Judgments nº T-470/13 of The General Court, September 08, 2016

• Resolution Date: September 08, 2016
• Issuing Organization: The General Court
• Decision Number: T-470/13

(Competition - Agreements, decisions and concerted practices - Market for antidepressant medicinal products containing the active pharmaceutical ingredient citalopram - Concept of restriction of competition ‘by object’ - Potential competition - Generic medicinal products - Barriers to market entry resulting from the existence of patents - Agreements concluded between a patent holder and a generic undertaking - Error of law - Error of assessment - Imputability of infringements - Liability of a parent company for infringements of the competition rules committed by its subsidiaries - Legal certainty - Reasonable time - Fines)

In Case T-470/13,

Merck KGaA, established in Darmstadt (Germany), represented initially by B. Bär-Bouyssière, K. Lillerud, L. Voldstad, B. Marschall, P. Sabbadini, R. De Travieso, M. Holzhäuser and S. O, lawyers, M. Marelus, Solicitor, and R. Kreisberger and L. Osepciu, Barristers, and subsequently by B. Bär-Bouyssière, L. Voldstad, M. Holzhäuser, A. Cooke, M. Gampp, lawyers, M. Marelus, R Kreisberger and L. Osepciu,

applicant,

v

European Commission, represented initially by J. Bourke, F. Castilla Contreras and T. Vecchi, and subsequently by F. Castilla Contreras, T. Vecchi, B. Mongin and C. Vollrath, acting as Agents, assisted by S. Kingston, Barrister,

defendant,

supported by

Generics (UK) Ltd, established in Potters Bar (United Kingdom), represented initially by G. Drauz, M. Rosenthal and B. Record, lawyers, and subsequently by G. Drauz and M. Rosenthal,

intervener,

APPLICATION for annulment of Commission Decision C(2013) 3803 final of 19 June 2013 relating to a proceeding under Article 101 [TFEU] and Article 53 of the EEA Agreement (Case AT.39226 - Lundbeck), and for reduction of the amount of the fine imposed on the applicant by that decision,

THE GENERAL COURT (Ninth Chamber),

composed of G. Berardis (Rapporteur), President, O. Czúcz and A. Popescu, Judges,

Registrar: S. Spyropoulos, Administrator,

having regard to the written part of the procedure and further to the hearing on 8 October 2015,

gives the following

Judgment

Summary of the facts and background to the dispute

I - The companies involved in the present case

1 H. Lundbeck A/S (‘Lundbeck’) is a company governed by Danish law which controls a group of companies specialising in the research, development, manufacture, marketing, sale and distribution of pharmaceuticals for the treatment of disorders in the central nervous system, including depression.

2 Lundbeck is an ‘originator’ undertaking, namely an undertaking whose activities are focused on researching new medicinal products and bringing them to the market.

3 Merck KGaA (‘Merck’ or ‘the applicant’) is a company governed by German law specialising in the pharmaceutical sector which, at the time the agreements concerned were concluded, indirectly held 100% - through the group Merck Generics Holding GmbH (‘Merck Generics’) - of its subsidiary Generics UK Limited (‘GUK’ or ‘the intervener’), a company responsible for the development and marketing of generic pharmaceutical products in the United Kingdom. The Commission regarded Merck and GUK as constituting a single undertaking for the purpose of competition law at the time of the infringement (‘Merck (GUK)’).

II - The relevant product and the applicable patents

4 The relevant product for the purposes of the present case is the antidepressant medicinal product containing the active pharmaceutical ingredient (‘API’) citalopram.

5 In 1977, Lundbeck filed a patent application in Denmark for the citalopram API and two processes - a cyanation process and an alkylation process - to produce that API. Patents for that API and those two processes (‘the original patents’) were issued in Denmark and in a number of Western European countries between 1977 and 1985.

6 As regards the European Economic Area (EEA), the protection afforded by the original patents and, where appropriate, the supplementary protection certificates (SPCs) provided for in Council Regulation (EEC) No 1768/92 of 18 June 1992 concerning the creation of a supplementary protection certificate for medicinal products (OJ L 182, p. 1), expired between 1994 (as regards Germany) and 2003 (as regards Austria). In particular, in the case of the United Kingdom, the original patents expired in January 2002.

7 Over time, Lundbeck developed other, more effective, processes for the production of citalopram, in respect of which it applied for and often obtained patents in several EEA countries and also from the World Intellectual Property Organisation (WIPO) and the European Patent Office (EPO).

8 Thus, on 13 March 2000 Lundbeck filed a patent application with the Danish authorities relating to a process for the production of citalopram which envisaged a method of purification of the salts used by means of crystallisation. Similar applications were filed in other EEA countries and also with the WIPO and the EPO. Lundbeck obtained patents protecting the crystallisation process in a number of Member States during the first half of 2002, in particular on 30 January 2002 in the case of the United Kingdom (‘the crystallisation patent’). The EPO granted a crystallisation patent on 4 September 2002.

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

III - The agreements at issue

10 During 2002 Lundbeck entered into six agreements concerning citalopram (‘the agreements in question’) with four undertakings active in the production and/or sale of generic medicinal products (‘the generic undertakings’), including Merck (GUK).

11 The first agreement between Lundbeck and Merck (GUK) came into effect on 24 January 2002, for a period of one year, and covered only the territory of the United Kingdom (‘the UK agreement’). That agreement was subsequently extended for a period of six months, ending on 31 July 2003. Next, after Merck (GUK) briefly entered the United Kingdom market between 1 and 4 August 2003, a second extension of the agreement was signed by the parties on 6 August 2003, for a maximum period of six months, which could be reduced if Lundbeck failed to initiate legal proceedings against other generic undertakings which attempted to enter the market or on determination of the litigation between Lundbeck and Lagap Pharmaceuticals Ltd, another generic undertaking (‘Lagap’ and ‘the Lagap litigation’).

12 According to the terms of the UK agreement:

- there was a risk that certain actions envisaged by GUK in respect of the marketing, distribution and sale of the ‘Product’ might constitute an infringement of Lundbeck’s intellectual property rights and could give rise to claims on the part of Lundbeck (Article 2.1 of the UK agreement), the ‘Products’ being defined in Article 1.1 of the agreement as ‘the citalopram products developed by GUK in raw material, bulk product and finished pack form as set out in the Schedule and manufactured in accordance with the specification for Products as supplied by GUK at the date of signature. Attached to Schedule 2’;

- Lundbeck would pay GUK the sum of 2 million pounds sterling (GBP), in consideration for the delivery of the ‘Products’, in the quantities set out in the agreement, on 31 January 2002 (Article 2.2 of the UK agreement);

- GUK also undertook, in consideration of a further payment of GBP 1 million, to deliver the ‘Products’, as specified in the schedule, on 2 April 2002 (Article 2.3 of the UK agreement);

- the payments made and the delivery of the ‘Products’ by GUK pursuant to Articles 2.2 and 2.3 of the agreement would constitute full and final settlement of any claim that Lundbeck might have against GUK for infringement of its intellectual property rights in connection with the ‘Products’ delivered by GUK up to that date (Article 2.4 of the UK agreement);

- Lundbeck undertook to sell its ‘Finished Products’ to GUK and GUK undertook to purchase those ‘Finished Products’ exclusively from Lundbeck for resale by GUK and its affiliates in the United Kingdom during the term and subject to the conditions of the agreement (Article 3.2 of the UK agreement), those ‘Finished Products’ being defined in paragraph 1.1 of the agreement as ‘products containing citalopram in finished pack form to be supplied by [Lundbeck] to GUK pursuant to this Agreement’;

- Lundbeck undertook to pay the sum of GBP 5 million guaranteed net profits to GUK, on condition that GUK ordered the agreed volume of ‘Finished Products’ during the term of the agreement (or a lesser amount to be calculated pro rata to the volume ordered) (Article 6.2 of the UK agreement).

13 The first extension of the UK agreement provided, in particular, for monthly payments of the sum of GBP 400 000 per month for the implementation of Article 6.2 of the agreement by GUK and amended the definition of ‘net profits’.

14 The second extension of the UK agreement provided, in particular, for monthly payments of the sum of GBP 750 000 per month for the implementation of Article 6.2 of that agreement by GUK.

15 The UK agreement expired on 1 November 2003, following the settlement of the Lagap litigation. In total, over the entire term of the agreement, Lundbeck transferred the equivalent of EUR 19.4 million to GUK.

16 A second agreement was concluded between Lundbeck and GUK on 22 October 2002, covering the EEA excluding the United Kingdom (‘the EEA agreement’). That agreement provided for payment of the sum of EUR 12 million, in consideration whereof GUK undertook not to sell or supply pharmaceutical products containing citalopram throughout the EEA (excluding the United Kingdom) and to use all reasonable efforts to ensure that...