Brussels, 28 April 2011
Antitrust: Commission opens investigation against pharmaceutical companies Cephalon and Teva
The European Commission has opened a formal antitrust investigation to assess whether an agreement between US-based pharmaceutical company Cephalon and Israel-based generic drugs firm Teva may have had the object or effect of hindering the entry of generic Modafinil in the European Economic Area. Modafinil is a medicine used for the treatment of certain types of sleeping disorders. The opening of proceedings does not mean that the Commission has conclusive proof of an infringement, only that it will investigate the case as a matter of priority.
The Commission has started an ex officio investigation to assess an agreement between Cephalon, Inc. and Teva Pharmaceutical Industries Ltd. that may have the object or effect of hindering the entry of generic Modafinil products in the markets of the European Economic Area. In particular it is assessed whether the agreement is in breach of the EU Treaty's rules on restrictive business practices (Article 101).
In December 2005 Cephalon and Teva settled patent infringement disputes in the United Kingdom and the United States concerning Modafinil (brand name Provigil®). As part of the settlement agreement Teva undertook not to sell its generic Modafinil products in the EEA markets before October 2012. A series of side deals were included into the settlement agreement, which is also subject to antitrust litigation in the United States initiated by the US antitrust authority FTC.
The opening of proceedings does not mean that the Commission has a definitive finding of an infringement, but indicates that it will investigate the case as a matter of priority.
There is no legal deadline to complete inquiries into anticompetitive conduct. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defence.
Background to antitrust investigations
Article 101 of the Treaty on the Functioning of the EU prohibits agreements and concerted practices which may affect trade and prevent or restrict competition. The implementation of this provision is defined in the Antitrust Regulation (Council Regulation No 1/2003) which can be applied by the Commission and by the national competition authorities of EU Member States.
Article 11(6) of the Antitrust Regulation provides that the initiation of proceedings by the Commission relieves the competition authorities of the Member States of their competence to also apply Articles 101 and 102 (ban on abuse of a dominant market position) to the practices concerned. Article 16(1) provides that national courts must avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings that it has initiated.
The Commission has informed the parties and the competition authorities of the Member States, that it has opened proceedings in this case.
Background on investigation of the pharma sector
In 2008 and 2009 the Commission carried out a broad inquiry of the pharmaceutical sector. Among others, the inquiry pointed to significant risks for European consumers stemming from certain types of patent settlements between originator and generic companies aimed at delaying the arrival into the market of cheaper generic medicines (sometimes also referred to as "pay-for-delay" settlements). The Commission regularly monitors potentially problematic patent settlements. The second such monitoring exercise was launched in January and the results are expected before the summer break (see IP/10/887 and IP/11/40).
The Commission has a number of ongoing individual investigations into suspected anti-competitive practice. In July 2010, the Commission took warmth from the confirmation, by the General Court, of the Commission's decision in the AstraZeneca case, which was its first abuse decision in the pharmaceutical sector. The company had misused the regulatory framework to prevent or, in the very least, delay the market entry of competing generic products, something that has now clearly been ruled as illegal. AstraZeneca has appealed the decision of the General Court.