Misuse of regulatory proceedings: European Court confirms special responsibility for dominant companies

On 6 December 2012, the European Court of Justice ("ECJ") dismissed the appeal by AstraZeneca against the General Court judgment that essentially upheld the European Commission's decision in which AstraZeneca was fined for the misuse of its patent rights with respect to Losec, a drug used for gastrointestinal conditions (Case C-457/10).

In June 2005, the Commission decided that AstraZeneca had abused its dominant position by attempting to block or delay market access for generic versions of Losec and preventing parallel imports of Losec. According to the Commission, AstraZeneca had first of all submitted misleading information to the patent offices in Germany, Belgium, Denmark, Norway, the Netherlands, the UK, and before the national courts of Germany and Norway. As such, AstraZeneca attempted to obtain additional protection for Losec which went beyond the original patent protection. Secondly, the Commission found that AstraZeneca had requested a withdrawal from the marketing authorisations for Losec capsules in Denmark and Norway. The intent of the withdrawal was to prevent the entry of generic products and parallel trading. The Commission imposed a total fine of €60 million on AstraZeneca.

The ECJ confirmed that AstraZeneca had abused its dominant position by providing misleading information to the patent offices. The General Court was therefore correct in holding that AstraZeneca's conduct, aimed at maintaining its dominant position, did not qualify as competition on the merits. Further, the ECJ consented with the General Court that AstraZeneca had abused its dominant position by using regulatory procedures so as to prevent or make the entry of competitors on the market more cumbersome. This would only be different if AstraZeneca could have relied on an objective justification for its behaviour. The mere fact that the regulatory framework allowed AstraZeneca to withdraw the marketing authorisations did not qualify as an objective justification.

The ECJ also rejected a cross-appeal by the Commission. The ECJ agreed with the General Court that the Commission had failed to prove that the deregistration of the marketing authorisations in Denmark and Norway restricted parallel imports.

The judgment of the ECJ resembles to some extent the ECJ judgment in the Deutsche Telekom case (Case C-280/08). In that case, Deutsche Telekom was found to have abused its dominant position by engaging in a margin squeeze. Deutsche Telekom argued that its behaviour was fully compliant with ex ante sector-specific regulation. This, however, did not dismiss Deutsche Telekom from ensuring its behaviour was also in line with competition law. It should be noted though that Deutsche Telekom was not found to be misusing regulatory proceedings. Nevertheless the judgments in both AstraZeneca and Deutsche Telekom confirm that dominant companies cannot infer from the fact that their behaviour is compliant with sector-specific regulation that their behaviour is also compliant with generic competition law.