Italy: Court quashes decision on abuse of dominant position

16 October 2012

Evelina Marchesoni

By decision no. 2467/2012 dated 3 September 2012, the Italian Administrative Court (Tribunale Amministrativo regionale per il Lazio) quashed the infringement decision issued on 11 January 2012 by the Italian Competition Authority (Autorità garante delle concorrenza e del mercato) against Pfizer Italia S.r.l., Pfizer Health AB and Pfizer Inc. (hereinafter also jointly Pfizer Companies).

The Italian Competition Authority had found Pfizer Companies to have abused its dominant position in the market for prostaglandin drugs. In particular, the Authority had ascertained that Pfizer Companies had put in place a “complex legal strategy” aimed at extending the patent protection of the medicinal product Xalatan® and at instrumentally using the consequent uncertainty of the real expiry of the patent in order to delay or to prevent the access of the generic products containing latanoprost as active ingredient. Therefore the Authority had condemned Pfizer Companies to pay a fine of Euro 10.6 million.

Facts underlying the case

On 6 September 1989, Pharmacia A.B. (a company later acquired by Pfizer) filed a patent application before the EPO claiming a class of prostaglandin active ingredients for the treatment of glaucoma, including latanoprost. The (parent) European patent was granted on 9 February 1994 with no. EP 0 364 417 (hereinafter also EP ‘417).

On the basis of EP ‘417, on 7 May 1997, Pfizer requested and obtained a Supplementary Protection Certificate (SPC) for the medicinal product containing as active ingredient latanoprost in many European countries , expiring on 17 July 2011. No application for an SPC was filed in Italy on the basis of EP ‘417.

Subsequently, on 15 June 1993, the patentee filed a divisional application of EP ‘417 with no. EP 0 569 046, which was then granted on 13 November 2002 (hereinafter also EP ‘046).

Finally, on 28 April 2002 (i.e. approximately 14 years after the priority date) Pfizer filed and obtained a further divisional of EP ‘046, i.e. the European patent EP 1225168 (hereinafter EP ‘168), granted on 14 January 2009.

Only on the basis of this last patent (EP ‘148), on 30 April 2009 an SPC on the medicinal product Xalatan® was requested by Pfizer in Italy, expiring on 17 July 2011, then prolonged through the paediatric extension until 17 January 2012.

The decision of the Italian Competition Authority

In October 2011, following a complaint by Ratiopharm Italia S.r.l., the Italian Competition Authority officially opened a preliminary investigation under article 14 of Italian Law no. 287/90, regarding a possible violation by Pfizer Companies of Art. 102 of Treaty on the Functioning of the European Union.

Pfizer immediately decided to take advantage of the possibility provided by Art. 14 ter of Italian Law no. 287/90, according to which those who are subject to a proceeding like the one at stake may draft a proposal of agreement, committing themselves to eliminate the facts that caused the opening of the competition procedure. If accepted by the Authority, this proposal becomes effective and, as a consequence, proceedings are immediately terminated.

In the case at issue, on 16 May 2011, Pfizer Companies filed their proposal with six commitments. In particular, Pfizer would commit itself to file an application to the Italian Patent Office (UIBM), publicly offering a license for free (i.e. without requiring the payment of royalties) for the non exclusive use in Italy of the invention claimed by EP ‘168. Furthermore they would undertake to renounce all the pending administrative and IP proceedings as well as withdrawing its request for the SPC’s six months paediatric extension.

The Competition Authority refused such commitments and found that, by filing the divisional applications, the SPC and the request for a pediatric extension, Pfizer Companies had adopted a strategy clearly aimed at artificially lengthening the patent protection of Xalatan® in Italy.

At the same time, as pointed out by the Competition Authority, Pfizer had started an aggressive legal campaign to enforce its exclusive rights, in particular by sending legal warnings and threatening civil and administrative action against the Italian Medicines Agency (AIFA) and competitors who had allegedly infringed such rights by preparing the launch of the generic medicinal product containing latanoprost as active ingredient.

According to the Italian Competition Authority, by delaying the entry into the market of the generic products for seven months, Pfizer was able to earn about 17 million Euro, corresponding to an unlawful monopolist profit between the date in which the generic should have been launched and the effective date of commercialization. Moreover, the delayed inclusion in the so called “transparency list” of the generic drug brought about an estimated loss by the Italian National Health System of approximately 14 million Euro (corresponding to higher expenses for the reimbursement of the price of the originator drugs by the National Health System to consumers).

In conclusion, the Competition Authority considered that the above described complex behavior put in place by Pfizer, constituted a very serious “exclusionary abuse” of dominant position on the Italian market for prostaglandin drugs. Accordingly, the Authority imposed a fine of 10.6 million Euro on Pfizer.

The judgment of the Italian Administrative Court 

This decision was appealed by Pfizer Companies before the Italian Administrative Court. As anticipated, the Administrative Court granted the appeal, quashing the decision at issue.

Firstly, the Court pointed out that the set of commitments proposed by Pfizer and refused by the Competition Authority had an “objective substantive consistency” and were “likely to diminish the legal uncertainty created by Pfizer’s strategy”.

According to the Administrative Court, the Competition Authority had issued its decision on the basis of the revocation of EP ‘168 by EPO Opposition Division, without taking into consideration that such revocation was not definitive and on the contrary, the EPO Board of Appeal had then confirmed the validity of the patent owned by Pfizer.

Furthermore, the judgment of the Administrative Court highlighted the fact that the Competition Authority “found a case of abuse of dominant position by putting in connection different conducts with which Pfizer companies lawfully enforced their legitimate rights before the administrative and civil Courts. In order to bring these behaviors within the scope of the anticompetitive infringement, a quid pluris is necessary in addition to the existence of a simple group of legitimate actions carried out before the competent administrative and jurisdictional authorities. If it were to be otherwise, this would entail a departure from EU case law and a flagrant violation of the principle of legal certainty. This additional element was not proven by the Authority in the present case”.

In other words, the Administrative Court emphasized that the simple enforcement of the exclusive rights is not sufficient to amount to an abuse of a dominant position: there must be a clear exclusionary intent and other additional anti-competitive factors.

The finding of abuse of a dominant position by the Competition Authority was therefore groundless according to the Administrative Court, which had granted the appeal and annulled the fine imposed on Pfizer.

Other cases on the EU and National Life Sciences developments newsletter for October 2012