1 By its appeal, Lupin Ltd seeks to have set aside the judgment of the General Court of the European Union of 12 December 2018, Lupin v Commission (T‑680/14, ‘the judgment under appeal’, EU:T:2018:908), by which the General Court dismissed its action seeking the annulment, so far as concerns Lupin, of European Commission Decision C(2014) 4955 final of 9 July 2014 relating to a proceeding under Article 101 and Article 102 [TFEU] (Case AT.39612 - Perindopril (Servier)) (‘the decision at issue’), and the cancellation or reduction of the fine imposed on it by that decision. Legal context
2 Article 23 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles [101] and [102 TFEU] (OJ 2003 L 1, p. 1) states, in paragraphs 2 and 3 thereof: ‘2. The [European] Commission may by decision impose fines on undertakings and associations of undertakings where, either intentionally or negligently: (a) they infringe Article [101 or 102 TFEU] … … 3. In fixing the amount of the fine, regard shall be had both to the gravity and to the duration of the infringement.’ Background to the dispute
3 The background to the dispute, as described, inter alia, in paragraphs 1 to 35 of the judgment under appeal, may be summarised as follows.
4 The appellant, established in India, is the ultimate parent company of the Lupin pharmaceutical group. Perindopril
5 Servier SAS is the parent company of the Servier pharmaceutical group which includes Les Laboratoires Servier SAS and Servier Laboratories Ltd (individually or jointly, ‘Servier’). Les Laboratoires Servier is specialised in the development of originator medicines, and its subsidiary Biogaran SAS is specialised in the development of generic medicines.
6 Servier developed perindopril, a medicinal product primarily intended for the treatment of hypertension and heart failure. That medicinal product is one of the angiotensin-converting enzyme inhibitors. The active ingredient of perindopril takes the form of a salt. The salt used initially was erbumine.
7 Patent EP0049658, relating to the active ingredient of perindopril, was filed with the European Patent Office (EPO) by a company in the Servier group on 29 September 1981. That patent was due to expire on 29 September 2001, but its protection was prolonged in a number of Member States, including the United Kingdom, until 22 June 2003. In France, protection under that patent was prolonged until 22 March 2005 and, in Italy, until 13 February 2009.
8 On 16 September 1988, Servier filed a number of patents with the EPO relating to processes for the manufacture of the active ingredient of perindopril with an expiry date of 16 September 2008, namely: patents EP0308339, EP0308340, EP0308341 and EP0309324.
9 On 6 July 2001, Servier filed with the EPO patent EP1296947 (‘the 947 patent’), relating to the alpha crystalline form of perindopril erbumine and the process for its manufacture, which was granted by the EPO on 4 February 2004. Servier also filed with the EPO patent EP1294689, relating to the beta crystalline form of perindopril erbumine and the process for its manufacture, and patent EP1296948, relating to the gamma crystalline form of perindopril erbumine and the process for its manufacture.
10 On 6 July 2001, Servier also filed national patent applications in several Member States before they were parties to the Convention on the Grant of European Patents, which was signed in Munich on 5 October 1973 and entered into force on 7 October 1977. Servier filed, for example, patent applications relating to the 947 patent in Bulgaria (BG 107 532), the Czech Republic (PV 2003-357), Estonia (P200300001), Hungary (HU225340), Poland (P348492) and Slovakia (PP0149-2003). Those patents were granted on 16 May 2006 in Bulgaria, on 17 August 2006 in Hungary, on 23 January 2007 in the Czech Republic, on 23 April 2007 in Slovakia and on 24 March 2010 in Poland.
11 Between 2003 and 2009, a number of disputes arose between Servier and manufacturers preparing to market a generic version of perindopril. The EPO decisions
12 In 2004, 10 manufacturers of generic medicines, including Lupin, filed opposition proceedings against the 947 patent before the EPO, seeking the revocation of that patent on grounds of lack of novelty, lack of inventive step and insufficient disclosure of the invention.
13 On 27 July 2006, the EPO Opposition Division confirmed the validity of the 947 patent. That decision was challenged before the EPO Technical Board of Appeal. By a decision of 6 May 2009, that board of appeal annulled the EPO decision of 27 July 2006 and revoked the 947 patent. Servier’s request for a revision of that decision of the Technical Board of Appeal was rejected on 19 March 2010. The decisions of the national courts
14 The validity of the 947 patent has been challenged before certain national courts by manufacturers of generic medicines, and Servier has brought infringement actions and applications for interim injunctions against those manufacturers. Most of those proceedings were closed before the courts seised could give a final ruling on the validity of the 947 patent as a result of settlement agreements entered into by Servier, between 2005 and 2007, with a number of those manufacturers of generic medicines.
15 In the United Kingdom, only the dispute between Servier and Apotex Inc. gave rise to a finding, by a court, that the 947 patent was invalid. On 1 August 2006, Servier brought an action for infringement of the 947 patent before the High Court of Justice (England & Wales), Chancery Division (patents court) (United Kingdom), against Apotex, which had begun to market a generic version of perindopril on the United Kingdom market. On 8 August 2006, Servier obtained an interim injunction against Apotex. On 6 July 2007, following a counterclaim by Apotex, that interim injunction was lifted and the 947 patent was declared invalid, thereby allowing that undertaking to place a generic version of perindopril on the market in the United Kingdom. On 9 May 2008, the decision declaring the 947 patent invalid was confirmed on appeal.
16 In the Netherlands, on 13 November 2007, Katwijk Farma BV, a subsidiary of Apotex, brought an action before a court of that Member State seeking a declaration of invalidity of the 947 patent. Servier made an application to that court for an interim injunction, which was rejected on 30 January 2008. That court, by a decision of 11 June 2008 in proceedings brought on 15 August 2007 by Pharmachemie BV, a company in the Teva group specialising in the manufacture of generic medicines, declared the 947 patent invalid in respect of the Netherlands. Following that decision, Servier and Katwijk Farma withdrew their claims. The Lupin agreement
17 On 18 October 2006, Lupin brought an action before the High Court of Justice (England & Wales), Chancery Division (patents court), for a declaration of invalidity of the 947 patent and a declaration that the generic version of perindopril which it intended to market in the United Kingdom did not infringe that patent.
18 On 30 January 2007, Servier and Lupin brought an end to that dispute and to the proceedings between them before the EPO relating to the 947 patent, by means of a settlement agreement (‘the Lupin agreement’). That agreement contained a ‘non-challenge’ clause whereby Lupin undertook not to challenge Servier’s patents relating to perindopril. It also contained a ‘non-marketing’ clause. Under the latter clause, Lupin undertook to refrain from selling a generic version of ‘perindopril erbumine … and any salt thereof’. It is apparent from paragraph 20 of the judgment under appeal that ‘Lupin was, however, authorised to market products supplied by Servier or its own perindopril (i) in countries where a generic version of perindopril authorised by Servier was on the market, (ii) in the event that all Servier’s relevant patents had expired or (iii) in countries in which a third party had placed a generic version of perindopril on the market and in which Servier had not brought any application for injunction seeking the prohibition of its sale’. Those non-challenge and non-marketing clauses applied to the territories of all the Member States of the European Economic Area (EEA).
19 In addition, the Lupin agreement provided for the assignment and licensing of intellectual property rights. Lupin assigned to Servier intellectual property rights covered by three patent applications relating to processes for the preparation of perindopril, rights which Servier undertook to license back to Lupin. In return for that assignment, Servier paid Lupin EUR 40 million.
20 Furthermore, the Lupin agreement provided that Servier and Lupin would use ‘all reasonable means’ to conclude a supply agreement under which Servier would supply perindopril to Lupin.
21 On 5 February 2007, Lupin withdrew from the opposition proceedings before the EPO. The decision at issue
22 In Article 5 of the decision at issue, the Commission found that Lupin had infringed Article 101 TFEU by participating in an agreement with Servier covering all the States that were members of the European Union on the date of adoption of that decision, except Croatia; that the start date of that infringement had been 30 January 2007, except as regards Malta, where it had started on 1 March 2007, and Italy, where it had started on 13 February 2009; and that the end date of that infringement had been 6 May 2009, except as regards the United Kingdom, where it had ended on 6 July 2007, the Netherlands, where it had ended on 12 December 2007, and France, where it had ended on 16 September 2008.
23 In Article 7(5)(a) of the decision at issue, the Commission imposed a fine of EUR 40 000 000 on Lupin for the infringement of Article 101 TFEU.
24 It is also apparent from Articles 1 to 4 of the decision at issue that the Commission found, inter alia, that the pharmaceutical undertakings Niche, Mylan, Teva and Krka infringed Article 101 TFEU by participating in agreements with Servier. In Article 7 of that decision, the Commission imposed, for those infringements, a fine of EUR 13 968 773 on Niche, a fine of EUR 17 161 140 on Mylan, a fine of EUR 15 569 395 on Teva and a fine of EUR 10 000 000 on Krka. The procedure before the General Court and the judgment under appeal
25 By document lodged at the Registry of the General Court on 19 September 2014, Lupin brought an action seeking, principally, the annulment in part of the decision at issue and, in the alternative, the cancellation of the fine imposed on it by that decision or a reduction in the amount of that fine.
26 In its action at first instance, Lupin put forward three pleas in law. The first plea concerned the characterisation of the Lupin agreement as a restriction of competition by object. The second plea concerned the characterisation of that agreement as a restriction of competition by effect. The third plea related to the fine imposed on Lupin and to the calculation of the amount thereof.
27 By the judgment under appeal, the General Court dismissed Lupin’s action in its entirety. The procedure before the Court of Justice and the forms of order sought
28 By document lodged at the Registry of the Court of Justice on 20 February 2019, Lupin brought the present appeal.
29 By document lodged at the Registry of the Court on 5 June 2019, the United Kingdom of Great Britain and Northern Ireland sought leave to intervene in the present case in support of the form of order sought by the Commission. By decision of 1 July 2019, the President of the Court of Justice granted that application.
30 By letter of 16 September 2019, the United Kingdom waived its right to lodge a statement in intervention.
31 The Court invited the parties to submit their written observations by 4 October 2021 on the judgments of 30 January 2020, Generics (UK) and Others (C‑307/18, EU:C:2020:52); of 25 March 2021, Lundbeck v Commission (C‑591/16 P, EU:C:2021:243); of 25 March 2021, Sun Pharmaceutical Industries and Ranbaxy (UK) v Commission (C‑586/16 P, EU:C:2021:241); of 25 March 2021, Generics (UK) v Commission (C‑588/16 P, EU:C:2021:242); of 25 March 2021, Arrow Group and Arrow Generics v Commission (C‑601/16 P, EU:C:2021:244); and of 25 March 2021, Xellia Pharmaceuticals and Alpharma v Commission (C‑611/16 P, EU:C:2021:245). Lupin and the Commission complied with that request within the prescribed period.
32 By its appeal, Lupin claims that the Court should: - set aside the judgment under appeal; - annul the decision at issue in so far as it relates to the infringement of Article 101 TFEU alleged against Lupin or, failing that, refer the case back to the General Court; - in the alternative, set aside the judgment under appeal in so far as it relates to the fine imposed on Lupin and give final judgment in the matter of that fine by cancelling it or by reducing the amount thereof; and - order the Commission to pay the costs incurred by Lupin in the proceedings before the General Court and in the present appeal.
33 The Commission contends that the Court should: - dismiss the appeal in its entirety, and - order Lupin to pay the costs. The appeal
34 Lupin puts forward six grounds in support of its appeal. The first ground of appeal alleges errors of law relating to the characterisation of the Lupin agreement as a restriction of competition by object. The second ground of appeal alleges errors of law relating to the characterisation of that agreement as a restriction of competition by effect. The third, fourth, fifth and sixth grounds of appeal relate, respectively, to the fine imposed on Lupin and concern the novelty of the infringement attributed to that undertaking (third ground of appeal), to the taking into account of the gravity and duration of that infringement for the purpose of determining the amount of that fine (fourth and fifth grounds of appeal), and to breach of the principle of equal treatment (sixth ground of appeal). The first ground of appeal, relating to the characterisation as a restriction of competition by object Arguments of the parties
35 By its first ground of appeal, which comprises two parts, Lupin submits that, in holding that the Commission had been entitled to characterise the Lupin agreement as a restriction of competition by object, within the meaning of Article 101(1) TFEU, the General Court erred in law. In that regard, it maintains that the General Court held that a patent dispute settlement agreement containing non-challenge and non-marketing clauses must be characterised as a restriction of competition by object where the manufacturer of generic medicines received a benefit inducing it to accept those clauses restricting competition. It argues that that assessment is based on contradictory grounds, is contrary to the principle of legal certainty and fails to have regard to the criteria derived from the case-law of the Court of Justice. According to Lupin, such a characterisation, which is subject to a restrictive interpretation, is reserved for conduct which, by its very nature, reveals a sufficient degree of harm to the proper functioning of normal competition, as is apparent from the judgment of 11 September 2014, CB v Commission (C‑67/13 P, EU:C:2014:2204).
36 By the first part of its first ground of appeal, Lupin criticises the grounds set out in paragraphs 108, 115, 121, 122 and 124 of the judgment under appeal. It submits that, in paragraphs 108 and 115 of that judgment, the General Court stated that reverse payments and non-marketing and non-challenge clauses contained in patent dispute settlement agreements could be regarded as legitimate and lawful. It maintains that the General Court held, however, in paragraph 122 of that judgment, that the characterisation of such agreements as a restriction of competition by object presupposes the presence of both an inducement in the form of a benefit for the manufacturer of generic medicines and a corresponding limitation of that manufacturer’s efforts to compete with the manufacturer of originator medicines.
37 Lupin puts forward five arguments against those assessments.
38 First, Lupin submits that non-challenge and non-marketing clauses are not necessarily anticompetitive, as the General Court observed in paragraph 108 of the judgment under appeal, and, moreover, that the question whether they are anticompetitive or legitimate cannot depend on the existence of an ‘inducement’. Consequently, according to Lupin, such clauses do not allow a patent dispute settlement agreement to be characterised as a restriction of competition by object.
39 Second, it submits that the General Court recognised, in paragraph 115 of the judgment under appeal, that a ‘reverse’ payment, that is to say, a payment from the manufacturer of originator medicines to the manufacturer of generic medicines, may be justified provided that it is inherent in the settlement of a dispute. It argues that the General Court therefore could not, without contradicting itself, state that a reverse payment, in the context of a patent dispute settlement agreement, is anticompetitive by its very nature. In addition, it maintains that the General Court failed to explain the distinction between reverse payments which are justified and those which are not. Lupin submits that, in the absence of such an explanation, an undertaking is unable to know whether its conduct is lawful. It claims that, in those circumstances, the test used by the General Court is not only contrary to the principle of legal certainty but is also not acceptable for the purpose of determining whether conduct may be characterised as a restriction of competition by object.
40 Third, Lupin submits that, in paragraph 124 of the judgment under appeal, in holding that the finding of an ‘inducement’ in favour of the manufacturer of generic medicines allows a patent dispute settlement agreement to be characterised as a restriction of competition by object, the General Court applied a test without, however, defining it. Moreover, it maintains that that test differs from the one applied by the Commission, which relied not on the existence of an ‘inducement’ but of a ‘significant inducement’. According to Lupin, the concept of an inducement differs from that of a reverse payment, since the General Court held that some reverse payments may be justified. Nor, it argues, did the General Court hold that the level of a reverse payment is a determining factor. Lupin reiterates, in that regard, that the effect of non-challenge and non-marketing clauses on competition does not depend on the level of a reverse payment.
41 Fourth, Lupin submits that the General Court’s assertion, in paragraph 122 of the judgment under appeal, that characterisation as a restriction of competition by object depends on the presence of both an inducement in the form of a benefit for the manufacturer of generic medicines and a limitation of that manufacturer’s efforts to compete with the manufacturer of originator medicines is tantamount, in practice, to holding that it is not possible to settle any patent dispute by providing for an economic benefit in favour of the manufacturer of generic medicines, even if each of the parties considers that the validity of the patent in question is uncertain.
42 Fifth, Lupin argues that, in paragraph 121 of the judgment under appeal, the General Court erred in law by referring to the judgment of 20 November 2008, Beef Industry Development Society and Barry Brothers (C‑209/07, EU:C:2008:643), since the case which gave rise to that judgment involved neither intellectual property rights nor a patent dispute settlement agreement.
43 By the second part of its first ground of appeal, Lupin criticises the grounds set out in paragraphs 197, 241 and 242 of the judgment under appeal. It submits that the General Court held, in paragraph 242 of that judgment, that non-marketing and non-challenge clauses the scope of which exceeds that of the patent concerned may be characterised as restrictions of competition by object, without its being necessary to prove the existence of an inducement in the form of a reverse payment. It maintains that, since the General Court found, in paragraph 197 of the judgment under appeal, that the scope of the clauses of the Lupin agreement was ambiguous, that court inferred, in paragraph 241 of that judgment, that the Commission had been entitled to consider that the scope of that agreement exceeded the scope of the 947 patent.
44 Lupin submits, first of all, that an ambiguous contractual provision cannot be regarded as being, by its very nature, harmful to the proper functioning of normal competition.
45 Next, it argues that, by holding that the ambiguous provisions of the Lupin agreement had to be interpreted in the sense most unfavourable to Lupin, the General Court disregarded the principle of the presumption of innocence.
46 Lastly, it submits that, according to a principle of English contract law, which is the law governing the Lupin agreement, an ambiguous contractual provision should be interpreted in such a way as to permit the inference that the contract concerned is lawful. It maintains that, by virtue of that principle of interpretation, which is also applicable in EU law, the General Court should have interpreted the Lupin agreement in such a way as to permit the inference that that agreement was lawful.
47 The Commission disputes that line of argument. Findings of the Court
48 It should be recalled that Article 101(1) TFEU states that all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market are incompatible with the internal market and are prohibited.
49 Accordingly, if the conduct of undertakings is to be subject to the prohibition in principle laid down in Article 101(1) TFEU, that conduct must reveal the existence of coordination between them, in other words, an agreement between undertakings, a decision by an association of undertakings or a concerted practice (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraph 31 and the case-law cited).
50 In addition, it is necessary to demonstrate, in accordance with the very wording of that provision, either that that conduct has as its object the prevention, restriction or distortion of competition, or that that conduct has such an effect (judgment of 21 December 2023, European Superleague Company , C‑333/21, EU:C:2023:1011, paragraph 158). It follows that that provision, as interpreted by the Court, makes a clear distinction between the concept of restriction by object and the concept of restriction by effect, each of those concepts being subject to different rules with regard to what must be proved (judgment of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraph 63).
51 Accordingly, as regards practices characterised as restrictions of competition by object, there is no need to investigate nor a fortiori to demonstrate their effects on competition, in so far as experience shows that such behaviour leads to falls in production and price increases, resulting in poor allocation of resources to the detriment, in particular, of consumers (see, to that effect, judgments of 19 March 2015, Dole Food and Dole Fresh Fruit Europe v Commission , C‑286/13 P, EU:C:2015:184, paragraph 115, and of 21 December 2023, European Superleague Company , C‑333/21, EU:C:2023:1011, paragraph 159).
52 On the other hand, where the anticompetitive object of an agreement, a decision by an association of undertakings or a concerted practice is not established, it is necessary to examine its effects in order to prove that competition has in fact been prevented or restricted or distorted to an appreciable extent (see, to that effect, judgment of 26 November 2015, Maxima Latvija , C‑345/14, EU:C:2015:784, paragraph 17).
53 That distinction arises from the fact that certain forms of collusion between undertakings can be regarded, by their very nature, as being injurious to the proper functioning of normal competition (judgments of 20 November 2008, Beef Industry Development Society and Barry Brothers , C‑209/07, EU:C:2008:643, paragraph 17, and of 14 March 2013, Allianz Hungária Biztosító and Others , C‑32/11, EU:C:2013:160, paragraph 35).
54 It is true, as Lupin has submitted, that the concept of a restriction of competition by object must be interpreted strictly and can be applied only to certain agreements between undertakings which reveal, in themselves and having regard to the content of their provisions, their objectives, and the economic and legal context of which they form part, a sufficient degree of harm to competition for the view to be taken that it is not necessary to assess their effects (see, to that effect, judgments of 26 November 2015, Maxima Latvija , C‑345/14, EU:C:2015:784, paragraph 20, and of 21 December 2023, European Superleague Company , C‑333/21, EU:C:2023:1011, paragraphs 161 and 162 and the case-law cited).
55 In that regard, in the economic and legal context of which the conduct in question forms a part, it is necessary to take into consideration the nature of the products or services concerned, as well as the real conditions of the structure and functioning of the sectors or markets in question. It is not, however, necessary to examine nor, a fortiori, to prove the effects of that conduct on competition, be they actual or potential, or negative or positive (judgment of 21 December 2023, European Superleague Company , C‑333/21, EU:C:2023:1011, paragraph 166).
56 As regards the objectives pursued by the conduct in question, a determination must be made of the objective aims which that conduct seeks to achieve from a competition standpoint. Nevertheless, the fact that the undertakings involved acted without having an intention to prevent, restrict or distort competition and the fact that they pursued certain legitimate objectives are not decisive for the purposes of the application of Article 101(1) TFEU (judgment of 21 December 2023, European Superleague Company , C‑333/21, EU:C:2023:1011, paragraph 167 and the case-law cited).
57 Accordingly, the assessment of the degree of economic harm of an agreement to the proper functioning of competition in the market concerned must be based on objective considerations, where necessary as a result of a detailed analysis of the agreement at issue, its objectives and the economic and legal context of which it forms part (see, to that effect, judgments of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraphs 84 and 85, and of 25 March 2021, Lundbeck v Commission , C‑591/16 P, EU:C:2021:243, paragraph 131).
58 In that context, it should also be borne in mind that a manufacturer of generic medicines, after assessing its chances of success in the court proceedings between it and the manufacturer of the originator medicine concerned, may decide to abandon entry to the market in question and to conclude with that manufacturer an agreement in settlement of those proceedings. Such an agreement cannot be considered, in all cases, to be a restriction by object within the meaning of Article 101(1) TFEU. The fact that such an agreement involves transfers of value by the manufacturer of originator medicines to a manufacturer of generic medicines is not a sufficient ground to classify it as a restriction of competition by object, since those transfers of value may prove to be justified. That may be the case where the manufacturer of generic medicines receives from the manufacturer of originator medicines sums which correspond in fact to compensation for the costs of or disruption caused by the litigation between them, or which correspond to remuneration for the actual supply of goods or services to the manufacturer of originator medicines (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraphs 84 to 86).
59 Consequently, wherever an agreement to settle a dispute relating to the validity of a patent between a manufacturer of generic medicines and a manufacturer of originator medicines that holds that patent involves transfers of value by the manufacturer of originator medicines in favour of the manufacturer of generic medicines, it is necessary to ascertain, first, whether the net gain from those transfers may be fully justified by the need to compensate for the costs of or disruption caused by that dispute, such as the expenses and fees of the latter manufacturer’s advisers, or by the need to provide remuneration for the actual and proven supply of goods or services from the manufacturer of generic medicines to the manufacturer of the originator medicine (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraph 92).
60 The settlement of such a dispute implies that the manufacturer of generic medicines recognises the validity of the patent in question, since it waives its right to challenge it. It follows that it is only where a ‘reverse’ payment, by the manufacturer of originator medicines to the manufacturer of generic medicines, is by way of the reimbursement of such costs or of remuneration for the supply of such goods or services that it can be regarded as consistent with such recognition and, therefore, as capable of being justified in terms of competition.
61 Second, if that net gain from the transfers is not fully justified by such a need, it must be ascertained whether, in the absence of such justification, those transfers can have no explanation other than the commercial interest of those manufacturers of medicinal products not to engage in competition on the merits. For the purposes of that examination, it is necessary to determine whether that gain, including any justified expenses, is sufficiently large actually to act as an incentive for the manufacturer of generic medicines to refrain from entering the market concerned; however, there is no requirement that the net gain should necessarily be greater than the profits which that manufacturer would have made if it had been successful in the patent proceedings (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraphs 87 to 94).
62 By the first part of its first ground of appeal, Lupin submits, in essence, that the General Court erred in law in holding that a patent dispute settlement agreement containing non-challenge and non-marketing clauses, such as the Lupin agreement, must be characterised as a restriction of competition by object where the manufacturer of generic medicines was induced to accept those competition-restricting clauses by means of a transfer of value. According to Lupin, since they are not by their very nature anticompetitive, non-challenge and non-marketing clauses and, moreover, clauses providing for a reverse payment cannot suffice to characterise such an agreement as a restriction of competition by object.
63 In that regard, it should be borne in mind that, according to the case-law referred to in paragraphs 54 to 57 of the present judgment, characterisation as a restriction of competition by object must be based not only on a detailed analysis of the agreement intended to implement a collusive practice, but also of its objectives and the economic and legal context of which it forms part. For that reason, it is necessary to examine its content, its origin and its legal and economic context, in particular the specific characteristics of the market in which its effects will actually occur. Accordingly, the fact that the terms of an agreement intended to implement a collusive practice do not reveal an anticompetitive object is not, in itself, decisive as to whether, in the light of its context, that agreement restricts competition by object (see, to that effect, judgments of 8 November 1983, IAZ International Belgium and Others v Commission , 96/82 to 102/82, 104/82, 105/82, 108/82 and 110/82, EU:C:1983:310, paragraphs 23 to 25, and of 28 March 1984, Compagnie royale asturienne des mines and Rheinzink v Commission , 29/83 and 30/83, EU:C:1984:130, paragraph 26).
64 Characterisation as a restriction of competition by object does not depend either on the form of the contracts or other legal instruments intended to implement such a collusive practice or on the subjective perception that the parties may have of the outcome of the dispute between them as to the validity of a patent. Only the assessment of the degree of economic harm of that practice to the proper functioning of competition in the market concerned is relevant.
65 Thus, settlement agreements whereby a manufacturer of generic medicines that is seeking to enter a market recognises, at least temporarily, the validity of a patent held by a manufacturer of originator medicines and gives an undertaking, as a result, not to challenge that patent nor indeed to enter that market are liable to have effects that restrict competition, since challenges to the validity and scope of a patent are part of normal competition in the sectors where there exist exclusive rights in relation to technology (judgment of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraph 81).
66 In addition, Lupin’s line of argument does not take account of the case-law referred to in paragraphs 59 to 61 of the present judgment, from which it follows that the test for determining whether a settlement agreement such as the Lupin agreement constitutes a restriction of competition by object consists in ascertaining whether the transfers of value by the manufacturer of originator medicines to the manufacturer of generic medicines constitute a quid pro quo for the latter manufacturer’s decision not to enter the market concerned (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraphs 87 to 94).
67 It therefore follows from those principles that, in order to determine whether an agreement such as the Lupin agreement may be characterised as a restriction of competition by object, it is necessary, not to analyse each of its clauses separately, but to assess whether that agreement, taken as a whole, reveals a degree of economic harm to the proper functioning of competition in the market concerned which justifies such a characterisation. On account of the close links between the non-challenge and non-marketing clauses and those providing for a payment by Servier to Lupin in respect of the assignment and licensing of intellectual property rights, it was therefore essential to examine those clauses as forming a whole.
68 In the present case, the General Court held, in paragraph 108 of the judgment under appeal, that the insertion of non-challenge and non-marketing clauses in a patent dispute settlement agreement ‘may be legitimate, but only in so far as it is based on the parties’ recognition of the validity of the patent in question and, consequently, of the infringing nature of the generic products concerned’. In addition, the General Court held, in paragraph 115 of that judgment, that, although the mere presence of a reverse payment does not allow such an agreement to be characterised as a restriction of competition by object, on the other hand, ‘where an unjustified reverse payment occurs in the conclusion of the settlement, the generic company must then be regarded as having been induced by that payment to agree to the non-marketing and non-challenge clauses and it must be concluded that there is a restriction by object’. The General Court stated, in paragraph 115 of that judgment, that, in such a case, the restrictions of competition resulting from the non-challenge and non-marketing clauses ‘can be explained by the conferral of a benefit inducing the generic company to abandon its competitive efforts’.
69 The General Court added, in paragraph 121 of the judgment under appeal, that an agreement with such characteristics may be regarded as equivalent to a market exclusion agreement, whereby the ‘stayers’ are to compensate the ‘goers’, which actually constitutes a buying-off of competition. It went on to observe that, in a context such as that of the Lupin agreement, such an agreement reveals a degree of harm which is all the greater since the excluded competitor is a manufacturer of generic medicines ‘the market entry of which is, as a rule, favourable to competition and which also contributes to the public interest in lowering the cost of healthcare’, and that it must therefore be characterised as a restriction of competition by object.
70 In the light of those considerations, the General Court held, in essence, in paragraph 122 of that judgment, that, where a patent dispute settlement agreement provides for an economic benefit for the manufacturer of generic medicines in return for the limitation of that manufacturer’s efforts to compete with the manufacturer of originator medicines, then ‘a finding of restriction of competition by object must be made in view of the harmfulness of that agreement to the proper functioning of normal competition’.
71 In so ruling, the General Court, in paragraphs 108, 115, 121 and 122 of the judgment under appeal, set out legal criteria for characterising a patent dispute settlement agreement as a restriction of competition by object, the substance of which is consistent with the criteria referred to in paragraphs 58 to 61 of the present judgment. It is therefore necessary to reject the line of argument by which Lupin submits that the General Court relied on incorrect legal criteria and on contradictory grounds, and in particular the line of argument by which it criticises the General Court for taking the general view that a reverse payment to a manufacturer of generic medicines which signs a settlement agreement such as the Lupin agreement constitutes an unjustified inducement in terms of competition, giving rise to a restriction by object.
72 Furthermore, in so far as Lupin maintains that the question whether non-challenge and non-marketing clauses contained in a settlement agreement such as the Lupin agreement are anticompetitive or legitimate cannot depend on the existence of an ‘inducement’ with respect to the manufacturer of generic medicines, it is sufficient to observe that such a line of argument disregards the economic and legal context of which such an agreement forms part, the relevance of which has been recalled in paragraph 63 of the present judgment. As is apparent from the considerations set out in paragraphs 58 to 61 of the present judgment, the reason for the acceptance of such clauses by the manufacturer of generic medicines in the context of a settlement agreement is decisive as to the anticompetitive or legitimate nature of the object of that agreement and to its harmfulness to competition.
73 Lupin nevertheless submits that, by failing to specify, in paragraph 115 of the judgment under appeal, which reverse payments may be regarded as ‘justified’ such that they do not fall within the characterisation of a restriction of competition by object, the General Court based its decision on a test the excessive vagueness of which undermines the principle of legal certainty.
74 It is true that, in paragraph 115 of the judgment under appeal, the General Court simply stated that, ‘where an unjustified reverse payment occurs in the conclusion of the settlement, the generic company must then be regarded as having been induced by that payment to agree to the non-marketing and non-challenge clauses and it must be concluded that there is a restriction by object’, without explaining the criteria according to which a reverse payment may be regarded as ‘justified’.
75 However, in paragraphs 153 to 191 of the judgment under appeal, in a part of that judgment dealing with the application of those criteria to the Lupin agreement, the General Court provided such an explanation. Thus, in paragraph 168 of that judgment, the General Court held, in essence, that remuneration by the manufacturer of originator medicines for the supply of goods or services by the manufacturer of generic medicines may be taken into account as a reverse payment, provided that such remuneration ‘exceeds the “normal” value’ of the goods or services traded, on the ground, set out in paragraph 173 of that judgment, that a payment by the manufacturer of originator medicines to the manufacturer of generic medicines, ‘if it is not intended to compensate for costs inherent in the settlement, therefore constitutes an inducive benefit’, that is to say, it constitutes consideration for the decision of the manufacturer of generic medicines not to enter the market concerned.
76 The General Court stated, in paragraphs 171 and 174 of the judgment under appeal, that it is for the Commission to adduce evidence of the excessive nature of such a payment and that, if the Commission succeeds in establishing such evidence, the parties to the agreement concerned may then rebut it by adducing evidence to the contrary or by demonstrating that ‘the benefit in question is insignificant, if the amount of that benefit is insufficient to be regarded as a significant inducement to accept the competition-restricting clauses set out in the settlement agreement’.
77 In those circumstances, Lupin is not justified in maintaining that the General Court based its assessment relating to the existence of a reverse payment in return for the decision of the manufacturer of generic medicines not to enter the market concerned on a test the excessive vagueness of which undermines the principle of legal certainty.
78 It must be observed, in that regard, that the concepts of the ‘normal value’ of the goods or services remunerated ‘at arm’s length’ by the manufacturer of originator medicines, on which the General Court relied in paragraphs 168 and 169 of the judgment under appeal, are intended, in essence, to distinguish between transfers of value which may be fully justified by the need to provide remuneration for the actual and proven supply of goods or services by the manufacturer of generic medicines, on the one hand, and transfers of value which, under the guise of providing remuneration for such supply of goods or services, in reality constitute consideration for the latter manufacturer’s decision not to enter the market, on the other, in accordance, in essence, with the case-law referred to in paragraphs 58 to 61 of the present judgment.
79 In the present case, in order to determine whether the payment by Servier of the sum of EUR 40 million to Lupin constituted consideration for Lupin’s decision not to enter the perindopril market, the General Court found, first, in paragraphs 179 to 182 of the judgment under appeal, that the Commission had correctly taken the view, in recitals 1871, 1947 and 1974 of the decision at issue, that that sum was ‘significant’ and that it exceeded the profits that Lupin could expect from that entry during the first two or three years of marketing perindopril, even though, according to the Lupin agreement, that sum was intended to provide remuneration for the assignment not of patents but of mere applications for patents in respect of which Lupin gave no assurance as regards the obtaining or validity thereof or the non-infringing nature of the products and processes claimed by those applications.
80 Second, the General Court found, in paragraphs 183 to 188 of the judgment under appeal, that Lupin did not produce any evidence during the administrative procedure or during the proceedings at first instance that made it possible, in essence, to conclude that the sum of EUR 40 million was fully justified by the need to compensate for the costs associated with the settlement of its dispute with Servier or by the need to provide remuneration for the actual and proven supply of goods or services to Servier; in that regard, the Commission noted inter alia, in recital 1955 of the decision at issue, that ‘neither Servier nor Lupin were able to provide a plausible description of the factors determining how the final sum of EUR 40 million [had been] reached’.
81 Since those findings are sufficient to establish the merits in law, in accordance with the case-law referred to in paragraphs 58 to 61 of the present judgment, of the assessment in paragraph 189 of the judgment under appeal, according to which ‘the Commission established the existence of a reverse payment which was not inherent in the settlement agreement at issue … and was therefore an inducement’, the first part of the first ground of appeal must be rejected, without there being any need to rule on the relevance of the judgment of 20 November 2008, Beef Industry Development Society and Barry Brothers (C‑209/07, EU:C:2008:643).
82 By the second part of its first ground of appeal, Lupin submits, in essence, that the General Court interpreted the scope of the Lupin agreement in the manner most unfavourable to its interests by holding, in paragraph 242 of the judgment under appeal, that the scope of that agreement exceeded the scope of Servier’s patents, even though the General Court found that the relevant provisions of that agreement were ambiguous in this respect.
83 In paragraph 242 of the judgment under appeal, the General Court noted that the presence, in a settlement agreement relating to a patent dispute, of non-challenge and non-marketing clauses the scope of which exceeds the scope of that patent ‘reveals a sufficient degree of harm to the proper functioning of normal competition for their inclusion to be classified as a restriction by object, without [its] even being necessary to prove, in addition, the existence of an inducement’.
84 In paragraph 243 of that judgment, the General Court stated that, even if the Commission had erred in finding that the scope of the Lupin agreement exceeded that of the 947 patent, such an error would not be capable of calling into question the Commission’s finding of a restriction of competition by object, since that finding is based essentially on the existence of a reverse payment which induced Lupin not to enter the market. It therefore follows from that assessment, and from the fact that Lupin’s complaints seeking to dispute the existence of such a payment in the present case have been rejected in paragraphs 68 to 81 of the present judgment, that the considerations set out in paragraph 242 of the judgment under appeal were included purely for the sake of completeness. It follows that Lupin’s line of argument directed against paragraph 242 of that judgment is ineffective and must be rejected.
85 Accordingly, without there being any need to rule on the alleged failure of the General Court to have regard to the principle of the presumption of innocence and to a principle of interpretation in English law relating to the interpretation of contracts in a manner which facilitates a finding that they are lawful, as referred to in paragraphs 45 and 46 of the present judgment, the first ground of appeal must be rejected in its entirety. The second ground of appeal, relating to the concept of restriction of competition by effect Arguments of the parties
86 By its second ground of appeal, Lupin asks the Court, in the event that the first ground of appeal is upheld, to give final judgment on whether the Lupin agreement should be characterised as a restriction of competition by effect.
87 The Commission disputes Lupin’s line of argument. Findings of the Court
88 It is apparent from the wording of the appeal that the second ground of appeal is raised on the assumption that the first ground of appeal is upheld. Since the Court has rejected the first ground of appeal, there is no need to rule on the second ground of appeal. The third ground of appeal, relating to the novelty of the infringement attributed to Lupin Arguments of the parties
89 By its third ground of appeal, Lupin submits that, by refusing to recognise the novelty of the infringement found by the Commission in respect of Lupin or to reduce the amount of the fine consequently, the General Court erred in law.
90 Principally, Lupin submits that, on the date of conclusion of the Lupin agreement, namely 30 January 2007, the parties to that agreement could not reasonably have foreseen that that agreement would be characterised as a restriction of competition by object.
91 First of all, according to Lupin, that characterisation is based on the criterion of whether the reverse payment constitutes an inducement. It argues that, however, as at that date, that criterion was novel.
92 Next, it submits that the General Court, in paragraph 282 of the judgment under appeal, based its reasoning on the judgment of 20 November 2008, Beef Industry Development Society and Barry Brothers (C‑209/07, EU:C:2008:643), which was delivered almost two years after the conclusion of the Lupin agreement.
93 Lastly, Lupin maintains that, by referring, in paragraph 287 of the judgment under appeal, to the Commission’s margin of discretion when setting the amount of fines, the General Court failed to consider that that margin of discretion does not allow the Commission to act in breach of the fundamental principle of legality of criminal offences and penalties.
94 In the alternative, Lupin submits that, in accordance with what was held by the Court of Justice in the judgment of 3 July 1991, AKZO v Commission (C‑62/86, EU:C:1991:286, paragraph 163), and by the General Court in the judgment of 30 September 2003, Atlantic Container Line and Others v Commission (T‑191/98 and T‑212/98 to T‑214/98, EU:T:2003:245, paragraphs 1615 to 1621), the General Court should have reduced the amount of the fine on account of the novelty of the infringement found by the decision at issue. It argues that, although the General Court found, in paragraph 285 of the judgment under appeal, that certain issues were novel, that court failed to consider whether it was appropriate to exercise its discretion so as to reduce the amount of the fine. It claims that, in so doing, the General Court failed to respond to Lupin’s arguments, as summarised in paragraphs 260 and 261 of the judgment under appeal.
95 Lupin asks the Court to give final judgment on the novelty of the infringement and to cancel the fine or reduce the amount thereof.
96 The Commission disputes the line of argument put forward by Lupin in support of its third ground of appeal. Findings of the Court
97 As regards Lupin’s principal line of argument, it should be recalled that it is apparent from Article 23(2) of Regulation No 1/2003 that the Commission may by decision impose fines on undertakings and associations of undertakings where, either intentionally or negligently, they infringe Article 101 or 102 TFEU. That condition is satisfied where the undertaking concerned cannot be unaware of the anticompetitive nature of its conduct, whether or not it is aware that it is infringing the competition rules of the Treaty. It follows from the above that the fact that that undertaking has characterised wrongly in law its conduct upon which the finding of the infringement is based cannot have the effect of exempting it from imposition of a fine in so far as it could not be unaware of the anticompetitive nature of that conduct (judgment of 25 March 2021, Lundbeck v Commission , C‑591/16 P, EU:C:2021:243, paragraphs 156 and 157 and the case-law cited).
98 Thus, all that matters is whether that undertaking was in a position to determine that its conduct was objectively anticompetitive in nature (see, to that effect, judgment of 25 March 2021, Lundbeck v Commission , C‑591/16 P, EU:C:2021:243, paragraph 158).
99 As regards the principle of legality of criminal offences and penalties, which Lupin claims to have been infringed, it requires the law to give a clear definition of offences and the penalties which they attract. That requirement is satisfied where the individual concerned is in a position to ascertain from the wording of the relevant provision and, if need be, with the assistance of the courts’ interpretation of it, what acts and omissions will make him or her criminally liable (judgment of 22 May 2008, Evonik Degussa v Commission and Council , C‑266/06 P, EU:C:2008:295, paragraph 39 and the case-law cited).
100 The principle that offences and penalties must be defined by law cannot therefore be interpreted as precluding the gradual, case-by-case clarification of the rules on criminal liability by judicial interpretation, provided that the result was reasonably foreseeable at the time the offence was committed, especially in the light of the interpretation put on the provision in the case-law at the material time (judgment of 22 October 2015, AC-Treuhand v Commission , C‑194/14 P, EU:C:2015:717, paragraph 41 and the case-law cited).
101 The scope of the notion of foreseeability depends to a considerable degree on the content of the text in issue, the field it covers and the number and status of those to whom it is addressed. A law may still satisfy the requirement of foreseeability even if the person concerned has to take appropriate legal advice to assess, to a degree that is reasonable in the circumstances, the consequences which a given action may entail. This is particularly true in relation to persons carrying on a professional activity, who are used to having to proceed with a high degree of caution when pursuing their occupation. Such persons can therefore be expected to take special care in evaluating the risk that such an activity entails (judgment of 22 October 2015, AC-Treuhand v Commission , C‑194/14 P, EU:C:2015:717, paragraph 42 and the case-law cited).
102 It should also be pointed out that it is in no way necessary that the same type of agreement has already been penalised by the Commission in order for such agreements to be considered to be restrictive of competition by object, and that remains the case even if they occur in a specific context, such as that of intellectual property rights. All that matters are the specific characteristics of those agreements, from which any particular harmfulness for competition can be inferred, where necessary as a result of a detailed analysis of those agreements, their objectives and the economic and legal context of which they form part (judgments of 25 March 2021, Sun Pharmaceutical Industries and Ranbaxy (UK) v Commission , C‑586/16 P, EU:C:2021:241, paragraphs 85 to 87, and of 25 March 2021, Lundbeck v Commission , C‑591/16 P, EU:C:2021:243, paragraphs 130 and 131).
103 In the present case, in paragraphs 273 to 275 of the judgment under appeal, the General Court recalled the case-law of the Court of Justice relating to the principle of legality of criminal offences and penalties. In paragraphs 277 to 286 of that judgment, it held, in essence, that, far from being unforeseeable at the time the Lupin agreement was concluded, the restrictions of competition provided for in that agreement were such that Lupin should have expected that they would be declared contrary to Article 101(1) TFEU. In particular, the General Court pointed out, in paragraphs 278 and 285 of that judgment, that, despite the novelty of certain issues raised, Lupin could reasonably have expected that, by agreeing to be paid by Servier to stay out of the perindopril market, its conduct was caught by the prohibition laid down in Article 101(1) TFEU. As is apparent from a reading of the judgment under appeal as a whole, the very object of the Lupin agreement was to prevent Lupin from entering that market through the payment by Servier of the sum of EUR 40 million, a method which is incompatible with free competition.
104 Such a statement of reasons establishes to the requisite legal standard that the penalty incurred as a result of the agreements at issue was, at the very least, foreseeable. It follows that the General Court did not commit the errors of law alleged by Lupin and that it did not, in ruling on the complaints brought before it, fail to comply with the obligation to state the grounds on which its judgments are based.
105 Similarly, Lupin’s argument that the unforeseeable nature of the infringement attributed to it is confirmed by the fact that the General Court, in paragraph 282 of the judgment under appeal, referred to the judgment of 20 November 2008, Beef Industry Development Society and Barry Brothers (C‑209/07, EU:C:2008:643, paragraphs 8 and 32 to 34), whereas that judgment was delivered after the conclusion of the Lupin agreement, must be rejected. The passages of that judgment referred to by the General Court correctly state that, by reason of its object, the agreement at issue in that case ‘conflict[ed] patently with the concept inherent in the [FEU Treaty] provisions relating to competition, according to which each economic operator must determine independently the policy which it intends to adopt on the market. Article [101 TFEU] is intended to prohibit any form of coordination which deliberately substitutes practical cooperation between undertakings for the risks of competition’.
106 That assessment simply reflects the very essence of Article 101 TFEU. It follows that Lupin cannot claim that the Court of Justice’s interpretation of Article 101 TFEU in that judgment, which was delivered after the conclusion of the Lupin agreement, is such as to render unforeseeable the infringement attributed to it. In that regard, it should be recalled that, in accordance with settled case-law, the interpretation which, in the exercise of the jurisdiction conferred upon it by Article 267 TFEU, the Court gives to a rule of EU law clarifies and defines where necessary the meaning and scope of that rule as it must be, or ought to have been, understood and applied from the time at which it entered into force (judgments of 27 March 1980, Denkavit italiana , 61/79, EU:C:1980:100, paragraph 16, and of 5 October 2023, Osteopathie Van Hauwermeiren , C‑355/22, EU:C:2023:737, paragraph 33 and the case-law cited).
107 It follows from the foregoing considerations that the principal line of argument put forward by Lupin in its third ground of appeal must be rejected.
108 In the alternative, Lupin submits that the General Court erred in law by failing, in paragraph 287 of the judgment under appeal, to exercise its discretionary power to reduce the amount of the fine in view of the novelty of the infringement.
109 In paragraph 287 of that judgment, the General Court held that the fact that the Commission has, in the past, imposed fines at a symbolic level for such infringements ‘does not mean that it is precluded from increasing that level within the limits indicated in Regulation No 1/2003, if that is necessary to ensure the implementation of EU competition policy’. The General Court thus ruled on the existence of an alleged obligation on the part of Commission to impose fines at a symbolic level for novel infringements.
110 In that regard, it must be pointed out that the fact that the Commission has, in the past, imposed fines set at a specific level for certain categories of infringements cannot prevent it from setting new fines at a higher level, if raising of penalties is deemed necessary in order to ensure the implementation of EU competition policy, that policy continuing to be defined solely by Regulation No 1/2003 (judgment of 14 September 2016, Ori Martin and SLM v Commission , C‑490/15 P and C‑505/15 P, EU:C:2016:678, paragraph 93 and the case-law cited).
111 In addition, contrary to what Lupin claims, the General Court held, in paragraphs 400 to 402 of the judgment under appeal, that the amount of the fine imposed on that undertaking was not disproportionate and, consequently, that there was no need to reduce the amount of that fine in the exercise of its unlimited jurisdiction. Lupin’s line of argument in that regard is therefore based on a misreading of the judgment under appeal.
112 Lupin’s criticisms of paragraph 287 of the judgment under appeal, put forward in the alternative, are therefore unfounded and, accordingly, must be rejected. The third ground of appeal must therefore be rejected in its entirety. The fourth ground of appeal, relating to the determination of the basic amount of the fine Arguments of the parties
113 By its fourth ground of appeal, which is divided into two parts, Lupin submits that, in holding that the Commission had been entitled to set the amount of the fine at the level of the reverse payment of EUR 40 million, the General Court made two errors of law.
114 By the first part of its fourth ground of appeal, Lupin maintains that the General Court infringed Article 23(3) of Regulation No 1/2003, which states that, in fixing the amount of the fine, regard is to be had both to the gravity and to the duration of the infringement.
115 In the first place, Lupin submits that, contrary to what the General Court held in paragraphs 340 to 346 of the judgment under appeal, there is not necessarily any relationship between the gravity and the duration of an infringement, on the one hand, and the amount of a reverse payment such as that provided for in the Lupin agreement, on the other.
116 Lupin contests the General Court’s statement, in paragraph 340 of the judgment under appeal, that the amount of that reverse payment is a reliable indicator of the gravity of the infringement and of the particular circumstances of the case. It observes that it is apparent from recital 3151 of the decision at issue that the Commission did not differentiate between the infringements on the basis of their gravity.
117 In addition, it argues that the General Court stated, in paragraph 342 of the judgment under appeal, that, in fixing the amount of the fine at the level of the reverse payment received by Lupin, the Commission took into account the foreseeable duration of the infringement on account of the fact that the amount of the reverse payment reflected the foreseeable profits of the parties to the Lupin agreement during the period of its implementation. According to Lupin, that statement is not supported by any evidence. It maintains that, according to the decision at issue, and in particular recitals 1974 and 1976 thereof, that reverse payment of EUR 40 million exceeded the profits that Lupin could rationally expect from its market entry, but represented only a small fraction of the profits that Servier could obtain by protecting itself against such entry.
118 In the second place, Lupin submits that the statement, in paragraph 346 of the judgment under appeal, that it was not possible to calculate the amount of the fine on the basis of the value of its sales on the ground that it was not present on the market at the time the Lupin agreement was concluded does not exempt the Commission from its obligation to apply the provisions of Article 23(3) of Regulation No 1/2003.
119 By the second part of its fourth ground of appeal, Lupin alleges breach of the principle of equal treatment.
120 Lupin submits that, by the decision at issue, the Commission imposed on it a heavier fine than those imposed on the other manufacturers of generic medicines to which the decision at issue was addressed. It maintains that its infringing conduct was not more serious than that of those other undertakings and was of a shorter duration than that found in respect of most of them.
121 It argues that, in holding, in paragraph 354 of the judgment under appeal, that the Lupin agreement was of increased gravity as compared with the agreements which Servier had concluded with Niche and Teva, the General Court contradicted the Commission and substituted its own assessment for that of the Commission. According to Lupin, the Commission stated both in its rejoinder submitted before the General Court and in the decision at issue that there was no need to differentiate between those agreements on the basis of their gravity.
122 The Commission disputes that line of argument. Findings of the Court
123 In order to rule on the first part of the fourth ground of appeal, it should be noted that the General Court stated, in paragraphs 334 to 336 of the judgment under appeal, that, since the Lupin agreement was intended to keep Lupin out of the perindopril market, the Commission could not, for the purpose of calculating the fine, use the value of sales made by that undertaking on that market in accordance with the methodology set out in its Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (OJ 2006 C 210, p. 2). In the decision at issue, the Commission therefore used, for that calculation, the transfer of value made by Servier to Lupin, namely the payment of the sum of EUR 40 million.
124 It is true, as Lupin submits, that that fact cannot exempt the Commission from its obligation to ensure, in accordance with Article 23(3) of Regulation No 1/2003, that, in fixing the amount of the fine, regard is had both to the gravity and to the duration of the infringement.
125 As regards the line of argument relating to an alleged failure to take into account the duration of the infringement, which it is appropriate to examine first, it must be stated that, in holding, in essence, that the Commission was entitled to fix the amount of the fine imposed on Lupin by relying on the amount of the reverse payment of EUR 40 million received by that undertaking, on account of the fact that that amount indirectly reflected that duration, the General Court verified that the Commission had complied with its obligation under Article 23(3) of Regulation No 1/2003 and did not, therefore, infringe that provision. The General Court stated, in paragraph 337 of the judgment under appeal, that a reverse payment corresponds to the price which the manufacturer of originator medicines was prepared to pay in order to exclude the manufacturer of generic medicines from the market and which the latter manufacturer was willing to accept in order to refrain from entering that market. In paragraphs 342 and 343 of that judgment, the General Court considered, in essence, that, when negotiating that price, each of the parties necessarily takes into consideration an estimate of the profits that the manufacturer of generic medicines may derive from its market entry during the term of the agreement, and an estimate of the profits that the manufacturer of originator medicines may derive, during that term, from the exclusion of the manufacturer of generic medicines from the market. In setting the amount of the transfer of value, the parties to the agreement in question therefore take into account the period during which the generic company agrees not to compete with the originator company, that is to say, the foreseeable duration of that agreement.
126 On the basis of those findings, the General Court was entitled to hold, on the grounds set out in paragraphs 344 and 345 of the judgment under appeal, that, by using the amount of the transfer of value received by the manufacturer of generic medicines as the amount of the fine to be imposed on that manufacturer, the Commission, albeit indirectly but nonetheless sufficiently, took into account the foreseeable duration of the infringement, as estimated by the parties to the agreement.
127 In addition, Lupin’s line of argument, summarised in paragraph 117 of the present judgment, is based on a misreading of the grounds set out in paragraphs 344 and 345 of the judgment under appeal. Contrary to what Lupin submits, those grounds do not concern the accuracy of any calculations relating to the foreseeable profits which each of the parties to the Lupin agreement might have made for the purpose of determining the amount of the reverse payment provided for in that agreement. On those grounds, the General Court, in essence, highlighted the fact that that amount reliably reflected the duration of that agreement, in so far as it was the result of a process of negotiation involving, inter alia, the reciprocal estimates and expectations of the parties regarding the profits that could be made during the term of that agreement and regarding the price that the manufacturer of generic medicines was willing to accept in order to refrain from entering the market.
128 Moreover, contrary to what Lupin claims, those grounds of the judgment under appeal are not irreconcilable with recitals 1974 and 1976 of the decision at issue. On the contrary, it is apparent from those recitals, the accuracy of which was not disputed before the General Court, that the Commission considered that the amount of the reverse payment of EUR 40 million exceeded the profits that Lupin could rationally expect during the first two or three years after its entry to the perindopril market, profits the total value of which the Commission had estimated during that period to range from approximately EUR 6 million to EUR 12 million. The amount of that reverse payment was also, according to the Commission’s estimates, significantly lower than the profits that Servier hoped to protect by entering into the Lupin agreement. Indeed, it is apparent from recital 1976 of the decision at issue that the operating profit from Servier’s sales of that medicinal product ranged, for the 2007 financial year, from EUR 150 million to EUR 350 million, and that the aim of the Lupin agreement was to secure Servier’s market position ‘for a multi-year period, possibly even until the 947 patent expiry in 2021’.
129 Therefore, the General Court did not err in law when it held, in paragraph 349 of the judgment under appeal, that the Commission had been entitled to use, as the amount of the fine, the amount of the transfer of value to the manufacturer of generic medicines, without its being necessary, or even appropriate, to take account of the duration of the infringement in another way.
130 Lupin also submits that, by holding, in paragraph 340 of the judgment under appeal, that taking into account the reverse payment stipulated in the Lupin agreement provided a reliable indicator of the gravity of the infringement, the General Court contradicted the Commission’s assessment in recital 3151 of the decision at issue, according to which the Commission did not differentiate between the infringements on the basis of their gravity.
131 It is apparent from recital 3151 of the decision at issue that, since it was unable, in fixing the amount of the fines, to use the value of sales of perindopril by the manufacturers of generic medicines which concluded infringing agreements with Servier, the Commission used the amount of the transfers of value to each of those undertakings, ‘without differentiating between the infringements on the basis of various factors of gravity such as nature, market share and geographical scope’. The Commission nonetheless stated, in that recital, that each of the infringements in question, having as their object market exclusion agreements, had to be regarded as a serious infringement of Article 101 TFEU; that each manufacturer of generic medicines knew or should have known that Servier possessed a very high share of the perindopril market(s) for the geographical areas concerned; that the infringements found with respect to Niche, Matrix and Lupin had a wide geographical scope, and that all the infringing agreements had been implemented.
132 In paragraphs 338 and 339 of the judgment under appeal, the General Court correctly recalled the settled case-law according to which the gravity of infringements must be determined by reference to numerous factors such as, in particular, the particular circumstances of the case, its context and the dissuasive element of fines, as well as the conduct of each of the undertakings, the role played by each of them in the establishment of the agreement, decision or concerted practice, their size, the value of the goods concerned and the threat that infringements of that type pose to the objectives of the European Union.
133 In the light of that case-law, the General Court held, in paragraph 340 of that judgment, that the amount of the transfer of value is a reliable indicator of the gravity of the infringement and of the particular circumstances of the case, since ‘that amount is the result of negotiations in which the generic company participated … and reflects at the same time the conduct of that company, the role that it played in the infringement and the benefit that it gained from it, as well as the value of the goods concerned, as estimated by the parties to the agreement at issue’.
134 It follows from the foregoing that, contrary to Lupin’s assertions, there is no contradiction between the assessments thus made by the General Court and recital 3151 of the decision at issue, that recital being taken as a whole. On the contrary, it must be held that the General Court could legitimately consider that the transfer of value to a manufacturer of generic medicines, in this case the reverse payment of EUR 40 million received by Lupin, is a reliable indicator of the gravity of the infringement arising from the conclusion of a market exclusion agreement. It follows from paragraph 340 of the judgment under appeal, and from paragraph 337 of that judgment, to which paragraph 340 thereof refers, that, according to the General Court’s assessment, the Commission did in fact differentiate between the infringements committed by each manufacturer of generic medicines on the basis of their gravity, in accordance with Article 23(3) of Regulation No 1/2003, by taking into account for that purpose the amount of the reverse payment which it had identified in each individual case.
135 It must be pointed out, in so far as it may be relevant, that the gravity of the infringement resulting from the Lupin agreement, namely a market exclusion agreement, is further reinforced by the fact that that agreement contained, in addition to non-challenge and non-marketing clauses, clauses intended to organise the assignment by Lupin of rights deriving from patent applications to Servier and the licensing of those rights by Servier to Lupin. As the General Court observed, in essence, in paragraphs 354 and 363 of the judgment under appeal, the use of such a contractual mechanism alongside provisions intended to arrange a patent dispute settlement may contribute to increasing the gravity of the anticompetitive conduct. Under the guise of providing remuneration for the supply of goods or services by the manufacturer of generic medicines, such a mechanism may serve to conceal the existence of transfers of value the real purpose of which is to compensate that manufacturer for having refrained from entering the market.
136 It follows from the foregoing that the General Court correctly held, in paragraph 350 of the judgment under appeal, that, by using the amount of the transfer of value to the manufacturer of generic medicines as the amount of the fine, the Commission did not disregard the provisions of Article 23(3) of Regulation No 1/2003.
137 As regards the second part of the fourth ground of appeal, it should be recalled that, according to settled case-law, the principle of equal treatment is a general principle of EU law, enshrined in Articles 20 and 21 of the Charter of Fundamental Rights of the European Union. That principle requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified (judgment of 25 November 2020, Commission v GEA Group , C‑823/18 P, EU:C:2020:955, paragraph 58 and the case-law cited).
138 In the present case, the General Court held, in paragraph 351 of the judgment under appeal, that both the gravity of the infringement and its duration, as well as the particular circumstances of the case, were appropriately reflected in the amount of the transfer of value to Lupin and, consequently, in the amount of the fine imposed on that undertaking.
139 Lupin submits that that assessment is irreconcilable with the assessment made by the Commission in recital 3151 of the decision at issue.
140 However, recital 3151 of that decision, which states that the agreements concluded by Servier with manufacturers of generic medicines referred to in the decision at issue, including the Lupin agreement, all constituted market exclusion agreements and that that type of agreement is a serious infringement of Article 101 TFEU, does not mean that the Commission was required to penalise those infringements by imposing a fine of the same amount on each of those manufacturers. In accordance with what has been stated in paragraphs 132 to 135 of the present judgment, the General Court was entitled to hold, without erring in law, that the amount of the transfer of value to the manufacturer of generic medicines is a reliable indicator of the duration and the gravity of the infringement, in so far as that amount reflects the value which the parties attribute to the contractual obligations restricting competition that were assumed by the manufacturer of generic medicines in each particular case. Therefore, the Commission was entitled, without infringing the principle of equal treatment, to fix the amount of the fines imposed on each of the manufacturers of generic medicines to which the decision at issue was addressed at the amount of the transfer of value received by them.
141 Since the second part of the fourth ground of appeal is unfounded, the fourth ground of appeal must therefore be rejected in its entirety. The fifth ground of appeal, alleging breach of the principle of proportionality Arguments of the parties
142 By its fifth ground of appeal, Lupin submits that, by holding in paragraph 400 of the judgment under appeal that the amount of the fine was not disproportionate, the General Court erred in law.
143 Lupin maintains that, in paragraph 386 of the judgment under appeal, the General Court considered that the Commission may impose a fine equivalent in amount to that of the transfer of value made by the manufacturer of the originator medicine where that amount ‘is not out of proportion to the amount of the reverse payment’, the latter concept being defined, in paragraph 371 of that judgment, as ‘the part of the payment made by the [manufacturer of originator medicines] which exceeds the “normal” value of the asset traded’. It states that, in paragraph 387 of that judgment, the General Court specified that the manufacturer of generic medicines may establish that the amount of the reverse payment, thus defined, is out of proportion to the transfer of value by demonstrating that that payment is of an amount considerably less than that of the transfer of value.
144 According to Lupin, the Commission should have deducted from the sum of EUR 40 million the value of the remuneration for the three patent applications transferred to Servier and estimated, in recitals 1960 to 1966 of the decision at issue, to be between EUR 1.5 million and EUR 10 million. It submits that the General Court was not entitled to disregard those estimates. Lupin therefore asks the Court of Justice to cancel the fine imposed on it or to reduce the amount thereof.
145 The Commission disputes that line of argument. Findings of the Court
146 By its fifth ground of appeal, Lupin submits, in essence, that, in holding that the Commission was entitled to fix the amount of the fine at the total amount of the transfer of value made by Servier, without deducting from that total amount the legitimate value of the intellectual property rights transferred by Lupin, the General Court infringed the principle of proportionality.
147 In that regard, it should be noted that, as is apparent from paragraph 136 of the present judgment, the Commission was entitled, without infringing its obligation to have regard to the duration and the gravity of the infringement, to fix the level of the fine imposed on Lupin on the basis of the total amount of the transfer of value to that undertaking, namely EUR 40 million. Furthermore, the General Court was correct to hold, in essence, in paragraph 363 of the judgment under appeal, that the fact that an infringement is committed through the use, via an ancillary commercial transaction such as the acquisition by Servier of Lupin’s patent applications in the present case, of a method designed to hide the existence of that infringement is a particularly serious infringement, by its very nature, which may justify taking into account the amount of the transfer of value received by the manufacturer of generic medicines without deducting from that amount the quid pro quo which that manufacturer would have received from a commercial transaction carried out at arm’s length.
148 Thus, the General Court was legitimately entitled to hold, in paragraphs 364 and 365 of the judgment under appeal, that to impose on the Commission the obligation to subtract from that amount the ‘legitimate’ value of goods or services supplied by the manufacturer of generic medicines to the manufacturer of originator medicines would amount to limiting the dissuasive nature of the fine since, in that situation, the effect of the fine would be merely to annul the benefit gained from the infringement, which would limit its dissuasive nature. Moreover, the grounds set out in paragraphs 363 to 365 of that judgment have not been contested by Lupin in its appeal.
149 The General Court nevertheless pointed out, in paragraphs 370 to 374 of the judgment under appeal, that it could not be ruled out that fixing the amount of the fine at the total amount of the transfers of value to the manufacturer of generic medicines may, in certain circumstances, lead the Commission to infringe the principle of proportionality. The General Court thus stated, in essence, that, if the majority of the total amount of those transfers of value were to consist of the ‘normal’, that is to say legitimate, remuneration for the value of the goods or services supplied by the manufacturer of generic medicines, a fine equal in amount to the total of those transfers of value would amount to imposing on that manufacturer a disproportionate fine which does not appropriately reflect the gravity and the duration of the infringement.
150 In the light of the foregoing, and contrary to what Lupin asserts, those assessments in paragraphs 370 to 374 of the judgment under appeal do not infringe the principle of proportionality, but rather are intended to ensure compliance with it.
151 In addition, since the General Court set out the difficulties inherent in determining what the normal value of goods or services may consist of, in paragraphs 377 to 383 of the judgment under appeal, it is then apparent from paragraphs 384 and 385 of that judgment, in essence, that the choice of the parties to related agreements, or to a single agreement comprising multiple commercial transactions such as the Lupin agreement, to link contractual obligations concerning an assignment of technology in return for a transfer of value to terms covered by a patent dispute settlement, is intended to connect two agreements which are in principle autonomous and have a different object, and thus to create an artificial link between those agreements capable of masking illegitimate transfers of value which are difficult for the Commission to verify. It was on the basis of that finding that the General Court held, without erring in law, in paragraphs 386 and 387 of the judgment under appeal, that the Commission must, in its assessment of the amount of the fine, ‘in light of the elements that it is able to access, given, in particular, its extensive powers of investigation under Regulation No 1/2003 … ensure that the total amount of the value transfer is not out of proportion’; and it is for the manufacturer of generic medicines to adduce evidence to the contrary.
152 The General Court found, in paragraphs 388 to 396 of the judgment under appeal, that none of the methods on the basis of which the Commission had estimated the value of the intellectual property rights transferred by Lupin to Servier led to the conclusion that the amount of the fine was disproportionate. In paragraphs 397 and 398 of that judgment, the General Court pointed out that, during the proceedings at first instance, Lupin had not adduced any evidence allowing that finding to be called into question. In those circumstances, the General Court justified in law its decision, in paragraph 399 of that judgment, to reject the claim for cancellation of the fine imposed on Lupin.
153 On the grounds set out in paragraphs 400 to 402 of the judgment under appeal, after finding that the amount of that fine was not disproportionate and that the Lupin agreement, as a market exclusion agreement, in principle had to be heavily fined, the General Court decided that there was therefore no need to reduce the amount of that fine in the exercise of its unlimited jurisdiction.
154 In that regard, it should be recalled that it is not for the Court of Justice, when ruling on questions of law in the context of an appeal, to substitute, on grounds of fairness, its own assessment for that of the General Court exercising its unlimited jurisdiction to rule on the amount of fines imposed on undertakings for infringements of EU law. Accordingly, only inasmuch as the Court of Justice considers that the level of the penalty is not merely inappropriate, but also excessive to the point of being disproportionate, would it have to find that the General Court erred in law, on account of the inappropriateness of the amount of a fine (judgments of 30 May 2013, Quinn Barlo and Others v Commission , C‑70/12 P, EU:C:2013:351, paragraph 57 and the case-law cited, and of 26 September 2018, Philips and Philips France v Commission , C‑98/17 P, EU:C:2018:774, paragraph 107).
155 In the present case, Lupin has not demonstrated, in the context of the present appeal, why the amount of the fine imposed on it is excessive to the point of being disproportionate.
156 The fifth ground of appeal must therefore be rejected. The sixth ground of appeal, alleging breach of the principle of equal treatment Arguments of the parties
157 By its sixth ground of appeal, Lupin submits that, in the event that the Commission’s appeal against the judgment of 12 December 2018, Krka v Commission (T‑684/14, EU:T:2018:918), is upheld, the Court of Justice should then find that, by rejecting, on the grounds set out in paragraphs 297 to 316 of the judgment under appeal, the line of argument alleging unequal treatment as compared with Krka’s situation, the General Court erred in law.
158 Lupin submits that, like Krka, it had concluded a patent assignment and licence agreement with Servier. It maintains that, as consideration for those licences, Servier paid the sum of EUR 40 million to Lupin and the sum of EUR 30 million to Krka. It argues that the Commission used that consideration to determine the amount of the fine for Lupin, but not for Krka, on the ground that there was not a sufficiently close connection between the EUR 30 million received by Krka and the patent dispute settlement agreement which it had concluded with Servier.
159 Lupin submits, moreover, that the General Court considered, in paragraphs 304 to 306 of the judgment under appeal, that such a close connection exists where two agreements are concluded on the same day, are legally linked or are, in the light of their context, indissociable.
160 First of all, according to Lupin, by prioritising form over substance, such reasoning favours agreements concluded on different dates, even if their substance is identical to that of agreements concluded on the same day.
161 Next, Lupin states that, although they were concluded on different dates, the patent assignment and licence agreement concluded by Krka and the settlement and licence agreements between Krka and Servier formed part of a ‘single continuous infringement’, which, it argues, should have led the General Court to conclude that Krka’s situation was materially identical to Lupin’s situation.
162 Lastly, Lupin submits that it is contrary to the principle of equal treatment to set the basic amount of the fine on the basis of the inducive benefit provided by the manufacturer of originator medicines without taking into account comparable benefits, such as ‘rent-sharing’, which other manufacturers of generic medicines derive from their agreements with that manufacturer of originator medicines.
163 The Commission disputes that line of argument. Findings of the Court
164 As has been recalled in paragraph 137 of the present judgment, the principle of equal treatment is a general principle of EU law, enshrined in Articles 20 and 21 of the Charter of Fundamental Rights. According to settled case-law, that principle requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified (judgment of 12 November 2014, Guardian Industries and Guardian Europe v Commission , C‑580/12 P, EU:C:2014:2363, paragraph 51).
165 In that regard, it is apparent from recital 1678 of the decision at issue, referred to in paragraph 304 of the judgment under appeal, that, two months after agreeing with Krka to share the national perindopril markets through the conclusion of an agreement settling disputes relating to the 947 and EP0308340 patents in exchange for the grant to Krka of an exclusive and irrevocable licence on the rights deriving from the 947 patent in Krka’s main geographical markets, Servier purchased, by means of an assignment and licence agreement, patent applications from Krka relating to processes for the manufacture of perindopril for a sum of EUR 30 million. The Commission considered that, while ‘certain indications point towards the existence of the link between the Settlement Agreement and the EUR 30 million payment by Servier, [the decision at issue] does not reach a conclusion to this effect, and the assessment of these agreements is not premised on the existence of such a link’.
166 On the basis of those factors, the General Court found, in paragraph 306 of the judgment under appeal, that there was no legal link between the settlement agreement and the assignment and licence agreement concluded between Servier and Krka nor were they concluded concomitantly, and, moreover, that the Commission had taken the view that it was not in a position to establish that those two agreements were indissociable or that the assignment and licence agreement had constituted consideration for Krka’s undertaking to accept the competition-restricting clauses provided for in the settlement agreement, which Lupin does not dispute in its appeal.
167 By contrast, as regards the Lupin agreement, it is apparent from paragraphs 79 to 81 of the present judgment that the Commission had succeeded in establishing that the sum of EUR 40 million paid by Servier for the assignment of Lupin’s patent applications, under the same agreement of 30 January 2007 which imposed non-marketing and non-challenge clauses on Lupin, constituted consideration for Lupin’s undertaking, arising from those clauses, to refrain from entering the perindopril market.
168 In view of that difference between the situations of Krka and Lupin, the General Court did not err in law, in the light of the case-law referred to in paragraph 137 of the present judgment and irrespective of how the Court of Justice rules on the Commission’s appeal in Commission v Krka (C‑151/19 P), when it held, in essence, in paragraph 312 of the judgment under appeal, that the method used by the Commission to determine the amount of the fines justified including within that amount the remuneration by Servier for the assignment of Lupin’s patent applications, but did not justify including the remuneration for the assignment of Krka’s patent applications.
169 As regards the complaint that it is contrary to the principle of equal treatment to set the amount of the fine at the level of the total amount of the transfers of value to the manufacturer of generic medicines, it should be pointed out that, in referring to ‘comparable benefits’ for other manufacturers of generic medicines such as ‘rent-sharing’, Lupin does not identify the specific reasons why, in its view, its situation and that of Krka were actually comparable within the meaning of the case-law referred to in paragraph 164 of the present judgment. As to the remainder, it must be stated that, by that complaint, Lupin merely, in essence, reiterates the line of argument which has been rejected in paragraphs 136 and 147 to 152 of the present judgment.
170 Since the sixth ground of appeal is unfounded, it must be rejected.
171 Since none of the grounds put forward in support of the appeal has been upheld, the appeal must be dismissed in its entirety. Costs
172 Under Article 138(1) of the Rules of Procedure of the Court of Justice, which applies to appeal proceedings by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
173 Since the Commission has applied for costs to be awarded against Lupin and the latter has been unsuccessful, Lupin must be ordered to bear its own costs and to pay those incurred by the Commission.
174 Article 140(1) of the Rules of Procedure, which applies to appeal proceedings by virtue of Article 184(1) thereof, provides that the Member States and institutions which have intervened in the proceedings are to bear their own costs.
175 Consequently, the United Kingdom must bear its own costs. On those grounds, the Court (First Chamber) hereby: 1. Dismisses the appeal; 2. Orders Lupin Ltd to bear its own costs and to pay those incurred by the European Commission; 3. Orders the United Kingdom of Great Britain and Northern Ireland to bear its own costs. Arabadjiev Lenaerts Xuereb Kumin Ziemele Delivered in open court in Luxembourg on 27 June 2024. A. Calot Escobar A. Arabadjiev Registrar President of the Chamber * Language of the case: English.