Settlement Agreement Antitrust

While it is still open to the companies concerned to demonstrate pro-competitive effects, which are so significant that they raise doubts as to whether the agreement is causing sufficient harm to competition, the judgment does not contain clear guidelines on the circumstances in which this might be the case. As a preliminary question, the ECJ was asked whether a patent holder for a drug and a generic drug manufacturer wishing to enter the market with a generic version of the drug should be considered a potential competitor when involved in a good faith patent infringement dispute. Indeed, agreements between companies fall within the scope of the ban on anti-competitive agreements only if they have negative and tangible effects on competition within the EU. With respect to the question of whether a patent comparison agreement results in a restriction of competition „with effect,“ the Court of Justice decided that, without the agreement, it was appropriate to consider how the market would work. However, it is not necessary to determine the likelihood that a generic drug manufacturer was successful in the original patent litigation, or that a settlement agreement, which was less restrictive of competition, could have been reached. To be a restriction of competition „for the purpose,“ the agreement must cause sufficient harm to competition. This will be the case, according to the Court of Justice, if payments (or other non-financial „value transfers“) to generic drug manufacturers under the agreement cannot, because of their size, have any explanation other than the commercial interest of the parties not to have competitive competition on the merits. It is not necessary to say that value transfers to generic drug manufacturers exceed the amounts they would have received if they had followed patent litigation to the end and had imposed themselves – „it is essential that these value transfers prove sufficiently advantageous to encourage the generic drug manufacturer to refrain from entering the market.“ The judgment deals only with limited circumstances in which a transfer of value may be justified, for example. B where it corresponds to compensation for costs or disruptions caused by litigation or compensation for the actual provision of goods or services to the patent holder. The Court of Justice stressed that the exercise of an exclusive right in relation to an intellectual property right (such as the conclusion of a patent agreement) could not in itself constitute an abuse of a dominant position, but that such conduct could not be tolerated, when it depended precisely on the strengthening and abuse of a company`s dominant position. This will be the case if effective market access is to be prevented – for example, a generic drug that contains an active substance that is available to the public. Bad press. Expensive and expensive collections of documents and data.

Unpredictable results. The sometimes slow pace of justice. It is easy to understand why the parties often prefer an early settlement in order to fight against legal action and final judgment. But the regulation itself is not a risk-free business, especially when it comes to competitors. In these circumstances, competitors and their lawyers should take special steps to ensure that their regulations do not raise competition issues that could ultimately lead the parties to the agreement contrary to federal, regional and/or international rules on cartels and abuse of dominance and competition. The most likely plaintiffs who sue in competition in a transaction are the parties` competitors and direct or indirect customers/consumers, since these are the companies that can argue that they have suffered economic harm in comparison to the illegal agreements.