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Brussels, 8 th July 2009

Antitrust: Commission opens formal proceedings against Les Laboratoires Servier and a number of generic pharmaceutical companies

The European Commission has decided to open a formal antitrust investigation against Les Laboratoires Servier for suspected breaches of the EC Treaty's rules on restrictive business practices (Article 81) and on abuse of a dominant market position (Article 82). The decision to open proceedings also concerns a number of generic companies including Krka d.d., Lupin Limited, Matrix Laboratories Limited (subsidiary of Mylan Inc as of 28 August 2006), Niche Generics Limited (subsidiary of Unichem Laboratories Limited) and Teva UK Limited / Teva Pharmaceutical Industries Limited, as regards a number of individual, possibly restrictive, agreements between each of them and Servier. The opening of formal proceedings follows unannounced inspections carried out by the Commission in November 2008 in several Member States (see MEMO/08/734 ). The Commission proceedings concern unilateral behaviour by Servier, and agreements which may have the object or effect of hindering entry on to the market of generic perindopril, a cardio-vascular medicine originally developed by Les Laboratoires Servier, on the EEA markets.

The opening of proceedings does not imply that the Commission has proof of the infringements but merely means that the Commission will deal with the cases as a matter of priority.

The companies' rights of defence will be fully respected.

There is no strict 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 the defence.

Why has the Commission decided to open proceedings?

The Commission's pharmaceutical sector inquiry has identified competition between originator companies and generic companies as one of the main areas where markets do not work as well as they should. In this context, the Commission concentrated its analysis on the use of various " instruments to which originator companies resort in their strategies to confront entry on to the market of generic drugs, notably:

  • patenting strategies such as patent clusters

  • disputes and litigation against potential generic competitors

  • patent settlements with generic companies

  • various interventions and launch of follow-on products (for details see IP/08/1829 of 28.11.2008 and IP/09/1098 of 8.7.2009).

The present investigation does not form part of the sector inquiry, but the knowledge acquired during the sector inquiry has allowed the Commission to draw conclusions on the areas where Commission action based on competition law could be appropriate and effective.

What is the legal basis for the decisions?

The legal basis for this procedural step is Article 11(6) of Council Regulation No 1/2003 and Article 2(1) of Commission Regulation No 773/2004.

Article 11(6) of Regulation No 1/2003 provides that the initiation of proceedings relieves the competition authorities of the Member States of their authority to apply Articles 81 and 82 of the Treaty to the practices under investigation by the Commission. Moreover, Article 16(1) of the same Regulation provides that national courts must avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings that it has initiated.

Article 2 of Regulation No 773/2004 provides that the Commission can initiate proceedings with a view to adopting at a later stage a decision on substance according to Articles 7-10 of Regulation No 1/2003 at any point in time, but at the latest when issuing a statement of objections or a preliminary assessment notice in a settlement procedure. In the case at stake the Commission has chosen to open proceedings before such further steps.

The Commission may also make public the initiation of proceedings in any appropriate way. Before doing so, it has to inform the parties concerned.

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