1 By their appeal, Mylan Laboratories Ltd and Mylan Inc. ask the Court of Justice to set aside the judgment of the General Court of the European Union of 12 December 2018, Mylan Laboratories and Mylan v Commission (T‑682/14, ‘the judgment under appeal’, EU:T:2018:907), by which the General Court dismissed their action seeking annulment, in so far as concerns them, 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 to reduce the fine imposed on them by that decision. Background to the dispute
2 The background to the dispute, as is apparent in particular from paragraphs 1 to 37 of the judgment under appeal, can be summarised as follows. Perindopril
3 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, while its subsidiary Biogaran SAS is specialised in the development of generic medicines.
4 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.
5 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.
6 On 16 September 1988, Servier filed a number of patents before 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 (‘the 339 patent’), EP0308340 (‘the 340 patent’), EP0308341 (‘the 341 patent’) and EP0309324.
7 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 (‘the 948 patent’), relating to the gamma crystalline form of perindopril erbumine and the process for its manufacture.
8 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. The perindopril-related activities of Matrix Laboratories Ltd
9 On 26 March 2001, Medicorp Technologies India Ltd (‘Medicorp’), a manufacturer of generic medicines established in India, and Bioglan Generics Ltd (‘Bioglan’), a manufacturer of generic medicines established in the United Kingdom, concluded a development and licensing agreement with a view to marketing a generic version of perindopril in the European Union (‘the agreement of 26 March 2001’). Medicorp was responsible for developing and supplying the active ingredient of that medicinal product. Bioglan was responsible for the business strategy and for obtaining marketing authorisations for that medicinal product.
10 In 2002, Unichem Laboratories Ltd (‘Unichem’), a manufacturer of medicines established in India, and a number of Bioglan’s management shareholders set up Niche Generics Ltd (‘Niche’).
11 On 15 April 2002, Niche took over Bioglan’s assets and business commitments.
12 On 27 March 2003, Medicorp and Unichem concluded an agreement under which Medicorp was responsible for the development and supply of the active ingredient of a generic version of perindopril and Unichem was to produce that medicinal product in tablet form.
13 On 20 May 2003, Matrix Laboratories Ltd (‘Matrix’), a company established in India and specialising in the production of active ingredients for generic medicines, merged with Medicorp and supplied an initial batch of a generic version of the active ingredient of perindopril and the file needed in order for Niche to prepare the marketing authorisation applications.
14 In the autumn of 2004, Servier considered acquiring Niche. On 10 January 2005, on completion of the first phase of a due diligence, Servier submitted a preliminary non-binding offer to acquire the capital of Niche. On 31 January 2005, after the second phase of that due diligence, Servier informed Niche verbally that it no longer wished to proceed with that acquisition.
15 On 22 June 2005, Matrix informed Niche that the agreement of 26 March 2001 was suspended with immediate effect until 16 September 2008, the expiry date of the 339, 340 and 341 patents.
16 In December 2006, Unichem acquired the whole of Niche’s capital.
17 On 8 January 2007, Mylan increased its holding in the capital of Matrix to 71.5%. Since 22 August 2011, Mylan has held between 97% and 98% of that capital.
18 Since 5 October 2011, Matrix has been known as Mylan Laboratories. Disputes relating to perindopril
19 Between 2003 and 2009, a number of disputes were conducted between Servier and manufacturers preparing to market a generic version of perindopril. The EPO decisions
20 In 2004, 10 manufacturers of generic medicines, including Niche, 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.
21 On 11 August 2004, Niche filed an opposition against the 948 patent before the EPO.
22 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 decision of 6 May 2009, the EPO Technical 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
23 The validity of the 947 patent has been challenged before certain national courts by manufacturers of generic medicines, and Servier has brought actions for infringement and has applied for interim injunctions against those manufacturers. The majority of those proceedings were closed before the courts seised were able to give a final ruling on the validity of the 947 patent, as a result of settlement agreements concluded by Servier, between 2005 and 2007, with a number of those manufacturers of generic medicines.
24 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 UK market. On 8 August 2006, Servier was granted 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, thus 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.
25 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 applied to that court for an interim injunction, which was refused 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 dispute between Servier and Niche
26 On 25 June 2004, Servier brought an action before the High Court of Justice (England & Wales), Chancery Division (patents court) for infringement of the 339, 340 and 341 patents, against Niche, which, by way of counterclaim, sought a declaration of invalidity of the 947 patent. Matrix participated in those proceedings by giving evidence. The date of the hearing in those proceedings had been set for 7 and 8 February 2005. Moreover, Servier sent a formal warning letter to Matrix on 7 February 2005, accusing it of infringing the 339, 340 and 341 patents and threatening to bring an action for infringement. The Matrix agreement
27 On 8 February 2005, Servier concluded two agreements to settle the dispute referred to in the preceding paragraph of the present judgment and the opposition proceedings relating to the 947 and 948 patents then pending before the EPO, the first with Niche and Unichem (‘the Niche agreement’) and the second with Matrix (‘the Matrix agreement’). Niche accordingly withdrew from the opposition relating to the 947 patent on 9 February 2005 and that relating to the 948 patent on 14 February 2005.
28 Each of those agreements contained, first, ‘non-marketing’ clauses, by which Niche and Unichem and Matrix undertook, until the expiry of Servier’s relevant patents relating to perindopril, to refrain from making, supplying or marketing any generic form of perindopril manufactured using the processes protected by those patents and, second, a ‘non-challenge’ clause, by which they undertook to refrain from or withdraw from any action seeking to challenge the validity of those patents or to obtain declarations of non-infringement.
29 In return, Servier undertook, first, not to bring any actions for infringement against those undertakings and, second, to compensate them for the costs that could result from the cessation of their programme to develop a version of perindopril manufactured using the processes protected by Servier’s patents. It was provided that that compensation would give rise to two payments, each of 11.8 million pounds sterling (GBP) (EUR 17 161 140), the first to Niche and the second to Matrix. Those agreements covered, inter alia, all the Member States of the European Economic Area (EEA) in which the 339, 340, 341 and 947 patents were in force.
30 Under a third agreement, also concluded on 8 February 2005, Niche undertook to transfer to Biogaran marketing authorisation files for three medicinal products other than perindopril, and a marketing authorisation obtained in France for one of those three medicinal products. In return, Biogaran was to pay Niche the sum of GBP 2.5 million, which was non-refundable, even if those marketing authorisations were not obtained. The decision at issue
31 On 9 July 2014, the Commission adopted the decision at issue.
32 In Article 2 of that decision, the Commission found that the appellants 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 for Italy and Croatia; that that infringement had started, in respect of Mylan Laboratories, on 8 February 2005 and, in respect of Mylan, on 8 January 2007, except as regards, in so far as concerns Mylan Laboratories, Latvia, where it had started on 1 July 2005, and Bulgaria and Romania, where it had started on 1 January 2007, and, in respect of both those companies, Malta, where it had started on 1 March 2007; and that the infringement in question had ended on 15 September 2008, except as regards the United Kingdom, where it ended on 6 July 2007, and the Netherlands, where it ended on 12 December 2007.
33 In Article 7(2)(a) of the decision at issue, the Commission imposed a fine of EUR 17 161 140 on Mylan Laboratories, for the infringement of Article 101 TFEU, of which EUR 8 045 914 was imposed jointly and severally with Mylan. The procedure before the General Court and the judgment under appeal
34 By document lodged at the Registry of the General Court on 19 September 2014, the appellants brought an action seeking the annulment of the decision at issue in so far as it concerns them, and the cancellation of or a reduction of the fine imposed on them by the Commission.
35 In their action at first instance, the appellants invoked eight pleas in law in support of the forms of order sought, the first to fifth and eighth of which are relevant for the purposes of this appeal. Those pleas concerned the existence of a potential competitive relationship between Matrix and Servier (first and second pleas); the characterisation of the Matrix agreement as a restriction of competition by object (third plea) and by effect (fourth plea) within the meaning of Article 101(1) TFEU; the imposition of a fine (fifth plea); and the imputation to Mylan of liability for the conduct of its subsidiary (eighth plea).
36 By the judgment under appeal, the General Court dismissed the appellants’ action in its entirety. The procedure before the Court of Justice and the forms of order sought
37 By document lodged at the Registry of the Court of Justice on 28 February 2019, the appellants brought the present appeal.
38 By document lodged at the Registry of the Court on 19 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 22 July 2019, the President of the Court of Justice granted that application.
39 By letter of 16 September 2019, the United Kingdom waived its right to lodge a statement in intervention.
40 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). The appellants and the Commission complied with that request within the prescribed period.
41 By their appeal, the appellants claim that the Court should: - set aside the judgment under appeal inasmuch as it dismissed their application for annulment of the decision at issue in so far as it concerns them; - cancel or substantially reduce the fine; or - refer the case back to the General Court for determination in accordance with the judgment of the Court of Justice; and - order the Commission to pay the appellants’ legal and other costs and expenses in relation to this case and any other measures that the Court considers appropriate.
42 The Commission claims that the Court should: - dismiss the appeal in its entirety; and - order the appellants to pay the costs. The appeal
43 In support of their appeal, the appellants raise five grounds of appeal. The first ground alleges errors of law relating to potential competition. The second ground alleges errors of law relating to the characterisation of the Matrix agreement as a restriction of competition by object. The third ground alleges a failure to rule on the characterisation of the Matrix agreement as a restriction of competition by effect. The fourth ground relates to the imputation of liability for Matrix’s conduct to Mylan. The fifth ground alleges a breach of the principle that offences and penalties must have a proper legal basis. The first ground of appeal, relating to potential competition Arguments of the parties
44 By their first ground of appeal, which is divided into two parts, the appellants take issue with the General Court’s finding that Matrix was a potential competitor of Servier at the time the Matrix agreement was concluded.
45 By the first part, the appellants dispute the finding, in paragraph 89 of the judgment under appeal, that the Commission was entitled to rely on the existence of the agreement of 26 March 2001 in order to find that Matrix and Niche had the ability to enter the perindopril market. In its examination of whether those undertakings together had real and concrete possibilities of entering that market and competing with Servier on it, the General Court, according to the appellants, made three errors.
46 First, the General Court failed to take into account the fact that Matrix and Niche were separate undertakings and that there was no contract between them. The General Court thereby misconstrued the concept of undertaking within the meaning of Article 101 TFEU.
47 Second, the General Court also failed to take into account that Matrix was present, upstream, on the market for the active ingredient of perindopril but not downstream on the market for that medicinal product. Those are two separate markets. Since it was not present on the downstream market, Matrix could not have been a potential competitor of Servier.
48 Third, the General Court erred when it found, in paragraph 90 of the judgment under appeal, that the agreement of 26 March 2001 was still in force on the date on which the Matrix agreement was concluded, 8 February 2005. According to the appellants, by focusing on the date of the formal termination of that agreement, the General Court failed to examine comprehensively all the evidence intended to show that, by that date, the relationship arising under that agreement had already come to an end. That failure amounts to an error of law or a manifest distortion of the evidence.
49 By the second part of their first ground of appeal, the appellants assert that, in paragraphs 111, 121, 123 and 128 of the judgment under appeal, the General Court misapplied the legal criteria for establishing the existence of a potential competitive relationship.
50 By holding that any undertaking that wishes to enter a market and takes steps to that end may be characterised as a potential competitor, unless insurmountable barriers prevent it from entering that market, the General Court placed too much weight on the intentions of the parties. According to the appellants, merely preparatory steps are not sufficient to establish that an undertaking had real and concrete possibilities of entering that market. Those errors caused the General Court to deny, incorrectly, the relevance of the patent-related and regulatory barriers encountered by Matrix and Niche. They also led the General Court to reverse the burden of proving the existence of real and concrete possibilities of market entry, which lies with the Commission, by requiring the appellants to refute the absence of insurmountable barriers to that entry.
51 The Commission disputes that line of argument. Findings of the Court
52 The second part of the first ground of appeal seeks to dispute the validity of the legal criteria on the basis of which the General Court ruled on the appellants’ arguments concerning the existence of a potential competitive relationship between Matrix and Servier. It is appropriate to examine that part first. - The second part
53 In order to respond to the appellants’ line of argument, under the second part of their first ground of appeal, that the General Court erred in law by holding that the Commission had been entitled to establish that Matrix, together with Niche, was a potential competitor of Servier, it should be recalled that, in the specific context of the opening of the market for a medicinal product to the manufacturers of generic medicines, it is necessary to determine, in order to assess whether one of those manufacturers, although absent from a market, is a potential competitor of a manufacturer of originator medicines present on that market, whether there are real and concrete possibilities of the former moving into that market and competing with the latter (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraph 36 and the case-law cited).
54 Thus, it is necessary to assess, first, whether, at the time those agreements were concluded, the manufacturer of generic medicines had taken sufficient preparatory steps to enable it to enter the market concerned within such a period of time as would impose competitive pressure on the manufacturer of originator medicines. Such steps permit the conclusion that a manufacturer of generic medicines has a firm intention and an inherent ability to enter the market for a medicine containing an active ingredient that is in the public domain, even when there are process patents held by the manufacturer of originator medicines. Second, it must be determined that the market entry of such a manufacturer of generic medicines does not meet barriers to entry that are insurmountable (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others (C‑307/18, EU:C:2020:52, paragraphs 43 to 45).
55 In that regard, the existence of a patent which protects the manufacturing process of an active ingredient that is in the public domain cannot, as such, be regarded as an insurmountable barrier, and does not mean that a manufacturer of generic medicines which has in fact a firm intention and an inherent ability to enter the market, and who, by the steps taken, shows a readiness to challenge the validity of that patent and to take the risk, upon entering the market, of being subject to infringement proceedings brought by the patent holder, cannot be characterised as a potential competitor of the manufacturer of originator medicines concerned (judgment of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraph 46).
56 Admittedly, where the validity of such a patent has been definitively established before all the courts before which that question has been brought, it would hardly be conceivable that other aspects of the economic and legal context characterising objectively the competitive relationships between the holder of that patent and a manufacturer of generic medicines could justify the conclusion that there is still a potential competitive relationship between them. However, it is nevertheless for the administrative authority or the competent court to examine all the relevant elements before reaching the conclusion that that holder and that manufacturer are not potential competitors, especially where disputes between them on the question of the validity of the relevant patent are still pending.
57 The Court of Justice has already held that any patents protecting an originator medicine or one of its manufacturing processes are indisputably part of the economic and legal context characterising the relationships of competition between the holders of those patents and the manufacturers of generic medicines. However, the assessment of the rights conferred by a patent must not consist in a review of the strength of the patent or of the probability of a dispute between the patent holder and a manufacturer of generic medicines concluding with a finding that the patent is valid and has been infringed. That assessment must rather concern the question whether, notwithstanding the existence of that patent, the manufacturer of generic medicines has real and concrete possibilities of entering the market at the relevant time (judgment of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraph 50).
58 Furthermore, a finding of potential competition between a manufacturer of generic medicines and a manufacturer of originator medicines can be confirmed by additional factors, such as the conclusion of an agreement between them when the manufacturer of generic medicines was not present on the market concerned, or the existence of transfers of value to that manufacturer in exchange for the postponement of its market entry (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraphs 54 to 56).
59 In the present case, the General Court held, in essence, in paragraphs 46 and 87 of the judgment under appeal, that a potential competitor is one which has real and concrete possibilities of entering the market in question. Such a finding must, according to that court, be based fundamentally on the ability to enter that market, supported, where appropriate, by the intention to do so, while furthermore, if a market is characterised by barriers to entry, an examination of whether those barriers are insurmountable is a useful adjunct to the examination of whether there are real and concrete possibilities, based on its ability and intention, of the undertaking in question entering that market.
60 In paragraphs 50 to 54 of the judgment under appeal, the General Court observed in that regard that efforts made to develop a generic medicine are indicative of an ability and intention to enter the market.
61 It also held, in paragraphs 55 to 59 of that judgment, that, for an undertaking to be capable of being characterised as a potential competitor, it must be able to make its market entry sufficiently quickly to constitute a constraint on the undertakings present on that market and thus exert competitive pressure on them.
62 In paragraphs 60 to 65 and 113 of the judgment under appeal, the General Court made clear that the evidence of potential competition can be borne out, on the one hand, by the perception on the part of the operator present on the market of the potential competition exerted by manufacturers of generic medicines and, on the other, by the perception on the part of those manufacturers of the possibilities of patents being declared invalid or being infringed, and that such a perception may contribute to establishing the intention of those manufacturers to enter the market in question. It noted, in that regard, referring to its own case-law, that the conclusion of an agreement between those undertakings can constitute evidence capable of supporting the existence of potential competition between them
63 Following its rejection, for the reasons set out in paragraphs 77 to 95 of the judgment under appeal - the merits of which will be assessed as part of the examination of the first part of the first ground of appeal - of the appellants’ complaints that the Commission had examined whether Matrix was a potential competitor not in relation to Matrix alone but in the light of the links existing between Matrix and Niche at the time the Matrix agreement was concluded, the General Court, in paragraphs 96 to 135 of that judgment, examined whether the Commission had been entitled to conclude that the agreement of 26 March 2001 justified the characterisation of Niche and Matrix as potential competitors of Servier.
64 First of all, the General Court found, in paragraphs 96 and 97 of the judgment under appeal, that Niche and Matrix had the ability to enter the perindopril market and intended to do so. Then, in paragraphs 99 to 135 of that judgment, it examined the validity of the appellants’ assertion that there were insurmountable barriers to that entry. The General Court rejected the appellants’ arguments concerning the existence of patent-related, technical, regulatory and financial barriers. Consequently, the General Court rejected the appellants’ plea in law at first instance alleging errors of law and assessment in the analysis of potential competition between Matrix and Servier.
65 It is clear from those considerations that the General Court did not err in law and ruled in accordance with what has been stated in paragraphs 53 to 58 of the present judgment when it set out the criteria from which it can be concluded that there is a potential competitive relationship between a manufacturer of originator medicines and a manufacturer of generic medicines. The criteria adopted by the General Court in fact correspond, in essence, to those adopted by the Court of Justice in paragraphs 36 to 57 of the judgment of 30 January 2020, Generics (UK) and Others (C‑307/18, EU:C:2020:52).
66 Specifically, the two criteria relating to the ability to enter the market in question and the intention to do so, referred to in paragraph 46 of the judgment under appeal, correspond to the criteria adopted by the Court of Justice, in particular in paragraph 44 of the judgment of 30 January 2020, Generics (UK) and Others (C‑307/18, EU:C:2020:52), relating to the firm intention and inherent ability of a manufacturer of generic medicines to enter the market for a medicine containing an active ingredient that is in the public domain, even when there are process patents held by the manufacturer of originator medicines.
67 Contrary to the appellants’ claims, in its assessment of the tests for potential competition, the General Court did not place ‘too much weight’ on the parties’ intentions. On the contrary, the General Court stated, in paragraph 46 of the judgment under appeal, that ‘while the intention of an undertaking to enter a market may be of relevance in order to determine whether it can be considered to be a potential competitor in that market, nonetheless the essential factor on which such a description must be based is whether it has the ability to enter that market’. The General Court also made clear, in paragraphs 61 to 63 of the judgment under appeal, that the perception on the part of the operator present on the market of the potential competition exerted by a third-party undertaking is a merely supplementary factor compared with the criteria relating to the ability and the intention to enter the market, and that its role, in the decision at issue, was only ‘very marginal’. In paragraph 113 of the judgment under appeal, the General Court found, furthermore, that the parties’ perception of the possibility of patents being declared invalid or of being infringed may contribute to establishing their intention to enter the market, while reiterating that the fundamental criterion in that regard is the ability to enter the market in question. Accordingly, the General Court did not make any error in law in that regard such as to call into question the validity of its finding in relation to potential competition.
68 The appellants’ complaint that, by requiring undertakings to establish the existence of insurmountable barriers to the market entry of manufacturers of generic medicines, the General Court reversed the burden of proving the existence of a potential competitive relationship, which lies with the Commission, must be rejected.
69 It is in fact apparent from paragraphs 96 to 135 of the judgment under appeal that the General Court did not reverse the burden of proof in that way but, in essence, merely held that, in the absence of evidence to the contrary relating to technical, regulatory, commercial or financial difficulties, the Commission was entitled to establish that the manufacturers of generic medicines had the ability and the intention to enter the market, and therefore had real and concrete possibilities of doing so, if it had gathered a body of consistent evidence attesting, at the very least, to steps taken with a view to producing and marketing the medicinal product at issue within a sufficiently short period of time to constitute a constraint on the manufacturer of originator medicines. According to the case-law of the Court of Justice, in matters of liability for an infringement of the competition rules, the factual evidence on which a party relies may be of such a kind as to require the other party to provide an explanation or justification, failing which it is permissible to conclude that the burden of proof has been discharged (judgments of 1 July 2010, Knauf Gips v Commission , C‑407/08 P, EU:C:2010:389, paragraph 80, and of 25 March 2021, Lundbeck v Commission , C‑591/16 P, EU:C:2021:243, paragraph 79).
70 In accordance with that case-law, if the Commission succeeds in establishing the existence of potential competition between two undertakings, on the basis of a body of consistent evidence, and without disregarding any evidence to the contrary of which it actually became aware in the course of the investigation which it conducted on an adversarial basis, including evidence relating to potential barriers to market entry, it is for those undertakings to refute the existence of such competition by adducing evidence to the contrary, which they may do either in the context of the administrative procedure or, for the first time, in the context of the proceedings before the General Court (see, on that latter point, judgment of 21 January 2016, Galp Energía España and Others v Commission , C‑603/13 P, EU:C:2016:38, paragraph 72). That onus does not constitute either an undue reversal of the burden of proof or a probatio diabolica , since it is sufficient for the undertakings in question to adduce evidence of a positive fact, namely the existence of technical, regulatory, commercial or financial difficulties which, according to them, constitute insurmountable barriers to one of them entering the market. Once such evidence has been adduced, it is for the Commission to ascertain whether it invalidates its analysis as to the existence of potential competition.
71 If, on the other hand, it was for the Commission to establish, in the negative, that there were no such difficulties, and, therefore, no insurmountable barriers whatsoever to the market entry of one of the undertakings in question, such a burden of proof would constitute a probatio diabolica for that institution.
72 It follows that the second part of the first ground of appeal must be rejected. - The first part
73 By the first part of their first ground of appeal, the appellants criticise the General Court for holding that the Commission was entitled to find that, as a result of its links with Niche, Matrix was a potential competitor of Servier.
74 In paragraphs 77 to 84 of the judgment under appeal, the General Court recalled that, in the decision at issue, the Commission had found that, as a result of the agreement of 26 March 2001, Matrix was closely linked to the activities carried on by Niche and by its parent company Unichem in order to develop a generic version of perindopril. In those circumstances, the Commission examined whether Matrix was a potential competitor of Servier not in isolation but primarily in the light of the partnership set up between Matrix and Niche.
75 It is apparent from the reasons set out in paragraphs 89 to 95 of that judgment that the General Court found that that partnership had been suspended only on 22 June 2005, that is to say, more than four months after the conclusion of the Niche and Matrix agreements. It accordingly held, in paragraph 89 of that judgment, that the Commission had been validly able to examine ‘Matrix, together with Niche, as a potential competitor, by checking whether, through the [agreement of 26 March 2001, those] two companies were able to enter the market with the generic perindopril produced as a result of the implementation of [that] agreement’, notwithstanding the fact that Niche and Matrix were two autonomous companies.
76 The appellants dispute that latter finding under the first part of their first ground of appeal by asserting, in essence, that the partnership between Niche and Matrix resulting from the agreement of 26 March 2001 had in practice already been abandoned when, on 8 February 2005, those undertakings concluded the Niche and Matrix agreements with Servier. According to the appellants, by finding that the agreement of 26 March 2001 was suspended on 22 June 2005, the General Court distorted the evidence and failed to discharge its obligation to examine comprehensively all the evidence before it.
77 In that regard, it should be pointed out that it is apparent from Article 256(1) TFEU and the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union that an appeal is to be limited to points of law and that the General Court therefore has exclusive jurisdiction to find and appraise the relevant facts and to assess the evidence (judgment of 10 July 2019, VG v Commission , C‑19/18 P, EU:C:2019:578, paragraph 47 and the case-law cited).
78 However, where the General Court has found or appraised the facts, the Court of Justice has jurisdiction to carry out a review, provided that the General Court has defined their legal nature and determined the legal consequences. The jurisdiction of the Court of Justice to review extends, inter alia, to the question of whether the General Court has taken the right legal criteria as the basis for its appraisal of the facts (see, to that effect, judgment of 2 March 2021, Commission v Italy and Others , C‑425/19 P, EU:C:2021:154, paragraph 53 and the case-law cited).
79 Complaints based on findings of fact and on the assessment of those facts in the contested decision are admissible on appeal where it is claimed that the General Court has made findings which the documents in the file show to be substantially incorrect or that it has distorted the clear sense of the evidence before it (judgment of 18 January 2007, PKK and KNK v Council , C‑229/05 P, EU:C:2007:32, paragraph 35).
80 That distortion must be obvious from the documents in the Court’s file, without there being any need to carry out a new appraisal of the facts and the evidence (judgment of 28 January 2021, Qualcomm and Qualcomm Europe v Commission , C‑466/19 P, EU:C:2021:76, paragraph 43). Although such a distortion may consist in an interpretation of a document that is at odds with its content, that must be manifestly clear from the file and the General Court must have manifestly exceeded the limits of a reasonable assessment of the evidence. In that regard, it is not sufficient to show that a document could be interpreted in a different way from that adopted by the General Court (judgment of 17 October 2019, Alcogroup and Alcodis v Commission , C‑403/18 P, EU:C:2019:870, paragraph 64 and the case-law cited).
81 In the present case, the appellants are not questioning the veracity per se of the General Court’s finding that, on 22 June 2005, Matrix notified Niche that the agreement of 26 March 2001 was suspended. They are asserting that, despite that notification, the whole body of evidence put before the General Court for assessment should have resulted in that court finding that the agreement in question had already ceased to have effect before 8 February 2005, the date on which the Niche and Matrix agreements were concluded.
82 However, it should be noted, first, that, in essence, the appellants merely refer to the evidence described in Section 4.3.1.4.2.1 of the decision at issue as a whole, without identifying any specific distortions of particular pieces of evidence that they allege were committed by the General Court and, second, that, in the guise of alleging a breach of the rules relating to the examination of evidence, the appellants are in reality merely criticising the finding, in paragraph 90 of the judgment under appeal, that the agreement of 26 March 2001 had ceased to have effect from 22 June 2005. In accordance with the case-law referred to in paragraphs 77 to 80 of the present judgment, such reasoning does not fall within the jurisdiction of the Court of Justice in appeal proceedings and must, therefore, be rejected.
83 The appellants also allege under the first part of their first ground of appeal that the General Court relied on the agreement of 26 March 2001 in order to find that, as a result of the partnership with Niche, Matrix was a potential competitor of Servier, whereas Matrix and Niche did not constitute an undertaking within the meaning of Article 101 TFEU.
84 In that regard, it should be recalled that it is clear from the wording of Article 101(1) TFEU that the authors of the Treaties chose to use the concept of an ‘undertaking’ to designate the perpetrator of an infringement of competition law, who is liable to be punished pursuant to that provision, not other concepts such as the concept of a ‘company or firm’ or of a ‘legal person’. Moreover, the EU legislature used that concept of ‘undertaking’ in Article 23(2) 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), to define the entity on which the Commission may impose a fine in order to penalise an infringement of the European Union’s rules on competition (judgments of 10 April 2014, Areva and Others v Commission , C‑247/11 P and C‑253/11 P, EU:C:2014:257, paragraphs 123 and 124, and of 25 November 2020, Commission v GEA Group , C‑823/18 P, EU:C:2020:955, paragraphs 62 and 63).
85 In so doing, EU competition law, by targeting the activities of undertakings, enshrines as the decisive criterion the existence of unity of conduct on the market. The concept of ‘undertaking’ therefore covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed. Accordingly, it designates an economic unit even if, in law, that economic unit consists of several persons, natural or legal, and that economic unit can contribute to the commission of an infringement of Article 101(1) TFEU (judgment of 1 July 2010, Knauf Gips v Commission , C‑407/08 P, EU:C:2010:389, paragraphs 84 and 86).
86 In the present case, neither the Commission, in the decision at issue, nor the General Court, in the judgment under appeal, nor moreover the appellants, in their appeal, regarded Niche and Matrix as together forming an economic unit liable for the infringement referred to in Article 2 of that decision. On the contrary, the appellants submit that Niche and Matrix were two autonomous companies with no contract between them and that, therefore, the Commission should have examined whether Matrix, on its own, had an ability, in real and concrete terms, to enter the perindopril market.
87 However, that line of argument relies on the factual premiss that the agreement of 26 March 2001, which constituted the basis of the partnership between Niche and Matrix to develop perindopril, had ceased by the date on which the Matrix agreement was concluded. That premiss is in fact directly contradicted by the findings made by the General Court in paragraph 90 of the judgment under appeal, and the appellants have not succeeded in demonstrating that those findings were based on a distortion of the evidence. Since the General Court could validly find that, on the date on which the Matrix agreement was concluded, the agreement of 26 March 2001 still existed between Niche and Matrix, that line of argument advanced by the appellants is founded on an incorrect factual premiss.
88 Furthermore, that line of argument is incorrect in law. Admittedly, if an undertaking confines itself exclusively to marketing a component of a finished product, which it neither produces nor markets on that product’s downstream market, that undertaking can as a general rule be regarded as a potential competitor of the undertakings already active in the sector in question only on the upstream market for that component. However, that circumstance does not mean that the undertaking concerned cannot enter the market for that finished product in a situation such as that at issue in the present case where that undertaking has concluded a partnership agreement to develop the finished product and market it on the downstream market, even though that undertaking’s role in the context of that partnership consists fundamentally in providing its partner with the component in question. In such a situation, it is therefore not inconceivable that the undertaking which produces that component could be regarded as a potential competitor of an undertaking present on the market for the finished product.
89 It follows that, when it held, in paragraph 88 of the judgment under appeal, that ‘the classification of an undertaking as a potential competitor cannot be rejected merely because it is not able to enter a given market by itself, where it has the possibility of finding business partners through which it can access that market, or has already concluded an agreement with those business partners’, the General Court did not make an error of law such as to invalidate its finding that Matrix was a potential competitor in the circumstances of the present case.
90 Furthermore, it is clear from the background to the dispute set out in paragraphs 2 to 30 of the present judgment that the common strategy of Matrix, Niche and Niche’s parent company Unichem was to develop a generic version of perindopril and market it in the territory of the European Union. That strategy was embodied in the agreements of 26 March 2001 and of 27 March 2003. According to those agreements, Matrix was responsible for producing the active ingredient of a generic version of perindopril and Unichem for the production of that generic version in tablet form, using that active ingredient. The marketing of that medicinal product, including its regulatory aspects, was entrusted to Niche.
91 To allow that Matrix could not be regarded as a potential competitor of Servier on the perindopril market solely because it produces only the active ingredient forming part of the composition of that medicinal product, as the appellants claim, would therefore not only be at odds with the interpretation of the concept of potential competition set out in paragraphs 53 to 58 and 88 of the present judgment, but would also amount to finding that an agreement between those undertakings, under which Matrix would refrain from supplying that component to Unichem - or indeed to any third-party undertaking capable of using it to produce a generic version of perindopril - and accordingly from entering the market for that medicinal product, could not be penalised as an infringement of Article 101(1) TFEU identified on that market. Since the object of an agreement of that nature is manifestly anticompetitive in respect of the market for the medicinal product in question, that outcome would undermine the effectiveness of the prohibition under Article 101(1) TFEU.
92 It follows from the foregoing that the General Court made no distortion or any error of law or of legal classification when it held, for the reasons set out in paragraphs 86 to 95 of the judgment under appeal, that it was necessary to reject the appellants’ claims criticising the joint assessment of whether Niche and Matrix were potential competitors.
93 The first part of the first ground of appeal must therefore also be rejected, as must the first ground of appeal as a whole. The second ground of appeal, relating to characterisation as a restriction of competition by object Arguments of the parties
94 By its second ground of appeal, which is divided into three parts, the appellants assert that the General Court erred in law by holding that the Commission was entitled to characterise the Matrix agreement as a restriction of competition by object within the meaning of Article 101(1) TFEU.
95 By the first part of their second ground of appeal, the appellants dispute the grounds set out in paragraphs 204 and 222 of the judgment under appeal, on which the General Court held that the fact that the non-marketing and non-challenge clauses in the Matrix agreement did not exceed the scope of Servier’s patents was not sufficient to prevent that agreement from being characterised as a restriction of competition by object. That characterisation, in relation to which Article 101(1) TFEU must be interpreted restrictively, is, they submit, reserved for conduct the harmful nature of which is proven and easily identifiable, in the light of experience and economics. The General Court therefore misapplied the legal test for identifying a restriction of competition by object, as that test was defined by the Court of Justice in its judgment of 11 September 2014, CB v Commission (C‑67/13 P, EU:C:2014:2204).
96 By the second part of their second ground of appeal, the appellants assert that the General Court erred in law, in paragraph 199 of the judgment under appeal, by inferring from the payment made by Servier to Matrix that there was a restriction of competition by object.
97 First, according to the appellants, characterisation as a restriction of competition by object means that the restriction in question must be readily identifiable from the terms of an agreement. The General Court did not confine itself to examining the wording of the terms of the Matrix agreement in order to characterise it as such. The General Court’s approach would mean that a restriction of competition by object could be inferred from the economic and legal context of an agreement, even though the objective and content of that agreement do not in themselves reveal an anticompetitive object. The General Court thereby blurred the distinction between restrictions of competition by object and restrictions of competition by effect.
98 Second, the appellants assert that the presence of a ‘reverse’ payment by the manufacturer of originator medicines to the manufacturer of generic medicines cannot be sufficient to turn an ordinary patent dispute settlement agreement into a restriction of competition by object. Such a characterisation does not involve ascertaining whether the manufacturer of generic medicines was induced to conclude such an agreement by virtue of a reverse payment, but determining whether that agreement, by its very nature, restricts competition. In assessing the economic and legal context of the Matrix agreement, the General Court could not ignore the significance of Servier’s patents. The existence of a reverse payment indicates nothing such as to cast doubt on the validity of those patents. According to the appellants, Servier could have agreed to a reverse payment despite being confident in the strength of its patents and in the fact that Matrix had little prospect of marketing a generic version of the medicinal product in question.
99 By the third part of their second ground of appeal, the appellants assert that the General Court erred when it found that the reverse payment had induced Matrix not to compete with Servier.
100 First, the appellants assert that a reverse payment does not mean that the terms of a patent dispute settlement are not the outcome of an objective assessment of the validity of the patent or patents concerned. They state that, in the present case, Matrix did not conclude the Matrix agreement because of a reverse payment, but because Niche had decided to withdraw from the agreement of 26 March 2001, thereby depriving Matrix of any route by which to access the perindopril market.
101 Second, the appellants submit that, by stating that, in the absence of a reverse payment, Matrix would not have agreed to the non-marketing clause, the General Court found that Matrix was prepared to run the risk of producing an active ingredient that infringed Servier’s patents. However, such a purely hypothetical consideration is unsupported by any evidence. On the contrary, Matrix made considerable efforts to develop a non-infringing version of that active ingredient.
102 Third, the appellants take issue with the criteria that the General Court used to determine which costs inherent in a patent dispute settlement are capable of giving rise to a reverse payment. In particular, it is in their view misconceived to exclude from those inherent costs the costs of research and development and the stock of active ingredients, as the General Court did in paragraph 216 of the judgment under appeal.
103 The Commission disputes that line of argument. Findings of the Court
104 It should be noted that, if it is to be subject to the prohibition in principle laid down in Article 101(1) TFEU, a collusive practice must have as its ‘object or effect’ the prevention, restriction or distortion to an appreciable extent of competition within the internal market. It follows that that provision, as interpreted by the Court, makes a clear distinction between the concept of restriction by object and the concept of restriction by effect, each of those concepts being subject to different rules with regard to what must be proved (judgment of 30 January 2020, Generics (UK) and Others , C‑307/18, EU:C:2020:52, paragraphs 62 and 63).
105 Accordingly, as regards practices characterised as restrictions of competition by object, there is no need to examine nor, a fortiori, to prove, 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).
106 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).
107 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).
108 It is true, as the appellants assert, 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).
109 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).
110 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).
111 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).
112 In that context, it should also be borne in mind that a manufacturer of generic medicines, after assessing its chances of success in court proceedings between it and the manufacturer of the originator medicine concerned, may decide to abandon entry to the market in question and to conclude a settlement agreement with that manufacturer. Such an agreement cannot be considered, in all cases, to be a restriction by object within the meaning of Article 101(1) TFEU. The fact that such an agreement involves transfers of value by the manufacturer of originator medicines to a manufacturer of generic medicines is not sufficient ground to classify it as a restriction by object, since those transfers of value may prove to be justified. That may be the case where the manufacturer of generic medicines receives from the manufacturer of originator medicines sums which correspond in fact to compensation for the costs of or disruption caused by the litigation between them, or which correspond to remuneration for the actual supply of goods or services to the manufacturer of originator medicines (see, to that effect, judgment of 30 January 2020, Generics (UK) and Others, C‑307/18, EU:C:2020:52, paragraphs 84 to 86).
113 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 to 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).
114 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.
115 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 medicines 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 to 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).
116 By the first part of their second ground of appeal, the appellants criticise the General Court for finding that the Matrix agreement could be characterised as a restriction of competition by object, whereas the non-challenge and non-marketing clauses in that agreement did not exceed the scope of Servier’s patents.
117 Admittedly, a patent dispute settlement agreement may be concluded, with a legitimate aim and entirely lawfully, on the basis of the parties’ recognition of the validity of the patent in question, in the absence of any other circumstance constituting an infringement of Article 101 TFEU. Such an agreement can even include non-challenge and non-marketing clauses, the scope of which is limited to that of the patent in question, as the General Court noted, in essence, in paragraph 191 of the judgment under appeal. Nevertheless, as can be seen from the next part of the General Court’s reasoning, in particular from paragraphs 192 to 202 of that judgment, characterisation of such an agreement as a restriction of competition by object also depends on other characteristics of that agreement and on the circumstances in which it was concluded, as a result of which the agreement can, if applicable, be regarded as revealing a sufficient degree of harm to competition.
118 As the General Court held, in essence, in paragraphs 192 and 193 of the judgment under appeal, the presence of non-challenge and non-marketing clauses the scope of which is limited to that of the patent held by the manufacturer of originator medicines may give rise to characterisation as a restriction of competition by object, where it is apparent that the manufacturer of generic medicines does not agree to those clauses on the basis of its recognition that the patent in question is valid but on the basis of a payment to it. As is clear from the case-law referred to in paragraphs 112 to 115 of the present judgment, the test for determining whether an agreement such as the Matrix agreement constitutes a restriction of competition by object is whether the ‘reverse’ transfers of value from the manufacturer of originator medicines to the manufacturer of generic medicines constitute the real consideration for the latter refraining from entering 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).
119 The first part of the second ground of appeal must, therefore, be rejected.
120 Under the second part of their second ground of appeal, the appellants put forward, in essence, two complaints. By the first, they assert that the General Court could not rely on the economic and legal context of an agreement in order to characterise it as a restriction of competition by object, even though the objective and content of that agreement did not in themselves reveal an anticompetitive object.
121 Nevertheless, it is apparent from the case-law referred to in paragraphs 108 to 111 of the present judgment that a characterisation as a restriction of competition by object must be based not only on a detailed analysis of the agreement at issue, but also on its objectives and on its economic and legal context. That is why 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). It follows that the first complaint lacks any foundation in law.
122 By their second complaint, the appellants submit that, in contrast to what the General Court held, the presence of a reverse payment should not be sufficient to justify its characterisation as a restriction of competition by object.
123 However, it can be seen from paragraphs 192 to 202 of the judgment under appeal that the General Court did not hold that the mere presence of a reverse payment from the manufacturer of originator medicines to a manufacturer of generic medicines was sufficient for a patent dispute settlement agreement to be characterised as a restriction of competition by object. The General Court expressly ruled out such a possibility, in particular in paragraph 208 of that judgment. It held, in those paragraphs 192 to 202, that the presence in such an agreement of non-challenge and non-marketing clauses, associated with a reverse payment, can be so characterised if that payment is not justified by consideration other than that consisting in the commitment made by the manufacturer of generic medicines to refrain from competing with the manufacturer of originator medicines which is the holder of the patent or patents concerned. In so doing, the General Court ruled in accordance with the case-law referred to in paragraphs 112 to 115 of the present judgment.
124 In so far as the appellants submit that it is necessary to establish that an agreement is sufficiently harmful in order to characterise it as a restriction of competition by object, it is sufficient to point out that a commercial arrangement such as that at issue in the present case is non- legitimate from a competition standpoint precisely because a reverse payment such as that paid by Servier to Matrix can only be explained, according to the General Court’s factual findings in that regard, by the commercial interest of Servier and Matrix not to engage in competition on the merits.
125 The second complaint is therefore based on a misreading of the judgment under appeal and is unfounded. The second part of the second ground of appeal must, therefore, be rejected.
126 Under the third part of their second ground of appeal, the appellants dispute, in particular, the findings that led the General Court to determine that it was Servier’s payment of the sum of GBP 11.8 million to Matrix that induced the latter to conclude the Matrix agreement. However, in support of that line of argument, the appellants do not advance any legal reasoning such as to identify a distortion of the evidence and of the facts found by the General Court or an error of law made by that court. They are, in reality, asking the Court of Justice to reassess the facts and evidence examined by the General Court in paragraphs 210 to 223 of the judgment under appeal, which examine the errors of assessment allegedly made by the Commission when it characterised the Matrix agreement as a restriction of competition by object. In accordance with the case-law referred to in paragraphs 77 to 80 of the present judgment, such a request does not fall within the jurisdiction of the Court of Justice in appeal proceedings.
127 Under that third part, the only admissible argument is that by which the appellants criticise the legal criteria used by the General Court to identify the costs inherent in a patent dispute settlement that can give rise to a reverse payment.
128 In paragraphs 213 to 216 of the judgment under appeal, the General Court held, in essence, that, in order to determine whether a manufacturer of generic medicines was induced to accept non-challenge and non-marketing clauses in return for a reverse payment from a manufacturer of originator medicines, it is necessary to examine whether that reverse payment is intended to compensate for the costs inherent in the settlement and borne by the manufacturer of generic medicines. The General Court stated that those costs include, in particular, expenses incurred in the context of the disputes to which the settlement agreement relates, provided that those expenses have been established by the parties to that agreement and that they are not disproportionate to the amount of the expenses that are objectively indispensable to the litigation. By contrast, according to the judgment under appeal, the costs inherent in the settlement do not include either the value of the stock of infringing medicines or the research and development costs incurred in developing those medicinal products. According to that judgment, those costs also exclude, as a general rule, sums payable as compensation under contracts concluded by the manufacturer of generic medicines with third parties, including for termination of contract.
129 It is clear that those criteria correspond, in essence, to those apparent from the case-law of the Court of Justice summarised in paragraphs 112 to 115 of the present judgment. On the basis of those criteria, the General Court was therefore entitled to assess the relevant factors and to find, for the reasons set out in paragraphs 217 to 222 of the judgment under appeal, that it was ‘clear’ from the actual wording of the Matrix agreement that Servier’s payment of the sum of GBP 11.8 million to Matrix had been the consideration for Matrix agreeing to the non-challenge and non-marketing clauses contained in that agreement.
130 Specifically, to the extent that the appellants assert that it would be incorrect to exclude research and development costs and the stock of active ingredients from the costs inherent in the settlement, as can be seen from paragraph 167 of today’s judgment in Servier and Others v Commission (C‑201/19 P), payments of that kind are the direct consequence not of the intention of the manufacturers of medicines to settle litigation or disputes between them concerning patents, but of the decision of the manufacturer of generic medicines not to enter the market for the medicinal product concerned. It follows that the General Court did not err in law, in paragraph 216 of the judgment under appeal, by holding, in essence, that such a reimbursement cannot be regarded as inherent in a settlement agreement such as the Matrix agreement.
131 In the light of the foregoing, the third part of the second ground of appeal, and, therefore, the second ground of appeal in its entirety, must be rejected. The third ground of appeal, relating to characterisation as a restriction of competition by effect Arguments of the parties
132 By their third ground of appeal, the appellants assert that, in paragraph 239 of the judgment under appeal, the General Court erred in law by rejecting as ineffective the plea in law at first instance taking issue with the characterisation of the Matrix agreement as a restriction of competition by effect.
133 While conceding that it is unnecessary to examine the effects of an agreement that has been characterised as a restriction of competition by object, the appellants assert that it is apparent from the judgment under appeal that, unless the decision at issue is annulled in its entirety, the Commission’s findings concerning the anticompetitive effects of the Matrix agreement will be binding on the national courts, in particular in the context of actions for damages. In those circumstances, the General Court should have ruled on the plea at first instance concerning the characterisation as a restriction of competition by effect. In that regard, the appellants draw an analogy with what, in their view, the Court of Justice held in its judgment of 6 September 2017, Intel v Commission (C‑413/14 P, EU:C:2017:632), paragraphs 141 and 142.
134 The Commission disputes those arguments. Findings of the Court
135 It should be noted that, in accordance with the case-law referred to in paragraphs 105, 109 and 110 of the present judgment, in relation to practices characterised as restrictions of competition by object, it is not necessary to investigate nor, a fortiori, to demonstrate, their effects on competition, be they actual or potential, or negative or positive.
136 In the present case, it follows from the rejection of the first and second grounds of appeal that the General Court did not err in law when, in paragraph 231 of the judgment under appeal, it rejected the plea in law at first instance alleging errors of law and of assessment allegedly committed by the Commission in relation to the characterisation of the Matrix agreement as a restriction of competition by object.
137 It is common ground that the infringement referred to in Article 2 of the decision at issue was based on the dual characterisation of the Matrix agreement as a restriction of competition by object and by effect. Accordingly, when it held, in paragraphs 236 to 240 of the judgment under appeal, that the plea in law at first instance by which the appellants disputed the characterisation of the Matrix agreement as a restriction of competition by effect could not have led to annulment of the operative part of that decision even if it had been well founded, the General Court merely drew the appropriate inferences from the alternative nature of the requirement laid down in Article 101(1) TFEU, relating to the existence of a restriction of competition by object or by effect, in accordance with the case-law referred to in paragraphs 104, 105, 109 and 110 of the present judgment. In those circumstances, and with no need to rule on the consequences of such a finding for any national court hearing an action for compensation for the harm caused to a third party as a result of that infringement, it must be found that the General Court did not err in law when, in paragraph 240 of the judgment under appeal, it rejected that plea as ineffective.
138 The third ground of appeal must, therefore, be rejected. The fourth ground of appeal, relating to the imputation to Mylan of liability for the infringement referred to in Article 2 of the decision at issue Arguments of the parties
139 By their fourth ground of appeal, the appellants submit that the General Court erred in law by finding that the Commission was able to impute Matrix’s unlawful conduct to Mylan from 8 January 2007, the date on which Mylan’s shareholding in Matrix was increased to 71.5%.
140 According to the appellants, it was incumbent on the Commission to establish that Mylan had in fact exercised decisive influence over Matrix’s conduct during the infringement period from 8 January 2007 to 15 September 2008. In paragraph 359 of the judgment under appeal, the General Court relied on indicia concerning the obligations in respect of authorisation, consultation, reporting and consolidation of accounts and the cross-directorships existing between Matrix and Mylan. None of those indicia, individually or in combination, is capable of proving that such influence was exercised.
141 Thus, according to the appellants, neither Matrix’s obligation to obtain Mylan’s approval for its strategic decisions, Mylan’s right to be consulted and to receive information from Matrix, the existence of cross-directorships between those companies nor the consolidation of Matrix’s annual accounts with those of Mylan prevented Matrix from independently determining its market conduct.
142 The appellants also submit that the two additional factors referred to in paragraph 360 of the judgment under appeal, that is to say, Mylan’s intervention in the management of Matrix’s subsidiaries and the conclusion of contracts between Mylan and Matrix, are not sufficient to establish that Mylan actually exercised decisive influence over Matrix.
143 The Commission disputes those arguments. Findings of the Court
144 It should be recalled that, in accordance with the case-law referred to in paragraphs 84 and 85 of the present judgment, where an undertaking, that is to say, an economic unit, infringes Article 101(1) TFEU, it is for that undertaking, in accordance with the principle of personal responsibility, to answer for that infringement. In that regard, in order to hold any entity within an economic unit liable, it is necessary to prove that at least one entity belonging to that economic unit has committed an infringement of Article 101(1) TFEU, such that the undertaking constituted by that economic unit is to be treated as having infringed that provision (judgment of 6 October 2021, Sumal , C‑882/19, EU:C:2021:800, paragraph 42 and the case-law cited).
145 Liability for the conduct of a subsidiary may therefore be imputed to its parent company when the parent company has not participated directly in an infringement, in particular where, although having a separate legal personality, that subsidiary does not determine independently its own conduct on the market, but essentially carries out the instructions given to it by the parent company, having regard especially to the economic, organisational and legal links between those two legal entities (see, to that effect, judgments of 14 July 1972, Imperial Chemical Industries v Commission , 48/69, EU:C:1972:70, paragraphs 131 to 133, and of 6 October 2021, Sumal , C‑882/19, EU:C:2021:800, paragraph 43 and the case-law cited).
146 For the purposes of the examination of whether the parent company is able to exercise decisive influence over the market conduct of its subsidiary, account must be taken of all the relevant factors relating to the economic, organisational and legal links which tie the subsidiary to its parent company and, therefore, account must be taken of the economic reality. Moreover, the actual exercise of decisive influence by a parent company over its subsidiary’s conduct may be inferred from a body of consistent evidence, even if some of that evidence, taken in isolation, is insufficient to establish the existence of such influence (judgment of 18 January 2017, Toshiba v Commission , C‑623/15 P, EU:C:2017:21, paragraphs 46 and 47 and the case-law cited).
147 After recalling, in paragraphs 331 to 334 of the judgment under appeal, the foregoing aspects arising from the case-law of the Court of Justice, the General Court examined the indicia on which the Commission had relied in the decision at issue in order to establish that, during the period from 8 January 2007, the date on which Mylan increased its shareholding in Matrix to 71.5%, to the end of the infringement, Mylan exercised decisive influence over Matrix’s commercial policy.
148 In paragraphs 346 to 358 of the judgment under appeal, the General Court examined (i) Mylan’s influence over Matrix’s decision-making processes in the light of the latter’s authorisation, consultation and reporting obligations to its parent company; (ii) the organisational links between those two companies, in particular as a result of the composition, functions and meeting venues of the Matrix board of directors; and (iii) the obligation to consolidate Mylan’s annual accounts with those of Matrix. Although the General Court made clear that that last factor was not, by itself, sufficient for the conclusion to be drawn that Mylan had decisive influence over Matrix, it nevertheless reinforced the two other categories of indicia identified by the Commission.
149 On conclusion of that analysis, in paragraph 359 of the judgment under appeal, the General Court found, in the light of those three categories of indicia, that the Commission had proved to the requisite legal standard that Mylan actually exercised decisive influence over the conduct of Matrix.
150 It is clear from the foregoing that, in contrast to the appellants’ claims, that finding is not vitiated by errors of law and was sufficient to justify the rejection of the plea in law at first instance concerning the imputation to Mylan of liability for the conduct of its subsidiary Matrix. In those circumstances, the appellants’ complaint taking issue with the findings in paragraph 360 of the judgment under appeal must be rejected since those findings were included merely for the sake of completeness.
151 The fourth ground of appeal must, consequently, be rejected. The fifth ground of appeal, relating to the fines Arguments of the parties
152 By their fifth ground of appeal, the appellants assert that, by finding, for the reasons set out in paragraphs 243 to 256 of the judgment under appeal, that the infringement referred to in Article 2 of the decision at issue was sufficiently foreseeable at the time the Matrix agreement was concluded for them to be subject to a fine, the General Court infringed the principle that offences and penalties must have a proper legal basis, enshrined in particular in Article 7 of the Convention for the Protection of Human Rights and Fundamental Freedoms, signed at Rome on 4 November 1950, the principle of legal certainty and Article 23(2) of Regulation No 1/2003, under which ‘the Commission may by decision impose fines on undertakings and associations of undertakings where, either intentionally or negligently … they infringe Article [101] or Article [102 TFEU]’.
153 On the date on which the Matrix agreement was concluded it was not foreseeable, according to the appellants, that a patent dispute settlement agreement such as the Matrix agreement could be regarded as a restriction of competition by object. At that time, there was no case-law, nor any guidelines, capable of indicating the circumstances in which such a characterisation could be adopted.
154 The Commission disputes those arguments. Findings of the Court
155 According to the case-law of the Court of Justice, the principle that offences and penalties must have a proper legal basis implies that legislation must define clearly 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 that person 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).
156 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 (see judgment of 22 October 2015, AC-Treuhand v Commission , C‑194/14 P, EU:C:2015:717, paragraph 41 and the case-law cited).
157 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).
158 In the present case, in paragraphs 243 to 248 of the judgment under appeal, the General Court summarised that case-law of the Court of Justice. In paragraphs 249 to 255 of that judgment, the General Court, in essence, observed that, in view of the scope of the prohibition under Article 101(1) TFEU, Matrix could not have been unaware that, by agreeing to be subject to non-marketing and non-challenge clauses, not in return for recognising the validity of Servier’s patents but in return for a payment to it, and by thus giving an undertaking to Servier to refrain from entering the perindopril market in cooperation with Niche or with any other third party, it was engaging in conduct prohibited by that provision. It should be noted in that regard that the alleged novelty of the approach consisting in characterising the conduct that gave rise to the infringements at issue as restrictive of competition by object does not call such a characterisation into question.
159 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).
160 It follows that the appellants cannot validly claim infringement of the principle that offences and penalties must have a proper legal basis, of the principle of legal certainty and of Article 23 of Regulation No 1/2003.
161 In those circumstances, the fifth ground of appeal must be rejected.
162 Since none of the grounds put forward in support of the appeal has been upheld, the appeal must be dismissed in its entirety. Costs
163 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.
164 Since the Commission has applied for costs to be awarded against Mylan Laboratories and Mylan and the latter have been unsuccessful, Mylan Laboratories and Mylan must be ordered to bear their own costs and to pay those incurred by the Commission.
165 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.
166 Consequently, the United Kingdom must bear its own costs. On those grounds, the Court (First Chamber) hereby: 1. Dismisses the appeal; 2. Orders Mylan Laboratories Ltd and Mylan Inc. to bear their own costs and to pay the costs 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.