse of a dominant position, behaviour does not necessarily have to result from, or be made possible by, the economic strength of the undertaking, since no causal link is required between the dominant position and the abuse of that position.

(see para. 267)

13. It cannot be argued that intellectual property rights do not constitute a relevant factor for the purposes of determining the existence of a dominant position. Although the mere possession of intellectual property rights cannot be considered to confer such a position, their possession is none the less capable, in certain circumstances, of creating a dominant position, in particular by enabling an undertaking to prevent effective competition on the market. The possession and exercise of intellectual property rights may therefore be relevant evidence of the dominant position.

The argument that the taking into account of intellectual property rights and of their exercise, even if not abusive, in order to establish the existence of a dominant position is liable to reduce any incentive to create innovative products cannot be accepted. Innovation is in any event rewarded by the exclusivity that intellectual property rights confer on the author of the innovation.

Moreover, a dominant position is not prohibited per se; only the abuse of such a position is so proscribed. In this respect, where the holder of the intellectual property right is regarded as enjoying a dominant position, the requirement that use of that right be non-abusive cannot be regarded as insufficient reward in the light of the incentives for innovation.

To be a relevant factor, the existence of solid protection by means of intellectual property rights does not necessarily have to be such as to exclude all competition on the market.

(see paras 270, 273-274)

14. The Commission may base its assessment of a pharmaceutical undertaking’s dominant position on a series of factors, foremost of which is its much higher market share than those of its competitors. Next, in view, first, of the specific features of the markets for pharmaceutical products, which are characterised by ‘inertia’ on the part of prescribing doctors, and, second, of the difficulties encountered by pharmaceutical undertakings to enter a market which increase in line with the number of competitors and products already on that market, the Commission is entitled to take the view that first-mover status is an appreciable competitive advantage. The fact that generic products are in a position to undermine the pharmaceutical undertaking’s dominant position does not call in question the fact that its first-mover status confers on it appreciable competitive advantages.

Furthermore, although the finding of the financial superiority of a pharmaceutical undertaking over that of its competitors, and the finding of the superiority of the financial and human resources devoted to research and development and to its sales force are not sufficient in themselves to warrant the conclusion that that undertaking is in a dominant position on the relevant market during the relevant period, those findings none the less constitute a series of relevant indicia which permit the inference that that undertaking has superior resources to those of its competitors such as to reinforce its market position in relation to them.

(see paras 278, 280, 285-286)

15. The submission to the public authorities of misleading information liable to lead them into error and therefore to make possible the grant of an exclusive right to which an undertaking is not entitled, or to which it is entitled for a shorter period, constitutes a practice falling outside the scope of competition on the merits which may be particularly restrictive of competition. Such conduct is not in keeping with the special responsibility of an undertaking in a dominant position not to impair, by conduct falling outside the scope of competition on the merits, genuine undistorted competition in the common market.

It follows from the objective nature of the concept of abuse that the misleading nature of representations made to public authorities must be assessed on the basis of objective factors and that proof of the deliberate nature of the conduct and of the bad faith of the undertaking in a dominant position is not required for the purposes of identifying an abuse of a dominant position. The question whether representations made to public authorities for the purposes of improperly obtaining exclusive rights are misleading must be assessed in concreto and that assessment may vary according to the specific circumstances of each case. In particular, it is necessary to examine whether, in the light of the context in which the practice in question was implemented, that practice was such as to lead the public authorities wrongly to create regulatory obstacles to competition, for example by the unlawful grant of exclusive rights to the dominant undertaking. In this respect, the limited discretion of public authorities or the absence of any obligation on their part to verify the accuracy or veracity of the information provided may be relevant factors to be taken into consideration for the purposes of determining whether the practice in question is liable to raise regulatory obstacles to competition.

Moreover, in so far as an undertaking in a dominant position is granted an unlawful exclusive right as a result of an error by it in a communication with public authorities, its special responsibility not to impair, by methods falling outside the scope of competition on the merits, genuine undistorted competition in the common market requires it, at the very least, to inform the public authorities of this so as enable them to rectify those irregularities.

Although proof of the deliberate nature of conduct liable to deceive the public authorities is not necessary for the purposes of identifying an abuse of a dominant position, intention none the less also constitutes a relevant factor which may, should the case arise, be taken into consideration by the Commission. The fact that the concept of abuse of a dominant position is an objective concept and implies no intention to cause harm does not lead to the conclusion that the intention to resort to practices falling outside the scope of competition on the merits is in all events irrelevant, since that intention can still be taken into account to support the conclusion that the undertaking concerned abused a dominant position, even if that conclusion should primarily be based on an objective finding that the abusive conduct actually took place.

Lastly, the mere fact that certain public authorities did not let themselves be misled and detected the inaccuracies in the information provided in support of the applications for exclusive rights, or that competitors obtained, subsequent to the unlawful grant of the exclusive rights, the revocation of those rights, is not a sufficient ground to consider that the misleading representations were not in any event capable of succeeding. Where it is established that behaviour is objectively of such a nature as to restrict competition, the question whether it is abusive in nature cannot depend on the contingencies of the reactions of third parties.

Consequently, the Commission applies Article 82 EC correctly in taking the view that the submission to the patent offices of objectively misleading representations by an undertaking in a dominant position which are of such a nature as to lead those offices to grant it supplementary protection certificates to which it is not entitled or to which it is entitled for a shorter period, thus resulting in a restriction or elimination of competition, constitutes an abuse of that position.

(see paras 355-361)

16. 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. The mere possession by an undertaking of an exclusive right normally results in keeping competitors away, since public regulations require them to respect that exclusive right. The argument that a finding of an abuse of a dominant position requires that an exclusive right obtained as a result of misleading representations has been enforced cannot therefore be accepted.

Moreover, it is not the case that the unlawful acquisition of an exclusive right constitutes an abuse of a dominant position only where it would have the effect of eliminating all competition. The fact that the behaviour in question concerns the acquisition of an intellectual property right does not justify such a condition.

Furthermore, where behaviour falls within the scope of the competition rules, those rules apply irrespective of whether that behaviour may also be caught by other rules, of national origin or otherwise, which pursue separate objectives. Similarly, the existence of remedies specific to the patent system is not capable of altering the conditions of application of the prohibitions laid down in competition law and, in particular, of requiring proof of the anticompetitive effects produced by such behaviour.

(see paras 362, 364, 366)

17. Instructions sent to patent attorneys to file supplementary protection certificate applications cannot be regarded as equivalent to the filing of supplementary protection certificate applications before patent offices. The Commission therefore errs in law in considering that an abuse of a dominant position committed by an undertaking in a dominant position on a pharmaceutical product market starts when instructions are transmitted to patent attorneys to file supplementary protection certificate applications before the patent offices. The desired outcome of the alleged misleading nature of the representations, namely the grant of the supplementary protection certificate, can arise only from the time that the supplementary protection certificate applications are filed before the patent offices, and not when the patent attorneys, who have only an intermediary role, receive the instructions regarding those applications.

(see paras 370, 372)

18. In order to constitute an abuse of a dominant position, it is not necessary that the behaviour has a direct effect on competition. In a situation where the practices in question – if they are established – cannot, in any way, be regarded as being covered by normal competition between products on the basis of an undertaking’s performance, it is sufficient for it to be established that, in view of the economic or regulatory context of which those practices form part, they are capable of restricting competition. Thus, the ability of the practice in question to restrict competition may be indirect, provided that it is shown to the requisite legal standard that it is actually liable to restrict competition.

Moreover, in order to achieve its aim, conduct aimed at excluding competitors frequently requires cooperation from third parties, whether from public authorities or market players, since, in practice, such conduct is rarely capable of having a direct effect on the competitive position of competitors. Thus, the success of a practice of excluding competitors by setting up barriers to entry of a regulatory nature through unlawfully obtaining exclusive rights necessarily depends on the reaction of public authorities, or even that of national courts if proceedings have been brought by competitors in order to have those rights invalidated. None the less, representations designed to obtain exclusive rights unlawfully constitute an abuse only if it is established that, in view of the objective context in which they are made, those representations are actually liable to lead the public authorities to grant the exclusive right applied for.

Lastly, the fact that the effect on competition of the abusive behaviour would be felt only several years later does not cause the behaviour in question – if it is established – to lose its abusive character.

(see paras 376-377, 380)

19. The fact that an undertaking is no longer in a dominant position at the time when its abusive behaviour produces its effects does not alter the legal classification to be attached to its acts, since those acts were committed at a time when that undertaking was in a dominant position and it was therefore under a special responsibility not to allow its behaviour to impair genuine undistorted competition in the common market.

(see para. 379)

20. The burden of proof of the existence of the circumstances that constitute an infringement of Article 82 EC is borne by the Commission. It is therefore incumbent on the Commission to adduce evidence capable of demonstrating the existence of the circumstances constituting an infringement.

In this respect, any doubt of the Court must benefit the undertaking to which the decision finding an infringement was addressed. The Court cannot therefore conclude that the Commission has established the infringement at issue to the requisite legal standard if it still entertains any doubts on that point, in particular in proceedings for annulment of a decision imposing a fine.

In the latter situation, it is necessary to take account of the principle of the presumption of innocence resulting in particular from Article 6(2) of the European Convention on Human Rights, which is one of the fundamental rights which, according to the case-law of the Court of Justice, reaffirmed in Article 6(2) EU, are general principles of Community law. Given the nature of the infringements in question and the nature and degree of gravity of the ensuing penalties, the principle of the presumption of innocence applies in particular to the procedures relating to infringements of the competition rules applicable to undertakings that may result in the imposition of fines or periodic penalty payments.

Thus, the Commission must show precise and consistent evidence in order to establish the existence of the infringement. However, it is not necessary for the Commission to adduce such evidence in relation to every aspect of the infringement. It is sufficient if the body of evidence relied on by the institution, viewed as a whole, and whose various elements are able to reinforce each other, meets that requirement.

(see paras 474-477, 839)

21. By replacing, in representations made to patent offices for the purposes of applying for supplementary protection certificates, the issue dates of technical marketing authorisations for medicinal products in several Member States by those corresponding to the publications of the price of the medicinal product in those countries, a dominant undertaking cannot reasonably be unaware that, in the absence of an express disclosure of the interpretation that it intends to adopt of the relevant legislation and which underlies the choice of the dates provided, those representations are liable to mislead the patent offices. Thus, there is no need for the Commission to demonstrate that undertaking’s bad faith or positively fraudulent intent on its part, it being sufficient to note that such conduct, characterised by a manifest lack of transparency, is contrary to the special responsibility of an undertaking in a dominant position not to impair by its conduct genuine undistorted competition in the common market.

(see paras 491, 493)

22. A pharmaceutical undertaking which adopts, over a period of several years, a consistent and linear course of conduct, characterised by the communication to the patent offices of several Member States of misleading representations for the purposes of obtaining the issue of supplementary protection certificates to which it is not entitled, or to which it is entitled for a shorter period, abuses its dominant position. Such misleading representations constitute a practice based exclusively on methods falling outside the scope of competition on the merits. Such conduct solely serves to keep manufacturers of generic products, wrongfully, away from the market by means of the acquisition of supplementary protection certificates in a manner contrary to the regulatory framework establishing those certificates.

(see paras 598, 608-609)

23. In order for an application for marketing authorisation of a generic medicinal product to be dealt with by way of the abridged procedure provided for in point 8(a)(iii) of the third paragraph of Article 4 of Directive 65/65 relating to proprietary medicinal products, the marketing authorisation of the reference medicinal product must still be in force in the Member State concerned on the date that that application is lodged. The abridged procedure is no longer available after withdrawal of the marketing authorisation of the reference medicinal product.

The data relating to the results of the pharmacological and toxicological tests and of the clinical trials which an undertaking carries out for the purposes of obtaining an original marketing authorisation are the fruit of an investment that it makes for the purposes of being able to market a medicinal product. Such an investment is characteristic of practices which come within the scope of competition on the merits and which are liable to benefit consumers.

Directive 65/65 has recognised the interest in protecting such investment by providing for a period of exclusivity during which only the owner of those data can use them. However, after the expiry of that period of exclusivity, point 8(a)(iii) of the third paragraph of Article 4 of Directive 65/65 no longer confers on the owner of an original proprietary medicinal product the exclusive right to make use of the results of the pharmacological and toxicological tests and clinical trials placed in the file and enables manufacturers of essentially similar medicinal products to benefit from the existence of those data in order to be granted a marketing authorisation under an abridged procedure.

In those circumstances, after expiry of the period of exclusivity, conduct designed to prevent manufacturers of generic products from making use of their right to benefit from the results of the pharmacological and toxicological tests and clinical trials produced for the purposes of marketing the original product is not based in any way on the legitimate protection of an investment which comes within the scope of competition on the merits, because, under Directive 65/65, the undertaking no longer has the exclusive right to make use of the results of those pharmacological and toxicological tests and clinical trials.

The deregistration by an undertaking of the marketing authorisations is only such as to prevent applicants for marketing authorisations in respect of essentially similar medicinal products from being able to make use of the abridged procedure and, therefore, to obstruct or delay the market entry of generic products. Similarly, depending on the attitude adopted by the national authorities towards deregistration of the marketing authorisation for a product for reasons unrelated to public health, such deregistration may be such as to prevent parallel imports.

The fact that an undertaking is entitled to request the deregistration of its marketing authorisations for medicinal products that it produces in no way causes that conduct to escape the prohibition laid down in Article 82 EC.

The fact that the regulatory framework offers an alternative route to obtaining a marketing authorisation does not remove the abusive nature of the conduct of an undertaking in a dominant position where that conduct, considered objectively, has the sole object of making the abridged procedure provided for by the legislature in point 8(a)(iii) of the third paragraph of Article 4 of Directive 65/65 unavailable and, accordingly, of keeping producers of generic products away from the market for as long as possible and increasing their costs in overcoming barriers to market entry.

Lastly, the fact that the delay caused to competitors in gaining access to the market is not evaluated precisely does not affect the finding that the conduct at issue is such as to restrict competition, where it is established that that deregistration results in the unavailability of the abridged procedure.

(see paras 669-670, 674-677, 812, 829, 831)

24. Whilst the fact that an undertaking is in a dominant position cannot deprive it of its entitlement to protect its own commercial interests when they are attacked, it cannot use regulatory procedures in such a way as to prevent or make more difficult the entry of competitors on the market, in the absence of grounds relating to the defence of the legitimate interests of an undertaking engaged in competition on the merits or in the absence of objective justification.

As regards conduct in which regulatory procedures are used without any basis in competition on the merits, evidence that, in view of its economic or regulatory context, that conduct is capable of restricting competition is sufficient to classify it as an abuse of a dominant position.

(see paras 672, 817, 824, 845)

25. The illegality of abusive conduct under Article 82 EC is unrelated to its compliance or non-compliance with other legal rules. In the majority of cases, abuses of dominant positions consist of behaviour which is otherwise lawful under branches of law other than competition law.

(see para. 677)

26. The case-law on ‘essential facilities’ relates, in essence, to circumstances in which a refusal to supply by an undertaking in a dominant position, by virtue, in particular, of the exercise of a property right, may constitute an abuse of a dominant position. That case-law therefore relates in particular to situations in which the free exercise of an exclusive right, being a right which rewards investment or innovation, may be limited in the interest of undistorted competition in the common market.

In the case of a pharmaceutical undertaking in a dominant position which deregisters the marketing authorisations for the medicinal products that it manufacturers, so as to render inapplicable the abridged procedure provided for in point 8(a)(iii) of the third paragraph of Article 4 of Directive 65/65 relating to proprietary medicinal products, thus restricting the use of the information derived from pharmacological and toxicological tests and clinical trials, the case-law on ‘essential facilities’ is not applicable. Thus, such conduct is not a refusal to give access to the results of the pharmacological and toxicological tests and clinical trials contained in the file, since the undertaking cannot, in any event, use its alleged property right to prevent the national authorities from relying on the data in question in the abridged procedure. Moreover, the fact that the abridged procedure is no longer available after withdrawal of the marketing authorisation of the reference medicinal product is not the concern to ensure that the manufacturer of the reference medicinal product has exclusivity with regard to the data that he has supplied, but the concern to ensure that public health is safeguarded, which constitutes a primary purpose of Directive 65/65.

(see paras 679, 682-683)

27. Although the Commission is required to take into account a possible objective justification for conduct which may constitute an abuse of a dominant position, it is still necessary for the undertaking concerned to raise that objective ground of justification during the administrative procedure and put forward arguments and evidence in support thereof. That is more specifically the case where the undertaking concerned is alone aware of that objective justification or is naturally better placed than the Commission to disclose its existence and demonstrate its relevance.

Since the lawfulness of a Community act is to be assessed in the light of the information available to the Commission when it was adopted, in proceedings before the Community judicature, no one can rely on matters of fact which were not put forward in the course of the administrative procedure.

(see paras 686-687)

28. The preparation by a pharmaceutical undertaking, even in a dominant position, of a strategy whose object it is to minimise erosion of its sales and to enable it to deal with competition from generic products is legitimate and is part of the normal competitive process, provided that the conduct envisaged does not depart from practices coming within the scope of competition on the merits, which is such as to benefit consumers.

However, the fact that an undertaking in a dominant position is under no obligation to protect the interests of competitors does not make practices implemented solely to exclude competitors compatible with Article 82 EC. The mere desire of an undertaking in a dominant position to protect its own commercial interests and to guard against competition from generic products and parallel imports does not justify recourse to practices falling outside the scope of competition on the merits.

(see paras 804, 816)

29. Under Community competition law different companies belonging to the same group form an economic unit and therefore an undertaking, if those companies do not independently determine their own conduct on the market.

In order for conduct to be capable of being classified as an abuse within the meaning of Article 82 EC, it is not necessary that it be implemented as a result of a strategy prepared at the management level of a group of companies.

Conduct implemented by one of the companies in the economic unit constituted by that group is also capable of infringing Article 82 EC.

Furthermore, where a subsidiary is wholly owned by a parent company, it is not necessary to examine whether the parent company is able to exert decisive influence over the policy of its subsidiary, since that subsidiary necessarily follows a policy laid down by the same executive bodies as those which determine that parent company’s policy.

(see paras 818-820)

30. Where an applicant requests the Court, in the body of the arguments set out in the application and in the reply, to reduce the amount of the fines that the Commission imposed on it for infringement of the competition rules, but omits, in the form of order sought, to formally seek an order that their amount should be reduced, such an omission does not preclude the Court’s exercising its unlimited jurisdiction in relation to fines. Even in the absence of any formal submission, the Court is authorised to reduce the amount of an excessive fine since such a result would not be ultra petita, but would on the contrary amount to a partial upholding of the application.

(see para. 884)

31. The concept of a single and continuous infringement relates to a series of actions which form part of an ‘overall plan’ because their identical object distorts competition within the common market. For the purposes of characterising various instances of conduct as a single and continuous infringement, it is necessary to establish whether they complement each other inasmuch as each of them is intended to deal with one or more consequences of the normal pattern of competition and, by interacting, contribute to the realisation of the objectives intended within the framework of that overall plan. In that regard, it is necessary to take into account any circumstance capable of establishing or casting doubt on that complementary link, such as the period of application, the content (including the methods used) and, correlatively, the objective of the various actions in question.

A single and continuous infringement encompasses conduct by a pharmaceutical undertaking which is consistent over time, stems from a strategy prepared by its central bodies and is characterised by the communication to the patent offices of misleading representations for the purposes of obtaining the issue of supplementary protection certificates to which it is not entitled or to which it is entitled for a shorter period.

(see paras 892-893)

32. An abuse of a dominant position consisting in misleading representations made deliberately by an undertaking in order to obtain exclusive rights to which it is not entitled or to which it is entitled for a shorter period, the purpose of which is to keep competitors away from the market, quite clearly constitutes a serious infringement. The fact that such abuse is novel cannot call that finding into question, given that such practices are manifestly contrary to competition on the merits. Moreover, the fact that conduct with the same features has not been examined in past Commission decisions does not exonerate an undertaking.

33. An abuse of a dominant position consisting in the deregistration by a pharmaceutical undertaking of marketing authorisations for medicinal products that it manufactures, the purpose of which is to create obstacles to the market entry of generic products in several countries and to parallel imports in other countries, thus resulting in partitioning of the common market, also constitutes a serious infringement.

(see para. 901)

When determining the amount of the fine for infringement of the Community competition rules, factors relating to the object of a course of conduct may be more significant for the purposes of setting the amount of the fine than those relating to its effects.

(see paras 902, 911)

JUDGMENT OF THE GENERAL COURT (Sixth Chamber, Extended Composition)

1 July 2010 ( )

(Competition – Abuse of dominant position – Market in anti-ulcer medicines – Decision finding an infringement of Article 82 EC – Market definition – Significant competitive constraints – Abuse of procedures relating to supplementary protection certificates for medicinal products and of marketing authorisation procedures for medicinal products – Misleading representations – Deregistration of marketing authorisations – Obstacles to the marketing of generic medicinal products and to parallel imports – Fines)

In Case T‑321/05,

AstraZeneca AB, established in Södertälje (Sweden),

AstraZeneca plc, established in London (United Kingdom),

represented initially by M. Brealey QC, M. Hoskins, D. Jowell, Barristers, F. Murphy, G. Sproul, I. MacCallum and C. Brown, Solicitors, and subsequently by M. Brealey, M. Hoskins, D. Jowell, F. Murphy and C. Brown, and lastly by M. Brealey, M. Hoskins, D. Jowell and F. Murphy,

applicants,

supported by

European Federation of Pharmaceutical Industries and Associations (EFPIA), established in Geneva (Switzerland), represented by M. Van Kerckhove, lawyer,

intervener,

v

European Commission, represented initially by F. Castillo de la Torre, É. Gippini Fournier and A. Whelan, and subsequently by F. Castillo de la Torre, É. Gippini Fournier and J. Bourke, acting as Agents,

defendant,

APPLICATION for annulment of Commission Decision C(2005) 1757 final of 15 June 2005 relating to a proceeding under Article 82 [EC] and Article 54 of the EEA Agreement (Case COMP/A.37.507/F3 – AstraZeneca),

THE GENERAL COURT (Sixth Chamber, Extended Composition),

composed of A.W.H. Meij (Rapporteur), President, V. Vadapalas, N. Wahl, L. Truchot and S. Frimodt Nielsen, Judges,

Registrar: C. Kristensen, Administrator,

having regard to the written procedure and further to the hearing on 26 and 27 November 2008,

gives the following

Judgment

Background to the dispute

1 Astra AB was a company incorporated under Swedish law established in Södertälje (Sweden) and was the parent company of a pharmaceutical group including, inter alia, AB Hässle and Astra Hässle AB, two wholly-owned subsidiaries established in Mölndal (Sweden). With effect from 6 April 1999, Astra merged with Zeneca Group plc to form AstraZeneca plc, the second applicant in this case, a holding company established in London (United Kingdom). As a result of that merger, Astra, which was wholly owned by AstraZeneca plc, acquired the name AstraZeneca AB, the first applicant in this case, and became a research and development, marketing and production company. The companies which belonged to the Astra group and those now in the AstraZeneca plc group will be called ‘AZ’. However, in so far as AstraZeneca plc and AstraZeneca AB are being referred to in their capacity as parties to these proceedings, they will be called together ‘the applicants’.

2 AZ is a pharmaceutical group active, worldwide, in the sector of inventing, developing and marketing innovative products. Its business is focused on a number of pharmaceutical areas including, in particular, that of gastrointestinal conditions. In that regard, one of the major products marketed by AZ is known as ‘Losec’, a brand name used in most European markets for that omeprazole product.

3 On 12 May 1999, Generics (UK) Ltd and Scandinavian Pharmaceuticals Generics AB (‘the complainants’) lodged a complaint pursuant to Article 3 of Regulation No 17 of the Council of 6 February 1962, First Regulation implementing Articles [81 EC] and [82 EC] (OJ, English Special Edition 1959-1962, p. 87) against Astra, by which they complained of AZ’s conduct aimed at preventing them from introducing generic versions of omeprazole on a number of European Economic Area (EEA) markets.

4 By decision of 9 February 2000, adopted pursuant to Article 14(3) of Regulation No 17, the European Commission ordered AZ to submit to investigations at its premises in London and Södertälje. In 2002 and 2003, AZ also replied to three requests for information pursuant to Article 11 of Regulation No 17.

5 On 25 July 2003, the Commission adopted a decision to initiate the procedure. On 29 July 2003, the Commission sent a statement of objections to AZ, to which it replied on 3 December 2003. A meeting was held on 29 January 2004 to discuss certain evidence submitted by AZ in its reply to the statement of objections. AZ also submitted various documents, including, inter alia, the memoranda of 27 January and 11 February 2004, in order to address issues raised by the Commission at the abovementioned meeting. On 13 February 2004, AZ provided the Commission with materials relating to the second alleged abusive course of conduct.

6 A hearing took place on 16 and 17 February 2004. On 26 February 2004, the Commission sent AZ a request for information, pursuant to Article 11 of Regulation No 17, relating to the issue of dominance. AZ replied to the request on 12 March 2004. On 23 November 2004, the Commission offered AZ the opportunity to comment on a number of factual elements and considerations which had not been included in the statement of objections. AZ provided its observations on those matters by letter of 21 January 2005.

7 On 15 June 2005, the Commission adopted a decision relating to a proceeding under Article 82 [EC] and Article 54 of the EEA Agreement (Case COMP/A.37.507/F3 – AstraZeneca) (‘the contested decision’), by which it found that AstraZeneca AB and AstraZeneca plc had committed two abuses of a dominant position, in breach of Article 82 EC and Article 54 of the EEA Agreement.

8 The first alleged abuse consisted of a pattern of allegedly misleading representations made before the patent offices in Germany, Belgium, Denmark, Norway, the Netherlands and the United Kingdom, and before the national courts in Germany and Norway (Article 1(1) of the contested decision). The second alleged abuse consisted of the submission of requests for deregistration of the marketing authorisations for Losec capsules in Denmark, Norway and Sweden combined with the withdrawal from the market of Losec capsules and the launch of Losec MUPS tablets in those three countries (Article 1(2) of the contested decision).

9 The Commission imposed on the applicants jointly and severally a fine of EUR 46 million and on AstraZeneca AB a fine of EUR 14 million (Article 2 of the contested decision).

Procedure and forms of order sought by the parties

10 By application lodged at the Registry of the Court on 25 August 2005, the applicants brought the present action.

11 By document lodged at the Registry of the Court on 7 December 2005, Generics (UK) and Merck NM AB applied for leave to intervene in support of the form of order sought by the Commission.

12 By document lodged at the Registry of the Court on 15 December 2005, the European Federation of Pharmaceutical Industries Associations (‘the EFPIA’) applied for leave to intervene in support of the form of order sought by the applicants.

13 By document lodged on 10 February 2006, the applicants made an application for confidential treatment vis-à-vis the interveners. That application for confidential treatment was not contested.

14 By orders of 4 July and 29 November 2006, the President of the Second Chamber of the Court allowed the EFPIA to intervene in the proceedings in support of the form of order sought by the applicants, and Generics (UK) and Merck NM to intervene in support of the form of order sought by the Commission.

15 On 26 January 2007, Generics (UK) and Merck NM waived their right to lodge a statement in intervention.

16 By letter lodged at the Registry of the Court on 24 November 2008, Generics (UK) and Merck NM withdrew their intervention in support of the form of order sought by the Commission.

17 By order of the President of the Sixth Chamber of the Court of 17 December 2008, Generics (UK) and Merck NM were removed from the case as interveners in support of the form of order sought by the Commission.

18 Upon hearing the Judge-Rapporteur, the Court (Sixth Chamber, Extended Composition) decided to open the oral procedure and, pursuant to Article 64 of its Rules of Procedure, invited the main parties to answer a series of questions. They complied with those requests within the prescribed periods.

19 At the hearing on 26 and 27 November 2008, the parties presented oral argument and replied to questions put by the Court.

20 The applicants claim that the Court should:

– annul the contested decision;

– order the Commission to pay the costs.

21 The EFPIA contends that the Court should:

– annul the contested decision;

– order the Commission to pay the costs.

22 The Commission contends that the Court should:

– dismiss the action;

– order the applicants to pay the costs.

Law

23 By their action, the applicants call in question the lawfulness of the contested decision as regards the definition of the relevant market, the assessment of the dominant position, the first abuse of a dominant position, the second abuse of a dominant position and the amount of the fines imposed. The Court will examine in turn the pleas put forward by the applicants in the context of each of these issues.

24 As a preliminary point, the Court notes, first of all, that the applicants have submitted an application for confidential treatment in respect of a large quantity of information relating, inter alia, to documentary evidence of conduct which, according to the Commission, amounts to an abuse of a dominant position.

25 The Court grants that application for confidential treatment in so far as the information in question does not appear in the non-confidential version of the contested decision, which is published on the internet site of the Directorate-General for Competition of the Commission and which is therefore accessible to the public. However, the application for confidential treatment must be dismissed in so far as it concerns information which appears in the non-confidential version of the contested decision. That information has in any event lost any confidential character it may have had, because it has been accessible to the public (see, to that effect, Case T‑99/04 AC-Treuhand v Commission [2008] ECR II‑1501, paragraph 19).

26 The Court notes, next, that, at the hearing, the applicants expressed reservations about the Commission’s use of a document submitted on 24 November 2008, which included, first, graphs reproducing, according to the Commission, data contained in tables annexed to the contested decision and, second, extracts from the application and from the annexes to the pleadings submitted by the parties in the course of the written procedure.

27 In this regard, the document submitted by the Commission a few days prior to the hearing essentially reproduces information which was already in the documents before the Court. That is true of the graphs set out at pages 2 to 8, 10 to 16 and 18 to 24 of that document, which reproduce the data presented in the tables annexed to the contested decision, and also the extracts from the application and the annexes to the pleadings cited in the document. The use made by the Commission of that document at the hearing therefore forms part of the oral presentation of the arguments previously expounded during the written procedure before the Court. Accordingly, the reservations expressed by the applicants on those points must be disregarded. The position is different as regards the graphs set out at pages 26 to 32 of the aforementioned document, which contain information relating to a price differential in percentage terms, which do not appear in tables 24 to 30 in the Annex to the contested decision to which those figures refer. To the extent that the graphs contain more information than is contained in the tables to which they refer, the document submitted by the Commission must be declared inadmissible on that point and the Court will not take account of those data in its findings.

A – Relevant product market

28 In the contested decision, the Commission found in essence that antihistamines (‘H2 blockers’) did not exercise significant competitive constraints over proton pump inhibitors (‘PPIs’) and that, consequently, the relevant product market was composed exclusively of the latter. The Commission based that finding on a series of considerations which took account of the features of competition in the pharmaceutical sector and which concerned, principally, the intrinsic features of the products, their therapeutic uses, the continuous increase of PPI sales at the expense of H2 blockers, price factors, and ‘natural’ events which occurred in Germany and the United Kingdom.

29 The applicants contest the soundness of the Commission’s definition of the relevant market and put forward, to that effect, two pleas in law. The first plea in law alleges a manifest error of assessment as to the relevance of the gradual nature of the increase in use of PPIs at the expense of H2 blockers. The second plea in law alleges various inconsistencies and errors of assessment.

1. Preliminary observations

30 It should be borne in mind, first of all, that, as is apparent inter alia from paragraph 2 of the Commission Notice on the definition of relevant market for the purposes of Community competition law (OJ 1997 C 372, p. 5; ‘the Notice on market definition’), the definition of the relevant market is carried out, in the context of the application of Article 82 EC, in order to define the boundaries within which it must be assessed whether a given undertaking is able to behave, to an appreciable extent, independently of its competitors, its customers and, ultimately, consumers (see, to that effect, Case 322/81 Nederlandsche Banden-Industrie-Michelin v Commission [1983] ECR 3461, paragraph 37).

31 According to settled case-law, for the purposes of investigating the possibly dominant position of an undertaking, the possibilities of competition must be judged in the context of the market comprising the totality of the products which, with respect to their characteristics, are particularly suitable for satisfying constant needs and are only to a limited extent interchangeable with other products; those possibilities of competition must also be assessed in the light of the competitive conditions and of the structure of supply and demand (Nederlandsche Banden-Industrie-Michelin v Commission, paragraph 30 above, paragraph 37; Cases T‑229/94 Deutsche Bahn v Commission [1997] ECR II‑1689, paragraph 54; and T‑219/99 British Airways v Commission [2003] ECR II‑5917, paragraph 91). As is apparent inter alia from paragraph 7 of the Notice on market definition, the relevant product market therefore comprises all those products or services which are regarded as substitutable by consumers, by reason of the products’ characteristics, their prices and their intended use.

32 Next, it follows from settled case-law that, although as a general rule the Community judicature undertakes a comprehensive review of the question as to whether or not the conditions for the application of the competition rules are met, the review of complex economic appraisals made by the Commission is necessarily limited to checking whether the relevant rules on procedure and on stating reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers. Likewise, in so far as the Commission’s decision is the result of complex technical appraisals, those appraisals are in principle subject to only limited review by the Court, which means that the Court cannot substitute its own assessment of matters of fact for the Commission’s (see Case T‑201/04 Microsoft v Commission [2007] ECR II‑3601, paragraphs 87 and 88 and the case-law cited).

33 However, while the Community judicature recognises that the Commission has a margin of assessment in economic or technical matters, that does not mean that it must decline to review the Commission’s interpretation of economic or technical data. In order to take due account of the parties’ arguments, the Community judicature must not only establish whether the evidence put forward is factually accurate, reliable and consistent but must also determine whether that evidence contains all the relevant data that must be taken into consideration in appraising a complex situation and whether it is capable of substantiating the conclusions drawn from it (see, to that effect, in relation to control of concentrations, Case C‑12/03 P Commission v Tetra Laval [2005] ECR I‑987, paragraph 39; see also, to that effect, Microsoft v Commission, paragraph 32 above, paragraph 89).

2. First plea in law, alleging a manifest error of assessment as to the relevance of the gradual nature of the increase in use of PPIs at the expense of H2 blockers

a) Arguments of the applicants and of the EFPIA

34 The applicants and the EFPIA argue that competition in the pharmaceutical sector has a number of specific features. The applicants claim, first, that the markets for pharmaceutical products in the relevant Member States are characterised by public regulation of pricing and reimbursement. Secondly, in those markets, the consumer (patient) differs from the decision maker (doctor) and, most of the time, from the payer (national insurance service or private health insurance). Since doctors and patients do not bear the bulk of the cost of prescription medicines, doctors are usually only slightly sensitive to the price of medicines when prescribing them. During the relevant period, prescribing doctors were primarily guided by the therapeutic appropriateness and effectiveness of medicines rather than by their price. Moreover, actual trends in the consumption of prescribed medicines constitute a key factor in assessing whether medicines are in the same product market. Finally, doctors’ prescribing practice is characterised by a certain ‘inertia’. The EFPIA adds that, in the pharmaceutical sector, competition takes place primarily at the level of innovation, rather than at the level of price. It therefore stresses the importance of intellectual property protection in order to encourage the investment necessary for innovation.

35 According to the applicants, it is common ground that PPIs are therapeutically superior to H2 blockers. That therapeutic superiority was accepted by the scientific community from the early 1990s. However, prescribing doctors did not recognise that superiority immediately. The increase in use of PPIs over the relevant period was gradual and took place at the expense of H2 blockers. PPIs and H2 blockers thus have similar therapeutic uses and were prescribed on fundamentally identical medical grounds.

36 The applicants and the EFPIA assert that H2 blockers must have exerted a significant competitive constraint on Losec, since sales of Losec increased at the expense of H2 blockers in a gradual manner. They therefore dispute that PPIs and H2 blockers belonged to separate product markets from 1993 onwards.

37 In support of that assertion, the applicants refer, first, to a report prepared by IMS Health concerning the use of PPIs and H2 blockers to treat acid-related gastric disease in the major European markets in the period 1990-2000. That report concluded that the increased use of PPIs had been a gradual process and that, at the end of the relevant period, there were major micro-diagnoses in most countries for which a significant percentage of prescriptions (20% or more) were H2 blockers. Moreover, H2 blockers were never completely replaced by PPIs in any country. With the exception of Sweden, even for micro-diagnoses at the more severe end of the spectrum of acid-related conditions, such as gastric and duodenal ulcers, a significant percentage (10% or more) of patients received a prescription for an H2 blocker. In Sweden, all patients diagnosed with gastric ulcer received PPIs.

38 To the same effect, the EFPIA also points out that PPIs gradually, and only partly, replaced H2 blockers due to concerns about their safety and side effects and that the contested decision contains no evidence to support the Commission’s contention that scientific and clinical studies carried out between the launch date of Losec and the start of the material period demonstrated the efficacy of the product relative to existing treatments.

39 Second, statements from four independent medical experts in the field of acid-related gastrointestinal diseases establish that acceptance of Losec by prescribing doctors was hindered by, inter alia, their reluctance to prescribe PPIs because of the fact that they were perceived as much stronger medicines than H2 blockers, arousing some suspicion as to their possible side effects. Those witness statements confirm that the acceptance of PPIs by doctors was a gradual process.

40 Third, the applicants refer to the Lexecon report, according to which doctors and patients have incomplete information about the characteristics of new medicines and only learn about these qualities slowly, on the basis of their personal experience or published medical literature. It therefore follows that new medicines usually require time to gain substantial market shares. Moreover, companies which are among the early market entrants enjoy a competitive advantage.

41 The applicants dispute that the ‘inertia’ characterising doctors’ prescribing practices is a factor exogenous to competition, since, in their view, it is, on the contrary, a relevant feature of the analysis of competition in the pharmaceutical product markets, as the Commission recognised in recital 362 of the contested decision. They argue that ‘inertia’ on the part of the doctor depends, inter alia, on how good the incumbent medicine is, what advantages the new product has and how quickly doctors get to know about that new product. The EFPIA submits, in this regard, that, if prescribing doctors are satisfied with the existing treatments their patients are receiving and those patients are adequately stabilised with those existing treatments, they will be cautious about switching to the use of another product unless the clinical data convincingly demonstrate that there are clinical advantages in doing so. Consequently, in the submission of the applicants, since ‘inertia’ is one of the principal obstacles which has to be overcome by a new entrant, comparative clinical studies, promotional activities and visits to doctors are important aspects of competition, of which the manufacturer of the new product will have to make use.

42 The EFPIA adds that the applicants undertook a range of work which produced consistent findings, according to which overcoming the ‘inertia’ in prescribing practices required a considerable time and H2 blockers exerted continuous competitive pressure on PPIs during the period 1993-2000. It claims that the Commission has failed to provide any refuting evidence demonstrating that H2 blockers stopped exerting competitive pressure on PPIs as from 1993 so that those products belonged to separate product markets.

43 Fourth, AZ’s contemporaneous internal strategy documents demonstrate that demand for H2 blockers showed resilience and that they were AZ’s primary competitive focus for Losec. The fact that the use of PPIs gradually increased at the expense of H2 blockers, and that the competitive challenge for AZ was for Losec to take market shares from H2 blockers, demonstrates that, during the relevant period, Losec and H2 blockers were substitute products that competed with each other. That view is supported by the fact that, even by the end of the relevant period, H2 blockers were still prescribed in substantial quantities for all the major micro-diagnoses.

44 Fifth, the applicants maintain that the Commission shows inconsistency by accepting the relevance of ‘inertia’ in the context of assessing dominance (recital 542 of the contested decision), while rejecting its relevance in the context of market definition, on the ground that it is an exogenous factor (recital 467 of the contested decision). In their view, ‘inertia’ not only cushions H2 blockers from competition but is also a competitive constraint on PPIs. They also dispute that, once overcome, ‘inertia’ is no longer a relevant factor in a doctor’s decision-making process and that it does not serve to reverse the process of substitution of H2 blockers by PPIs. Moreover, by stating that ‘inertia’ protected H2 blockers from a more rapid decline, the Commission implicitly accepts that it played a role by constraining prescribing practices during the relevant period. The applicants also state that, in recitals 541 to 543 and 551 of the contested decision, the Commission emphasises the advantages associated with first-mover status in the pharmaceutical sector and with having an established product.

45 They submit, in addition, that the Commission’s arguments that, on the one hand, a considerable proportion of sales of PPIs were not substituting for former sales of H2 blockers and, on the other hand, doctors prescribe H2 blockers or PPIs depending on the step-down or step-up in treatment desired, cannot be taken into consideration since they are not included in the contested decision and are being raised for the first time at the stage of proceedings before the Court. With regard to the first of those two arguments, they add that it is not supported by the contested decision, which does not contain any consideration, in recitals 381 to 385 and 37 to 47, of actual prescribing practices during the period between 1993 and 2000, and that it even departs from recital 386 of the contested decision. This argument is, moreover, contradicted by the conclusions of the IMS Health study. With regard to the second argument, the applicants point out that the Commission did not carry out any investigation as to doctors’ actual prescribing practices and refer to their reply to the statement of objections.

46 In addition, the EFPIA complains that the Commission, contrary to the judgment in Case T‑168/01 GlaxoSmithKline Services v Commission [2006] ECR II‑2969, paragraph 276, omitted to check the nature and import of the evidence taken into consideration and that it drew inferences from documents submitted to it during the investigation without conducting any independent analysis. As regards its examination of doctors’ prescribing practices, the Commission chose data selectively from the IMS Health report produced by the applicants, without rebutting the other data contained in that report showing that H2 blockers exercised competitive constraints over PPIs. The EFPIA maintains that the only evidence mentioned in the contested decision that was not supplied by the applicants comes from a correlation study supplied by the complainants, which the Commission itself recognised as suffering from methodological weaknesses.

47 The EFPIA submits that it is not sufficient to show that sales by value of PPIs increased and sales by value of H2 blockers decreased or stagnated in order to conclude that the latter no longer exert competitive pressure on PPIs. It points out, in that regard, that the volume of sales of H2 blockers in Germany and the United Kingdom exceeded that of sales of PPIs until 1997 and 1998 respectively, and in 2000 still represented 40% of combined PPI and H2 blocker sales in those countries. Moreover, the fact that Losec lost sales to its generic version and to other PPIs does not mean that H2 blockers did not exert competitive pressures on PPIs during the relevant period.

48 In the light of the foregoing, the applicants and the EFPIA therefore submit that the Commission’s conclusion that PPIs and H2 blockers were in different product markets from 1993 onwards is wrong.

b) Arguments of the Commission

49 The Commission observes, first, that the applicants focus exclusively on prescription practices, without addressing the aspect of the contested decision concerning the question of how H2 blockers failed to exercise any significant competitive constraint on Losec during the relevant period, and in particular on the setting of its price. In its view, a ground of annulment as partial as that cannot succeed.

50 It then makes three points of clarification regarding the applicants’ claims. First, it states that the examination does not relate to the question of whether an innovative new product such as Losec forms a separate product market at the time of its introduction on the market, or to that of whether Losec was dominant in a separate PPI market shortly after its launch. Losec was launched on the market in the late 1980s, that is four to five years before the year adopted by the Commission as the starting point for the market definition (1993). Studies demonstrating the efficacy of Losec relative to existing treatments were carried out between its launch date and the beginning of the relevant period and were communicated to medical practitioners. Consequently, the significant sales of PPIs in 1993 and 1994 show that, at the beginning of the relevant period, the message of the therapeutic superiority of PPIs was already reaching doctors and that the effect of ‘inertia’ had largely been overcome.

51 Secondly, the Commission points out that the combined sales of PPIs and H2 blockers underwent a considerable expansion in the countries concerned, increasing from a value of approximately United States Dollars (USD) 644 million in 1993 to approximately USD 1.43 billion in 1999. The IMS Health data show that PPIs accounted for the bulk of that expansion. They were used in the treatment of conditions for which H2 blockers were not previously regarded as appropriate or effective. Sales of the latter tended to decline in absolute value terms, before stabilising or increasing very moderately relative to their 1993 levels, then decreasing considerably from 1997 onwards. According to the Commission, the temporary stabilisation and increase in sales of H2 blockers coincided with a partial shift to treatment areas where they were less exposed to competition from PPIs. The reaction of the producers of H2 blockers in the face of the threat from PPIs was to reposition their products towards the treatment of milder gastrointestinal conditions, and even to convert them into over-the-counter drugs. It necessarily follows from the considerable expansion of combined sales during the relevant period, which was largely captured by PPIs, that PPIs did not only replace sales of H2 blockers. That is supported by recitals 382 and 386 of the contested decision, in which it is observed that PPIs were deemed to be the only effective remedy for a large number of conditions. The Commission points out, however, that it does not contend that the growth in PPI sales over that period was exclusively at the expense of H2 blockers.

52 Moreover, those two products were prescribed by medical practitioners sequentially at the different stages of a single course of treatment, depending on whether a step-down or step-up of that treatment was required. Consequently, PPIs and H2 blockers should not be considered as substitutes, but as part of a hierarchy of medicines. The Commission observes, in that regard, that the applicants do not dispute that the therapeutic superiority of PPIs over H2 blockers results in the two products serving different types of demand. There is comprehensive evidence on actual prescriptions by doctors, demonstrating that PPIs progressively extended to the entire relevant disease spectrum (recitals 380 to 399 of the contested decision). The Commission adds that it is not necessary to quantify the prevalence of step-up and step-down treatment strategies, as these are only part of the explanation of the extraordinary sales expansion, which necessarily implies that PPIs were prescribed in circumstances in which H2 blockers had not traditionally been used.

53 In reply to the EFPIA’s arguments, the Commission submits that the clear therapeutic superiority of PPIs over H2 blockers exceeds the quality that might be attributed to the best product in a given class of treatments. It is clear from AZ’s explanations in its 1996 annual report and from its publications (recitals 37 and 38 of the contested decision) that from the end of the 1970s it considered omeprazole to be a superior pharmaceutical product. The Commission points out that the Court has acknowledged that two products with similar functions and whose substitutability is asymmetrical, the relationship between them being characterised by migration from one product to the other, do not belong to the same product market, even if the migration is not complete by the end of the relevant period (Case T‑340/03 France Télécom v Commission [2007] ECR II‑107, paragraphs 88 and 89).

54 The Commission further disputes the EFPIA’s assertion that it did not analyse the factors that determine doctors’ prescribing practice. It states that in the contested decision, it relies on IMS Health data on prescriptions, both in aggregated form in respect of each country and year and in disaggregated form detailing prescriptions across the disease spectrum. It identified the prescribing patterns throughout the relevant period, as well as the therapeutic factors influencing the prescribing choices (recitals 386 to 399 of the contested decision).

55 Thirdly, the Commission draws attention to three points in the consumption trends, which are key elements in its analysis. Firstly, the annual percentage of sales of either H2 blockers or PPIs as a proportion of the combined sales of those products does not convey either the market expansion dominated by PPIs or the repositioning of H2 blockers. Secondly, the increase in the absolute value of sales of PPIs between 1991 and 2000 was dramatic. Thirdly, the ‘inertia’ of medical practitioners contributed to the gradual character of the market process.

56 As regards the ‘inertia’ characterising prescribing practice, the Commission contends that it is an exogenous characteristic of the market, unrelated to competition on the merits, which autonomously dampens demand for a new product. Thus, ‘inertia’ on the part of prescribing doctors cannot be regarded as a competitive constraint imposed by H2 blockers, akin to brand loyalty generated by past reputation or advertising. In the Commission’s view, producers of H2 blockers had few resources available for appreciably increasing that ‘inertia’. Moreover, there is nothing to indicate that, once the effect of ‘inertia’ had been overcome, H2 blockers offered sufficient advantage to reverse the process of one-way substitution.

57 As regards the applicants’ argument that the Commission contradicts itself by taking the view that ‘inertia’ is a relevant factor in the determination of dominance, the Commission contends that ‘inertia’ may mitigate the constraints imposed on an incumbent firm by new products by creating a barrier to entry and expansion for products challenging the putatively dominant product. It points out, in that regard, that the purpose of market definition in this case is to determine the competitive constraints on PPIs, and not the competitive constraints on H2 blockers. In addition, the Commission points out that, in any event, the market definition is based on an overall assessment of all relevant factors and cannot be called into question on the assumption – which it disputes – that ‘inertia’ could be regarded as a competitive advantage specifically attributable to H2 blockers.

58 As regards the competitive constraints on PPIs, the Commission maintains that it is evident from the consumption data that ‘inertia’ neither prevented the growth of PPIs nor permitted H2 blockers to reverse the process of substitution by PPIs. It therefore infers from this that ‘inertia’ protected sales of H2 blockers from an even more rapid decline. Moreover, the fact that PPI producers succeeded in negotiating and applying prices which were higher than those of H2 blockers shows that national health systems had accepted that PPIs represented an innovation which was not comparable to H2 blockers.

59 The Commission makes it clear that it does not maintain that PPIs have been part of a market distinct from that of H2 blockers since 1993. It did not in fact exclude, in recital 504 of the contested decision, the possibility that a distinct PPI market may have existed before that date. However, it points out that it was unnecessary to examine previous years, because the abusive behaviour had begun in 1993.

60 The Commission submits that the evidence to which the applicants refer in support of their argument relates to uncontested factual premises and cannot help them. Thus, the IMS Health report attests to the gradual process by which PPIs displaced H2 blockers, a fact which was taken into account in the contested decision. At the very most, AZ’s expert medical testimony explains the origins of the ‘inertia’ phenomenon, but does not explain how H2 blockers exercised a competitive constraint over PPIs. The Lexecon report does not address either the considerable lapse of time between the first marketing of Losec and 1993 or the broad acknowledgement of the superiority of PPIs over H2 blockers. Nor does it explain how ‘inertia’ could be attributable to the competitive constraints exercised by H2 blockers over PPIs. Finally, AZ’s internal documents mentioning the resilience of H2 blockers concern an undisputed fact. However, those documents do not demonstrate that H2 blockers exercised significant competitive constraints over PPIs.

c) Findings of the Court

61 The dispute between the parties regarding the definition of the relevant product market centres on the competitive interaction between two pharmaceutical products, PPIs and H2 blockers. It is appropriate first of all to present those products succinctly.

62 It is apparent from recital 34 of the contested decision that histamine receptor antagonists (also known as ‘antihistamines’ or ‘H2 blockers’) and PPIs are pharmaceutical products for the treatment of gastrointestinal acid-related conditions which proactively inhibit acid secretion into the stomach. Acid is pumped into the stomach by a specific enzyme (‘the proton pump’) inside the parietal cells along the stomach’s wall. While H2 blockers only block one of the stimulants of the proton pump, namely the histamine receptors in the parietal cells, PPIs operate on the proton pump itself. In the contested decision, the Commission thus found that H2 blockers only operated indirectly on the proton pump, whereas PPIs had the ability to operate directly on the proton pump.

63 Next, it should be noted that it is common ground that the therapeutic strength of PPIs is significantly greater than that of H2 blockers. The parties also agree that sales of PPIs increased significantly and that sales of H2 blockers fell significantly. As the Commission observes, it is apparent from tables 9 to 15 in the Annex to the contested decision that combined sales of PPIs and H2 blockers, measured in value terms, underwent considerable expansion in Germany, Belgium, Denmark, Norway, the Netherlands, the United Kingdom and Sweden between 1991 and 2000, with sales growth of PPIs accounting for the bulk of that expansion. During that same period, sales of H2 blockers, also measured in value terms, declined considerably. Similarly, it is clear from tables 17 to 23 in that annex that the combined number of PPI and H2 blocker treatments increased considerably between 1991 and 1999 or 2000 in those countries. Within that trend, the number of PPI treatments increased strongly and, according to the country in question, the number of H2 blocker treatments declined significantly or stagnated. The accuracy of the data in those tables is not disputed.

64 The first plea essentially alleges a manifest error of assessment as to the relevance of the gradual nature of the increase in use of PPIs at the expense of H2 blockers. Essentially, that plea hinges on reasoning in two stages. In the first place, even if their therapeutic strength was lesser, H2 blockers constituted therapeutic substitutes for PPIs and, at the end of the relevant period (1991-2000), were being sold in significant quantities for the treatment of gastrointestinal conditions identical to those for which PPIs were prescribed. Consequently, in the second place, since sales of PPIs increased at the expense of H2 blockers in a gradual manner, H2 blockers must have exercised a significant competitive constraint over PPIs.

65 In the light of those arguments, it is necessary to examine the lawfulness of the contested decision as regards, first, the therapeutic use of PPIs and H2 blockers, and then, second, the relevance of the gradual nature of substitution of PPIs for H2 blockers for the purposes of assessing the competitive constraint that H2 blockers are alleged to have exercised over PPIs.

The differentiated therapeutic use of PPIs and H2 blockers

66 In recitals 381 to 386 of the contested decision, the Commission took the view that the therapeutic superiority of PPIs over H2 blockers pointed to the existence of a product market composed solely of PPIs. It thus found that there was a significant patient population suffering from gastrointestinal acid-related conditions for which only PPIs were an appropriate remedy. According to the Commission, doctors increasingly considered that PPIs constituted the most effective and appropriate remedy.

67 In support of their challenge to the Commission’s view that the therapeutic superiority of PPIs constitutes a factor supporting a market definition comprising only PPIs, the applicants claim that PPIs and H2 blockers were used for the same therapeutic purposes, since H2 blockers were to a significant extent prescribed for the same conditions as PPIs. The applicants rely in this respect on written statements from medical experts that they submitted during the administrative procedure in reply to the statement of objections.

68 Having conducted an examination of the statements of the medical experts which were brought to its attention, the Court finds that those statements agree on the following points:

– H2 blockers and PPIs belong to a continuum of therapies aimed at suppressing acids;

– since their entry on the market, PPIs were perceived by the medical community as more powerful medicines than H2 blockers;

– PPIs were suspected of having carcinogenic effects and were prescribed only very gradually by doctors; specialists were prepared to prescribe PPIs before primary care doctors, who remained very cautious in this respect, were prepared to do so;

– H2 blockers and PPIs were prescribed as part of the step-up or step-down in treatments; the ‘step-down’ approach, which was generally preferred by doctors, consisted in prescribing at the beginning of treatment PPIs in sufficient doses to control symptoms, then in prescribing milder pharmaceutical products, such as H2 blockers or other products (for example antacids); the ‘step-up’ approach consisted in administering relatively mild products initially (H2 blockers or other products) and subsequently PPIs when the products initially prescribed were not sufficient to treat the condition;

– in certain countries, including Germany, the high cost of PPIs might have been a relevant factor in the prescription of PPIs and in the choice between the ‘step-up’ or ‘step-down’ approach;

– PPIs were generally administered initially to treat the severe forms of gastrointestinal conditions; however, their use seems to have expanded to the less severe forms of the conditions.

69 It is therefore apparent from the statements of the medical experts that, between 1991 and 2000, PPIs and H2 blockers were administered to treat the same conditions. However, it is also apparent from those statements that PPIs were generally prescribed to treat the severe forms of the conditions while H2 blockers were generally prescribed more to treat their mild or less serious forms.

70 In their statements, the medical experts sometimes stated that H2 blockers and PPIs were alternative first-line treatments, according to whether a ‘step-up’ or ‘step-down’ approach was adopted. However, the fact that PPIs were prescribed at the start of treatment or at a later stage, according to whether a ‘step-down’ or ‘step-up’ approach was chosen, does not change the finding that PPIs and H2 blockers were prescribed in different situations, in the context of a gradation of treatments.

71 The fact that H2 blockers were prescribed to treat the same conditions as PPIs, or constituted, just as much as PPIs, first-line treatments, is of limited relevance, since it does not make it possible to determine whether, in the light of the therapeutic use of PPIs, which were used above all to treat the severe forms of the conditions, H2 blockers exercised a significant competitive constraint over them. It is absolutely clear from the abovementioned statements that, once it was necessary to control symptoms of a certain degree of severity, H2 blockers were replaced by PPIs, whether at the beginning of the treatment, when a ‘step-down’ approach was adopted, or at the end of it, when a ‘step-up’ approach was chosen.

72 It is therefore apparent from the statements of the medical experts submitted by the applicants during the administrative procedure that, although they were prescribed to treat the same conditions, PPIs and H2 blockers were used differently. While PPIs were essentially prescribed to treat the severe forms of gastrointestinal acid-related conditions, H2 blockers were prescribed to treat the less severe, or mild, forms of those conditions. It should also be noted, as the Commission observed at the hearing, that that fact was put forward by the applicants themselves in reply to the statement of objections (point 4.41(ii)(b) of the reply to the statement of objections).

73 The Commission was therefore right to find, in recital 389 of the contested decision, that the fact, put forward by the applicants during the administrative procedure, that PPIs tended to be used only to treat the more severe forms of the conditions supported the conclusion that there was a relevant product market comprising PPIs only.

74 The applicants cannot claim that the differentiated use of PPIs and of H2 blockers, according to the step-up or step-down in treatment, constitutes a new element which cannot be taken into account in the review of the lawfulness of the contested decision. It is apparent from the contested decision that the Commission did in fact take account of the differentiation in the therapeutic use of those products, in response, indeed, to the arguments put forward by the applicants, as is evident from recitals 389, 490 and 502 of the contested decision.

75 In this respect, it should also be noted that, on the basis of AZ’s internal documents, the Commission found, in recitals 384 and 490 of the contested decision, that the first PPI placed on the market, Losec, prompted the H2 blocker firms to turn their attention towards treatment of the mild forms of the conditions, which have traditionally been treated by antacids and alginates, and even to make their products available on a non-prescription basis.

76 Moreover, the fact, alleged by the applicants, which rely in this respect on the IMS Health report, that major gastrointestinal conditions still gave rise at the end of the relevant period and in most of the countries to a significant proportion of H2 blocker prescriptions, does not invalidate th