The first abuse: a pattern of misleading representations

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Analysis of the abuses in AstraZeneca

 Introduction to the analysis of the case

It has already been brought to the attention of the reader that the case of AstraZenca has re-sulted in yet another type of conduct falling within the concept of ‘abuse of dominant posi-tion’. In the case of AstraZeneca a court within the EU, established for the first time that an abuse of dominant position according to 102 TFEU, can consist of misusing public proce-dures and regulations. This can occur when a company behaves in a way that is considered to be outside the scope of what is ‘legal’, but also in situations when the conduct falls within what generally has been regarded as ‘legal’. In both situations the discussion of the intention of the company becomes relevant, which would seem as a new turn when it comes to the concept of abuse of dominant position, as it has been held in case law numerous times that the test of abuse is an objective one. In the following, two separate analysis will take place, one for each of the two abuses in the case, before giving a final analysis where the two abuses are compared and contrasted, in an attempt to fulfil the purpose of the the-sis.

The first abuse: a pattern of misleading representations

The main aspect of the abuse

Through the Courts judgement in AstraZeneca, it is evident that the first abuse consisted of a pattern of misleading representations by the company, to patent offices and in some of the countries national courts.66 It should be highlighted here that the abuse did not consist of the fact that the company made a different interpretation than usual of the SPC Regula-tion. The problem of abuse arose because of the misleading information given to the public authorities regarding the different interpretation.
As can be concluded from the Court’s assessment in AstraZeneca, the company did not compete on the merits, or in other words, have a conduct within normal business behav-iour. The reason being that the company was not entitled to obtain extended right for the length of the SPC, but tried to get the extension nonetheless, by the misleading information given to the public authorities.67 This statement by the Court is in accordance with earlier case law, where it was stated that a conduct is abusive if it is not based on a ‘trader’s [smart] performance’ or what is sometimes called ‘superior economic efficiency’.68
The Court itself upheld that it is not required to show evidence of a deliberate nature of the behaviour to mislead the public authorities, in order to find an abuse of a dominant posi-tion. The reason being that the test of abuse is primarily objective and therefore, an exami-nation of what falls outside competition on the merits (or so called normal business behav-ior) should be made at first hand. However, the Court continued by observing that inten-tion is a relevant feature, which may be taken into account in relevant situations.69


Some authors raised their voices after the Commission came with its decision and claimed that what seemed to be the case of ‘misleading representations’, was in fact problems aris-ing from the situation with a regulation (the SPC Regulation) which was unclear at the time of the conduct.70 Other authors have adopted the same line of thinking (even before the Commission published its decision) and in addition to that held that it is not proportionate to let the company run the risk of an unclear legislation, especially in a case where article 102 TFEU is applied in a new way.71
However, in the case of AstraZeneca, the Commission was of the opinion that there were inconsistencies and proactive exclusionary strategies on the company’s side, and that the evidence of these proved the intent of the company, namely to hinder competition and keep out competitors.72 Through the line of reasoning by the Court in AstraZeneca, it is quite clear that the Court took the same position as the Commission.73 All the same, the Commission never accused the company for behaving abusive by misinterpreting the law, as the Commission also pointed out as early as in its first decision.74


According to the author of this thesis, the above mentioned (under section 6.2.2) is where the discussion of good faith and a duty of honesty becomes relevant. The Court brought forward many considerations regarding the way in which the company proceeded when seeking for patent extension protection throughout different countries. This was made by the Court when it was assessing whether or not the misleading representations constituted an abuse of dominant position according to article 102 TFEU. In other words, the oppor-tunity given to the company to show that it was not aiming to abuse its dominant position when providing the public authorities with misleading representations, comes with the de-mand to prove that it acted in good faith. In the same way, if there is enough evidence to prove that the company’s conduct was in a way as to deliberately abstain from giving in-formation to the authorities, an abuse of a dominant position exists. This proof against the company was put forward through comparing the conduct of the company in for example different countries. In some situations where the company knew that some of the coun-tries’ national offices had contact with each other in a way as to share information, the company withdrew its application for patent extension protection. This behavior took place because the company suspected that the found rejection in one country would lead to the same in the other.75
The author of this thesis believes that the Court did not take this position because there is a duty of honesty or good faith in general within the frames of article 102 TFEU, rather be-cause of the following: in situations where there seems too be ambiguities or vagueness in for example, as the present case a legislation (such as the SPC Regulation in the case of As-traZeneca), this can naturally make room for an alternative interpretation. However, in situa-tions where the public authorities have a much limited discretion or are not obliged to make sure that the information provided by the company is accurate, the ‘special responsi-bility’ of the company becomes relevant. The ‘special responsibility’ makes it necessary for the company to provide the public authorities with information regarding their new angle in interpreting the provision. By not acting with enough ‘special responsibility’ and providing this information, the company was found having the intention to misuse the the patent system. The ‘special responsibility’ becomes even broader the bigger the dominant position is. Therefore, the specific scope of the ’special responsibility’ for each company in a domi-nant position, is determinative for the steps that the company in question needs to take in order to avoid infringing article 102 TFEU. The greater the ‘special responsibility’ is, the greater becomes ‘the duty of honesty’. Conclusively, the degree to which the company needs to prove its good faith becomes higher the higher the ‘special responsibility’ is, due to the extent of the company’s dominant position.
Since the company knew that it was making an alternative interpretation and what effect it would have on the market, it should at the very least, have provided the public authorities with information regarding the alternative interpretation. Otherwise, the extension could have been wrongly granted, since it was found that the company was not legally entitled to the right it wished for. The just mentioned would have the effect that competitors were foreclosed from the market, leading to the detriment of competition in the internal market. This effect would not be in line with the objectives or aims of competition law in the EU.


The second abuse: misuse of government procedures


The second abusive conduct could not be found to breach article 102 TFEU through an objective test of abuse of dominant position. Instead, the Court carried on to examine the company’s intention in this situation as well (even though the objective test did not amount to the finding of an abuse). The Court found that the company breached article 102 TFEU by its second abuse, through an examination of the company’s conduct and whether this was deliberately trying to restrict competition.
It has been held that the Court’s intervention in relation to the second abuse is more far-reaching than in the first abuse. In theory, the first abuse could never lead to the grant of a right, as the company was never entitled to the right, whereas in the second abuse, the company had a legal right in support of its conduct.76 However, as seen in the case, it was the specific circumstances, although put together, that made the practice in the second abuse liable for a breach of article 102 TFEU.77 The Court noted that the primary purpose of the directive for marketing authorizations is to safeguard public health. It is necessary that the reference medicinal product (the Losec capsules) is continuingly in force, at the time when an application for marketing authorization of generic medicinal products is dealt with. Otherwise the application for generic medicinal products is prevented from being dealt with. The effect of preventing the procedure for applications of a generic medicinal product resulted in the need for manufacturers of these products to carry out their own tests in order to show that their products were safe and efficient.78
When the company deregistered its marketing authorization for Losec capsules through the marketing authorisation rules, it hampered the purpose of the rules that allowed the dereg-istration right in the first place. Even though the regulatory framework did permit the company to deregister its authorization, this should be done in light of the purpose of the directive, which is to safeguard public health.79 If the right would be used by the company for other reasons than public health, there would be no need to deregister at all. The com-pany could have just let the authorization expire without renewing it, and by doing this not hindering generic products and parallel imports from benefitting of the authorisation. No justifiable reason in connection with public health was brought forward by the company, leading to the fact that the company only withdrew its authorization to impair competition. Differently speaking, the company was in bad faith.
After the Commission came with its decision, prior to appeal before the Court, some legal experts criticized the finding that the company abused its dominant position by deregister-ing its marketing authorization, since it was the company’s legal right to do so. These ex-perts claim that there might be justifiable motives to why a company wants to deregister its marketing authorization. These critics suggest that there could be a situation when the company in question has produced a better version of the medicament.80 Other critics also comment on the company’s interests, stating that limiting the company’s right to deregister its product is an improper intrusion in the company’s commercial freedom.81
However, through the case of United Brands it is evident that a company in a dominant po-sition is permitted look after its interests by ways that are appropriate and reasonable, and only if the real aim of the practice is not to abuse its dominant position.82 That means that the company’s commercial freedom is not without limitation, and that the focus on inten-sions is in line with earlier case law.
Even if there was a legitimate interest such as the suggested, these experts forget that it would be unlikely for such a justification to be accepted. The reason being that this com-mercial interest would be weighed against the interest of public health, and it is not likely that the company’s interest would be significant enough to outweigh the safeguarding of public health.
Furthermore, the criticism brought forward by the critics is the very reason why the Court examines whether or not the company had an intention to hinder competition. The Court made its assessment by looking at the different stages of the company’s conduct, to see if the claimed interest is genuine overall, or simply an excuse for the purpose of restricting competition. In addition, the Court takes into account whether the positive aspects the conduct brings for the company is more important than the proper functioning of compe-tition.

1 Introduction
1.1 Background
1.2 Purpose
1.3 Method and materials
1.4 Outline
2 Introduction to abuse of dominant position 
2.1 Regulatory framework
2.2 The concept of abuse
3 The case of AstraZeneca 
4 The first abuse in AstraZeneca 
4.1 Regulatory framework for the first abuse
4.2 Findings of the Court
5 The second abuse in AstraZeneca 
5.1 Regulatory framework for the second abuse
5.2 Findings of the Court
6 Analysis of the abuses in AstraZeneca 
6.1 Introduction to the analysis of the case
6.2 The first abuse: a pattern of misleading representations
6.3 The second abuse: misuse of government procedures
6.4 Analysis for the two abuses taken together
7 Final analysis 
7.1 Final analysis as regards good faith in general
7.2 Special responsibility
8 Conclusion 
List of references
Is there a requirement for ‘good faith’ or a ‘duty of honesty’ under article 102 TFEU, as regards misuse of public procedures and regulations, when establishing an abuse of a dominant position?

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