Thursday, February 25, 2021

The Legal Status of Pay-for-Delay Agreements in EU Competition Law: Generics (Paroxetine)

The Legal Status of Pay-for-Delay Agreements in EU Competition Law: Generics (Paroxetine)


Pablo Ibáñez Colomo

London School of Economics - Law Department

Date Written: September 16, 2020


This case note presents the ruling of the Court of Justice in Generics (Paroxetine) and considers its implications for Articles 101 and 102 TFEU. It is submitted, first, that the approach to the assessment of pay-for-delay agreements enshrined in the judgment can effectively minimise the risk of Type I and Type II errors. Second, the Court does not depart from the long-standing principle whereby EU law does not question the existence of intellectual property rights, but only their exercise.

The judgment, together with Budapest Bank, has important implications for the assessment of restrictions by object under Article 101(1) TFEU. Generics (Paroxetine) confirms that the evaluation of the object of an agreement is a case-by-case, context-specific inquiry. In addition, it notes that the pro-competitive aspects of an agreement may, as factors pertaining to the relevant economic and legal context, be considered as part of the said evaluation. In the same vein (and as confirmed in Budapest Bank), the conditions of competition that would have prevailed absent the practice may also play a role.

As far as Article 102 TFEU is concerned, finally, the judgment confirms that anticompetitive effects within the meaning of that provision only exist where a practice has an impact that goes beyond the limitation of the freedom of action of individual undertakings. In this sense, it seems necessary to consider the cumulative effects of individual agreements by reference to the market as a whole. This approach is consistent with Post Danmark II and Intel, both of which signalled the importance of the coverage of the practice.

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