High Court clarifies abuse of dominance issues in the life sciences sector

27 February 2013

Richard Eccles, Peter Willis

A High Court judgment published on 25 February 2013 provides helpful clarification of the application of competition law on abuse of dominance in the life sciences sector. Judgments in this area are rare, especially where (as in this case) an application for an interim injunction is involved. 

Abbvie Limited supplied a homecare services provider, Chemistree Homecare Limited, with its protease inhibitor, Kaletra, an HIV antiretroviral therapy drug, for use in Chemistree’s homecare services. Unbeknown to Abbvie, Chemistree started wholesaling significant quantities of the product both in the UK and elsewhere in the EU.  After obtaining a breakdown of Chemistree's sales, Abbvie refused to supply Chemistree with Kaletra other than for its UK homecare services business. Chemistree brought proceedings alleging abuse of dominance by Abbvie in refusing to supply Kaletra for wholesale purposes and sought an interim injunction requiring deliveries of such additional quantities of the drug. 

The High Court refused the injunction, on several grounds. First, it concluded there was no evidence of dominance in a relevant market on the part of Abbvie.  Second, it held that even if Abbvie had been dominant, the refusal of supplies would not have been abusive. Third, it held that even if liability had been established, any loss to Chemistree would have been purely financial (and so could have been compensated in damages) so that it would not have suffered serious harm for which an injunction would be needed.

On the question of dominance, the High Court held that it was likely that ritonavir based protease inhibitors used in antiretroviral treatment may constitute a distinct market, but there was no evidence that Chemistree was dominant in such a market. There was insufficient evidence of patients for whom Kaletra is a "must-have" medicine and for whom other antiretroviral drugs would not be a satisfactory alternative (for example patients who are already undergoing treatment rather than starting treatment), and on this basis there was no or insufficient evidence that Kaletra constituted a market on its own. The High Court also held that the fact that there was no equivalent generic product to Kaletra did not result in Kaletra constituting a distinct product market on its own; if this could be the case then any patented medicine could be a distinct product  market.

Whilst it was not strictly necessary to decide the question of whether there was an abuse of dominance, because dominance was not established, the High Court judge (Roth J) set out his conclusions on this aspect by reference to the leading EU cases on abuse of dominance. Whilst it can in some circumstances be abusive for a dominant company to refuse to supply "ordinary orders" to a wholesaler, it is not an abuse of dominance to refuse supplies for wholesale when the customer in question has previously received supplies only for retail sale (as in this case), where the supplier was not aware of the customer's wholesale activities, and where the supplier has a policy of not supplying wholesalers (the product being provided by Abbvie as a "hospital-only" product). Abbvie had not ceased supplying Chemistree's "ordinary orders" as it had not been aware that Chemistree was making wholesale supplies. Roth J stated that Article 102 TFEU on abuse of dominance does not oblige a supplier to adopt a particular manner of distribution, such as wholesaling, which it has not previously used. 

For further information please contact:

Richard Eccles

Peter Willis