When Competition Law Analysis Goes Wrong – The Italian Pfizer/Pharmacia Case

Posted by Social Science Research Network

When Competition Law Analysis Goes Wrong – The Italian Pfizer/Pharmacia Case – Damien Geradin (George Mason University School of Law ; Tilburg University – Tilburg Law and Economics Center (TILEC) ; Covington & Burling LLP)

ABSTRACT: The January 2012 decision of the Italian Competition Authority (“ICA”) to fine Pfizer and Pharmacia €10.6 million is an illustration of the more aggressive trend taken by competition authorities in the pharmaceutical sector. In this case, the ICA alleges that the parties sought to delay entry of generic suppliers by implementing a “complex strategy” to “artificially” extend its patent rights, hence committing an abuse of a dominant position in breach of Article 102 of the Treaty on the Functioning of the European Union (“TFEU”).

The purpose of this paper is to show that the decision of the ICA is fundamentally flawed as it fails to provide any evidence that the parties’ patent filings were misleading or “artificial” under the applicable patent laws. Instead, the decision is based solely on the ICA’s unsubstantiated view that Pfizer’s conduct did not constitute “competition on the merits”, a vague standard unable to satisfy the basic requirements of the rule of law and legal certainty. Following this unreasoned decision, pharmaceutical companies and their counsel face an impossible task of assessing which IP strategies are compatible with competition law. This legal uncertainty, combined with the risk of large fines, means that pharmaceutical firms may no longer dare to take steps to obtain patent protection to which they are legally entitled, and more importantly, may have less incentive to invest in future research and development.