Browsing by Author "Zupančič, Neža"

The pharmaceutical industry plays a vital role in maintaining wellbeing of a society. Continuous innovation and strive to improve existing solutions is and should be lauded and encouraged. However, the same industry is also notorious for large amounts of money circulating within that is perhaps not always used for or obtained with the most honourable intentions. This thesis discusses the phenomenon of the so called pay-for-delay agreements in the pharmaceutical industry that are a recent subject of the competition investigations of the European Commission. The agreements were concluded as a result of impending patent disputes, as patent settlements. Contrary to the usual scenario of patent settlement, in a pay-for-delay agreement, the patentee pays the alleged infringer to stay off the market for certain time period and restrain from future patent challenges. The agreements were found to infringe competition by object, according to Article 101(1) TFEU. The investigations were opened following the Pharmaceutical Sector Inquiry that unveiled several market failures. The same practice was brought under antitrust scrutiny also in the US. There, the issue culminated in a decision of the Supreme Court and thus settled previous diverging opinions. In the EU, the issue is not resolved definitely. Following the Commission’s decisions, appeals are currently pending in front of the General Court. Because of that, this thesis reviews the Commission’s decisions in light of the existing case law on Article 101 TFEU and asses the appropriateness of their decision. The US discussion on the topic will serve some examples of alternative solutions. Besides reviewing the application of Article 101 TFEU to pay-for-delay agreements, this thesis will also take a look at its full effect. The question of damages under the EU competition provisions was bought in the spotlight in recent years as an extension of issues surrounding nullity of Article 101(2). The increasing amount of case law led to the Commission taking pro-active steps to resolving the dilemmas surrounding possibility of recovering damages. With the adoption of the Damages Directive, many questions were indeed answered. However plenty are still left unresolved. One of those issues is the lack of harmonisation of collective redress mechanisms. This shortcoming is highlighted in the context of pay-for-delay agreements – because they have the potential to harm a large amount of persons, but for extremely small sums. The hypothesis of this thesis is thus two-fold: First, the hypothesis is that the Commission’s approach to assessing pay-for-delay agreements is too rigid and might ultimately even harm the competition, instead of preserving it. In the second part, the hypothesis is that the current mechanisms of the EU law do not adequately address the situations of numerous dispersed potential small claims, such as would potentially arise as a consequence of illegality of the pay-for-delay agreements under Article 101 TFEU. The research questions are as follows: I.) Why does the Commission find pay-for-delay agreements restrictive by object? a) Is the Commission’s approach too rigid? II.) Who are the persons affected by the pay-for-delay agreements? a) What are their possibilities in recovering damages in the current state of law in the EU? The thesis is divided as follows. After the introductory chapters, the description of pharmaceutical market and how it is regulated will be explained. This is a necessary background in order to understand the issue at hand. After that review of Commission’s recent decisions, the analysis under Article 101(1) TFEU will follow. In order to get a deeper understanding of the subject, the solutions of US courts will be presented afterwards. This will lead to the comparison of certain elements of the decisions in both jurisdictions. Next, the chapter discussing the full effect of Article 101 TFEU, specifically the possibility to recover damages will follow. The review of the current state of the law will be followed by the discussion on possible solutions for persons harmed by the pay-for-delay agreements. Because the lack of collective redress mechanisms will be in the focus of this chapter, the discussion will again benefit from the lessons from the US. In last chapter conclusions will be drawn and the hypothesis either confirmed or refuted.