“…literally overnight, Pfizer and Flynn increased their prices for phenytoin sodium capsules by factors of between approximately 7 and 27, when they were in a dominant position in each of their markets. That did not, of course, abrogate the need for a rigorous reasoned approach to the legal and factual questions before the CAT, but it was important to keep in mind.”
“379. It is apparent from the above that the CMA clearly gave some consideration to the suitability of tablets as a comparator. However, it is not clear to us that it did so in sufficient depth. We emphasise that the purpose of a comparison at this stage of the analysis is to see whether what has been found to be a price influenced by market conditions where competition is restricted is unfair in the context of comparators. If the prices, and market conditions, are similar, it might suggest either that all of the prices are unfair, or that none are. Given the inherent difficulty in making assessments in this area of competition law it is all the more important to conduct a full and proper examination.”
“417. We therefore do not think this is a binary issue but more one of degree. We of course accept … that charging what the market will bear does not automatically point to abuse of a dominant position. There is clearly some economic value to be derived from the significant contribution of phenytoin to treating epilepsy in a significant number of patients. Some allowance must be made for the extent to which the choice of switching from phenytoin may be restricted, which decreases the value as measured in terms of patient benefit. … 419. In light of the above, our finding is that the Decision was defective in its treatment of the economic value that may be derived from patient benefit. Placing a precise monetary value on patient benefit is not straightforward but it appears to us that a qualitative assessment would be possible and should have been attempted by the CMA rather than simply assessing this value as nil.”
“Pfizer and Flynn were aware that they were able to price independently of cost and independently of competitive constraints. As successful Enterprises, they will have been well-aware of why this was the case. They were in a dominant position because of the need for Continuity of Supply, which was not something they delivered to the market, but rather something that they took advantage of. In short, they priced not because demand exceeded supply … nor because of any particular innovation … but because there was a basic human need for the Capsules, which only they could satisfy. The human need was not as stark as it might have been – the State intervened to pay – but that does not disguise the fact that both Pfizer and Flynn were gouging the market in a manner that can only be characterised as unjustifiable or opportunistic or – in a word – unfair. This is something that Pfizer and Flynn intended. They did not accidently or negligently overprice. They had market power given them; and they abused it.”
“340 … we are in no doubt that these were intentional infringements, which harmed the healthcare system in this country by extracting from a limited budget monopoly rents. Although this is rightly a long judgment – competition law infringements must be established to the proper standard and the reasoning fully set out, particularly where the decision under appeal is materially flawed – the infringements in this case are extreme and can be shortly stated in the manner that we have just done.”
“…directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions”
“97. … (i) The basic test for abuse, which is set out in the Chapter II prohibition and in Article 102, is whether the price is “unfair”
"53. For our part, and notwithstanding the flexibility open to a court or competition authority as to where to take into account the question of economic value, we consider the approach taken by the parties to be a helpful one. This is for two reasons. First, it enables the Limb 1 exercise, complex and challenging as it may be, to focus on the linear process of deciding (a) the relevant competitive benchmark, (b) the excess of the price (if any) over that benchmark, and (c) whether such excess is significant and persistent …. One would perhaps hesitate to describe such a process as "mechanical" where the underlying questions can be the subject of hotly contested expert evidence and where they involve various value judgments, and moreover where there is a margin of appreciation afforded, at least to a competition authority. Nonetheless, we consider that it is, from an analytical point of view, "cleaner" and more efficient if the question of economic value can be considered as part of the Limb 2 unfairness exercise which, on any view, is clearly less "mechanical" than the Limb 1 exercise, and where a multiplicity of different factors can be taken into account."
“76. … . It is important to be clear about the implications of different phrases which are used in the case law. The term “workable competition” is a short hand for the language used in United Brands (ibid) paragraph [249] of “normal and sufficiently effective competition” and this, itself, is a shorthand for fairness, which is the legislative test. The concept of “workable competition” was formulated … as an antidote to the economic concept of “perfect competition” which emerged in the late 19th century literature in which paradigm markets were described as in optimal equilibrium where output was equal to marginal cost. It was early understood, however, that the use of perfect competition as a tool for understanding how markets really operated, or for determining regulatory policy, was unrealistic and attention turned to workable competition as a practical alternative. … . 77. …there is agreement that competition law regulation does not proceed upon some theoretical, laboratory, model of perfect competition but upon the real world and focuses upon achieving the acceptable or adequate as opposed to the paradigmatic. Evidence of how a market reflecting “normal and sufficiently effective competition” or “workable competition” operates might therefore be relevant, and even important, evidence in a case but it is not a mandatory test. There is no rule that a regulator or Court must seek out evidence of what might happen in an actual market said to exhibit the features of workable competition as a benchmark. … The case law, as summarised in Phenytoin at paragraph [97] … describes practical approaches to determining fairness as the legislative test. It is understood that, to make the law practicable, there must be evidential proxies for determining what a fair price would be if generated in sufficiently effective, workably competitive, market conditions. It also makes clear that there is a wide range of economic and accounting models, as well as a variety of sources of evidence (e.g. comparables), that can be used to this end. As observed this does not mean that evidence of a broad nature about market structure is irrelevant but it does mean, contrary the applicants submissions, that in an appropriate case Cost Plus, is a valid and sufficient way of establishing whether prices are “fair” and, to this extent, can be said to reflect those that would be generated in a sufficiently effective, workably competitive, market: United Brands paragraphs [248]–[252] and Phenytoin paragraph [97(i) – (v)]. This is notwithstanding that a Cost Plus exercise is performed in relation to a dominant undertaking operating in a market which is not workably competitive.”
“12. The Court of Appeal has jurisdiction in appeals of this sort only on points of law: section 49(1) CA 1998. Where an issue focuses upon an evaluation of evidence it is, at least in principle, capable of amounting to an error of law in some circumstances: see e.g. Airwave Solutions Limited v CMA[2025] EWCA Civ 54 at paragraphs [88] and Cinven (ibid) at paragraphs [161], [242]-[243]. Classic illustrations are where the CAT acted irrationally in its findings in the sense that no CAT could, acting reasonably, arrive at the conclusion that it did, or failed to address relevant considerations, or took into account irrelevant considerations. However, this Court has to ensure that it does not, without good and proper reason, interfere in the exercise of the legitimate discretion of the CAT to find facts and draw inferences from those facts. Both the nature of the evidence and the institutional composition of the CAT are factors affecting the breadth of the margin of discretion that must be accorded to the CAT and this impacts upon the sorts of alleged errors that the Court will recognise as amounting to viable grounds of appeal: i) First, many issues to be decided about the computation of Cost-Plus and the justification for the differential with selling prices are incapable of precise measurement or quantification. The complexity of the task is multiplied because many cases resemble large multi-piece jigsaws. The CAT has to form conclusions based upon data exhibiting varying degrees of accuracy and completeness which may also be based upon assumptions of uncertain precision and authenticity meaning that routinely it must make judgment calls about the reliability of multiple strands of divergent and inconsistent evidence. In doing this the CAT has to use its powers of informed, skilled, guesstimation, or, to use the more colourful analogy deployed in other cases, wield the broad axe. ii) Secondly, the CAT has an institutional ability on the Bench to meld legal, financial, business and economic experience, a range of skills not systemically replicated in an appeal Court, but which are especially important in cases such as the present given the nature of the evidence. Where a finding concerns how to identify relevant costs, or as to their attribution once identified to a line of business or, assuming it is to be attributed, as to the extent of the allocation, or as to the assessment of the value to consumers of various features of a good or service both in the index market and/or in a comparable market, or as to the relationship between value and final selling price, the appellate court is in a materially weaker position to form a fair and rounded conclusion, than is the CAT. This is why its jurisdiction is limited to points of law and why, where disputes over evidence and fact are said to amount to appealable points of law, the Court exercises considerable reticence before interfering in the CAT's evaluative judgment.”
“…that we do it via Tor to distance ourselves from the price increase. Clearly, we do not need Tor to do this and could just try to go down this route ourselves, however I believe that we would struggle to get the price increase required with the [DHSC]”
“My other concern is just an ethical one – the top line money looks great, however this would increase the price of phenytoin capsules to the NHS drastically and to be frank, doesn’t feel right. Clearly we need to make money on the product and therefore, I wonder if a conversation with the DOH [DHSC] with these findings could simply increase our pack price to enable profitability. It would certainly not add£19m to the top line but might sit better? Or on the other hand, maybe I’m just being to [sic] nice!!”
“2.214 In addition, [Pfizer Director 1] raised a concern regarding the ‘positioning’ of the proposal: ‘We need to work out how we can position this as ‘no change’ with patients & physicians; and at the same time ‘change’ with [the DHSC] and payers without being accused of hypocrisy by pursuing a trust agenda, yet taking the opportunity to fleece the NHS in [a] time of funding crisis’. Finally, [Pfizer Director 1] again raised the possibility of approaching the DHSC directly: May be a ‘no-goer’ but as an alternative; is there an opportunity to go to [the DHSC] and have a sensible debate with them about the inequity in the tabs/caps prices, and explain (in the spirit of openness) that we cannot afford to sell it [Epanutin] at this price and that we could implement a scheme such as this (without going in to details). The aim being to obtain a special price increase outside of PPRS; or at least get them to cut the Cat M price of tabs to the same as caps and prevent TEVA making supernormal profits.”
“2.233 In relation to ‘pharmaco-political issues’, the briefing records: Pfizer UK’s position would be simple: Pfizer has divested the product to Flynn Pharma Ltd. Flynn would defend its right to make profit within the bounds of the PPRS and generic pricing regulations. The cost implications to the NHS would be preferable, in any event, to the alternative of discontinuing the product in the UK and switching patients to more expensive tablet presentations.”
“1.16 The high prices that the Parties imposed were the result of an agreement between them under which Capsules were de-branded and removed from the branded price regulatory regime (the Pharmaceutical Price Regulation Scheme (the ‘PPRS’)), so that they could significantly increase their prices and share the substantial profits generated between them.”
“2.256 The arrangements entered into between Pfizer and Flynn had the effect of introducing a second dominant supplier into the supply chain, without the addition of relevant commercial activity or financial investment in that supply chain. 2.257 The Parties also envisaged that the arrangements themselves were likely to increase barriers to competition from parallel imports.”
“5.63 Conversely, for the reasons explained in paragraphs 5.102 to 5.119, the CMA considers there to be significant conceptual issues which render the use of a ROS analysis problematic in Flynn’s case. These conceptual issues include that: 5.63.1 the high input cost that Flynn agreed to pay to Pfizer as part of the Parties’ arrangement suppresses Flynn’s profit margins, such that significant profits earned by Flynn can be associated with a low computed percentage margin. Profit margin analysis thus allows Flynn to rely on its position in the supply chain and its arrangement with Pfizer to insulate Flynn’s own supply prices from the effective application of Chapter II. 5.63.2 the combination of a number of product-specific factors (including high sales volumes and a very low level of commercial risk as well as the high input cost incurred by Flynn) result in unusual economics of supply, with the consequence that it is very difficult to identify meaningful ROS comparators for Flynn’s supply of Capsules.” 5.63.1 the high input cost that Flynn agreed to pay to Pfizer as part of the Parties’ arrangement suppresses Flynn’s profit margins, such that significant profits earned by Flynn can be associated with a low computed percentage margin. Profit margin analysis thus allows Flynn to rely on its position in the supply chain and its arrangement with Pfizer to insulate Flynn’s own supply prices from the effective application of Chapter II. 5.63.2 the combination of a number of product-specific factors (including high sales volumes and a very low level of commercial risk as well as the high input cost incurred by Flynn) result in unusual economics of supply, with the consequence that it is very difficult to identify meaningful ROS comparators for Flynn’s supply of Capsules.”
“The significant differences in price between the UK and these seven other European jurisdictions illustrate the true scale of the price increases imposed in the UK, as well as the resulting very high prices. They also illustrate further how the price increases in the UK went beyond any level that might have been necessary to ensure commercial viability, given that this is exactly the same drug, manufactured by the same company, in the same facility in Germany, and with similar direct costs.”
“(ii) We entirely recognise the fragility of these figures. They are fragile for a number of reasons. We know very little about the other products distributed by Flynn, in particular their Product Unit Costs and their Product Unit Price. We simply have the percentage ROS figure, from which these values cannot be inferred. The level of the percentage ROS figure varies according to volumes sold: the percentage ROS is significantly lower in the case of higher volume sales. That is unsurprising, given that a Seller will look to absolute revenue not percentage return. The Capsules, as can be seen from Figure/Table 10, are by volume one of Flynn’s best sellers, and yet the ROS commanded is at around the average ROS rate, which is high.”
“The fact is that Pfizer contended that its prices before its arrangements with Flynn were put in place were loss-making. Given the judgmental difficulties in ascertaining Product Unit Cost and Product Unit Price, competition authorities need to be confident that the evidence justifies the rejection of such a contention, and in this case, we are not. Similarly, whilst an ability to increase prices dramatically is certainly evidence of dominance, to regard it as evidence of abuse is to prejudge matters without considering the facts objectively.”
“312. Consumer surplus is an economic measurement of consumer benefits resulting from market competition. A consumer surplus arises when the price that consumers pay for a product or service is less than the price they are willing to pay. It is, in short, a measure of the additional benefit that individual consumers receive because they are paying less for something than what they would have been prepared to pay. … 316. Producer surplus is the difference between how much a supplier would be willing to accept for a product versus how much they can receive by selling the product at the market price. Again, it is a measure that varies according to individual producer. The difference or surplus amount is the benefit a particular producer receives for selling the good in the market.”
“316. …The sale of Capsules cannot be said to provide no benefit to the consumer at all. The consumer benefits through the continued supply of Capsules manufactured by Pfizer. This, for reasons articulated, is of objective benefit to patients. This objective benefit is something of economic value for which ultimate consumers, as a class, would be prepared to pay a premium. In other words, the Consumer Surplus is such that, assuming an ability to pay, there will be some willingness to pay over-and-above CMA Cost Plus rates. 317. We consider … Pfizer is providing distinctive value to the ultimate consumer in the form of a differentiated product. The effect of the Continuity of Supply issue and the MHRA Guidance is to render each phenytoin sodium product different, even though these products are pharmacologically the same. This is a form of distinctive value that a Seller like Pfizer is entitled to charge for.”
“(1) We accept that all Enterprises – and in particular, Enterprises engaged in the pharmaceutical sector – rely upon any Producer Surplus that they can charge in order to recover Extraneous Costs. The pharmaceutical sector as a whole is engaged in developing new products and should be encouraged to do so. That means that the costs of failure need to be recovered somehow. The only way to discharge such legitimate Extraneous Costs is by charging a Producer Surplus where such can be maintained. (2) We also accept that the Capsules manufactured by Pfizer do real good. AEDs that eliminate or ameliorate seizures in epileptics deliver significant and unquantifiable human benefit. They also deliver significant benefit in the form of avoided costs namely: (i) the costs of treating a seizure that could have been avoided through prescription of Capsules; and (ii) the costs to the wider economy in an epileptic being off work or unable to assist in family life, etc. We accept that these benefits vastly outweigh the price of the Capsules, although we are in no position to quantify these benefits (even the economic ones).”
“(i) The distinctive value generated by the Capsules is limited to the provision of Continuity of Supply. That has undoubted psychological benefits, which are valuable, but the Capsules deliver no medical benefit that could not equally be delivered by differently manufactured Capsules or Tablets. There was evidence of considerable switching between phenytoin sodium products and – apart from the important psychological aspect – the experts were relaxed about this. (ii) Turning then, to the ultimate consumer – as we have defined them – we consider that such a consumer would be prepared to pay a premium in order to procure Continuity of Supply to them. Put another way, assuming an ability to pay, there would be a willingness on the part of the ultimate consumer to pay materially above CMA Cost Plus. In short, at the CMA Cost Plus price, there would be very significant Consumer Surplus, which would remain significant (although of course less) even if the Product Unit Price were higher so as to accommodate a material Producer Surplus accruing to Pfizer. (iii) At some point the ultimate consumer (rather than paying 50mg, 100mg or 300mg Product Unit Prices) would either pivot to 25mg Capsules (and simply take more Capsules to achieve the same dosage) or to phenytoin sodium differently administered (e.g., Tablets). (iv) The reason this movement away from the Capsules does not occur in the real world is because Pfizer has been taking advantage of the noble – but inconsistent – objectives of our health care system. This system wants to obtain value for money, but not at the price of patient welfare. Hence the clear tension between the firm strictures of the MHRA Guidance in regard to Continuity of Supply and the concerns expressed by CCGs as to cost. Because the system needs to consider the aggregate class of epileptics being prescribed Capsules, and cannot consider the individual case, there is an invidious choice between keeping costs under control and maximising patient benefit. In adopting the MHRA Guidance, the latter has been prioritised over the former, thereby giving market power to Pfizer.”
“There is, thus, a palpable sense of the Decision reasoning towards the conclusions the CMA wanted to find, without pausing to consider the evidence in the round nor the infringements actually found by the CMA”
“219. The point taken by the Appellants was simply this: when considering the Unfair Limb, the model that the CMA had in its mind was substantially derived from theory – a kind of dynamic perfect competition model – which accorded no legitimacy at all to the Producer Surplus, but rather regarded it as a badge not merely of excess, but of unfairness also. This is the issue which underlies a number of the Appellants’ Grounds of Appeal.”
“…treating every case of Producer Surplus as rendering Product Unit Price automatically excessive defeats the object of the Excessive Limb as a gateway to the Unfair Limb.”
“…This appeal should be allowed because the CMA’s conduct of this investigation has been sufficiently unfair and unbalanced that the Tribunal cannot have confidence in the process by which the CMA gathered and disclosed evidence, the objectivity of the CMA’s analysis and ultimately the Decision itself.”
“Ground 4 is particularised in a number of respects, and most of these we have no hesitation in rejecting. Thus, points are made in regard to the CMA’s disclosure of material, the CMA’ changes of position in response to Pfizer’s probing, and the dilatory nature of the investigation. We do not consider that these are fair criticisms of a decision-making process that clearly has been conducted conscientiously and with every effort being made to achieve due process.”
“The public statements of the CMA, and its approach to the evidence as a whole, displays a clear case of confirmation bias. The CMA’s conduct of this investigation has been characterised throughout by a single-minded desire to bring the case home. That is not consistent with its role as a competition authority.”
“Pfizer’s considered view, formed after careful analysis and reflected in its NoA, is that the most likely explanation for the CMA’s approach to this investigation (including but not limited to divergence from its usual approach to comparators and disclosure) is confirmation bias.”
“A decision is also flawed and liable to be set aside if the decision maker approaches the issue with a closed mind, so that the outcome is predetermined. As with bias, that is so both if the outcome is actually predetermined and also if there is an appearance of predetermination… Accordingly, if there is a real possibility that a decision maker has predetermined an issue, in the sense of closing their mind to the merits of the issue that is to be decided, then they are disqualified from making the decision, and if they do make the decision it is liable to be quashed. The test to be applied is the analogue of the Porter test for bias. That is, whether a fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal had predetermined the issue…”
“The money required to acquire an efficient level of buffer stock may well be a cost of running an Enterprise, but (unless “unitised” to constitute part of the Product Unit Cost) it has nothing to do with the Product Unit Cost of the Capsules” (iv) Having quoted a passage from the evidence of Mr Walters, a director of Flynn, explaining the buffer stock built up by Flynn, the CAT said, Judgment paragraph [155]: “155. This is nothing to do with the question posed by the Excessive Limb when assessed by reference to the Focal Product Spreadsheets. That is a consequence of the static way in which Product Unit Costs have been assessed by the CMA, divorced from the manner in which an Enterprise would in fact operate. (1) An Enterprise would, as we have described, operate dynamically, and it may be that the Annex 3 data could have been compiled in this way. But it was not. A dynamic model would consider Flynn’s Capital requirements by reference to its cash flow needs calculated by reference to costs incurred on some dates, and revenues received on other (typically later) dates. In other words, because of revenue coming in from the sale of Product, Flynn’s Capital costs would be correspondingly less, and dependent upon the time gap between payment and receipt. (2) These are factors that operate at the Enterprise level, but they were not taken into account by the CMA when assessing Flynn’s Profit Margin. However, because Profit Margin is the difference between Product Unit Cost and Product Unit Price (which are assumed to be received at the same time) the Capital costs of acquisition of Product either need to be included at 100% because the revenue received on (instantaneous) sale is then immediately set off or that revenue needs to be discounted to account for the accelerated receipt. (3) The latter exercise was not undertaken by the CMA. Nor was any meaningful discount (to take account of setting off the sale receipts) applied by the CMA to the Product Unit Cost. As a result, the CMA has adopted a cost of Capital that is unrelated to the Annex 3 data, risking misstatement of the infringer’s Profit Margin. (4) This case represents a particularly extreme example, because of the very high (Capital) Product Unit Cost of the Capsules. However, this very high cost was passed on by Flynn in its Product Unit Prices, which are set off when calculating Profit Margin against Product Unit Costs with no temporal delay.” (v) Upon this basis the CAT held that the CMA erred in failing to justify having used a cost of Capital “detached from the data in the Focal Product Spreadsheets”
“166. Just like the CMA’s assessment of Flynn’s employed capital, the CMA’s WACC looks not to the Focal Product and the Product Unit Cost, but to the Enterprise … The Decision does not ask two key questions: “(i) what is the Reasonable Rate of Return to the entrepreneur for selling the Focal Product; and (ii) does the WACC constitute a good proxy or means of assessing the Reasonable Rate of Return?”
“Thus whilst a cost of capital approach is appropriate, that cost needs to be localised in the Focal Product. We have termed this the PUCC, but recognise that this is not, in any way, a term of art.”
“First, the Commission recognises that companies are entitled to make a reasonable rate of return, in order to cover their cost of capital. In fact, the Commission’s preliminary assessment of the Product’s profitability on the basis of a cost-plus analysis … accounts for a reasonable rate of return, in line with the industry’s average performance, by adding a “plus” element to the costs based on the Comparator Profitability. That “plus” element allows recovering the costs of capital. In principle, no further recognition of the remuneration of the capital employed in the products is therefore required.”
“The appropriateness of a WACC as a measure for this return is not considered.”
“As we have described, the Drug Tariff is not a price but a reimbursement rate to pharmacies which acts as a price ceiling under which competition takes place. The Drug Tariff thus says nothing about price…”
“… we consider that rejecting the evidence on the basis that the comparators were not sufficiently comparable to be unfair to Flynn. As the CMA has found – necessarily, in order to establish a Chapter II jurisdiction – Flynn was dominant in the market, by reason of the characteristics of the Capsules (to which we will be coming). In such circumstances, to require the production of comparables that closely compare to a product that is dominant because of its unique characteristics is unfair. Such evidence will be hard, if not impossible, to obtain. The better approach is to accept that the comparables are likely to be somewhat incomparable, but not to reject them out of hand for this reason. The extent to which comparables are truly comparable should go to weight. To this extent the CMA’s binary rejection of Flynn’s evidence leaves a great deal to be desired.”
“Real World Competition [is] synonymous with the phrase “normal and sufficiently effective competition” coined in United Brands.”
“The CMA appears to have concluded that the Drug Tariff was itself the outcome of a competition law infringement by Teva”
“We consider that the CMA erred in disregarding this data. We cannot say at this stage whether it is supportive of a finding of unfairness or a contra-indicator. What we can say is that it is material that ought to have been taken into account, and it was a material error on the part of the CMA to disregard it.”
“The CMA’s view is that the differences between Capsules and the Comparator AEDs described above means that, from a product perspective, these AEDs are not sufficiently similar to Capsules to allow for a meaningful comparison.”
“273. We disagree with this conclusion. The question is what the CMA understands by a “meaningful comparison”
“Capsules are subject to regulatory guidance recommending Continuity of Supply for patients stabilised on the drug. This is the ultimate reason that Pfizer and Flynn were able to impose significant price increases on customers, rather than anything related to the therapeutic benefits associated with the drug.”
“… is explicitly a CMA Cost Plus factor, with its emphasis on very high prices relative to costs. In other words, the factor identifies that Producer Surplus exists and presumes it to be unjustifiable and so unfair.”
“439. We agree that a large price rise, sustained over a considerable period, may be indicative of an abuse of a dominant position that needs to be examined, and we understand the weight that the CMA placed on this matter. However, whilst this may be a valid reason for a competition authority to investigate a case, it should not be confused with the test for unfair pricing itself.”
“19. It must be observed in that regard that where the Commission undertakes an assessment of the conduct of an undertaking in a dominant position, that assessment being an essential prerequisite of a finding that there is an abuse of such a position, the Commission is necessarily required to assess the business strategy pursued by that undertaking. For that purpose, it is clearly legitimate for the Commission to refer to subjective factors, namely the motives underlying the business strategy in question. 20. Accordingly, the existence of any anti-competitive intent constitutes only one of a number of facts which may be taken into account in order to determine that a dominant position has been abused. 21. However, the Commission is under no obligation to establish the existence of such intent on the part of the dominant undertaking in order to render Article 82 EC applicable.”
“• First, the CAT wrongly arrogated to itself a jurisdiction which it did not possess under Schedule 8, paragraph 3 CA 1998. The CAT re-made the infringement decision on a factual basis that was fundamentally different from the basis advanced in CMA Decision II and was not (therefore) the subject of Pfizer’s Notice of Appeal. The CAT disregarded its own judgment in Imperial Tobacco Group v OFT which outlined the limits of the CAT’s power to re-make an infringement decision. • Second, even if it did have jurisdiction, the CAT acted procedurally unfairly because the re-made infringement decision is based on a novel theory of economic value and certain factual findings to which Pfizer was not given a fair chance to respond. The CAT’s process is contrary to the principles of fairness enunciated in Imperial Tobacco on the exercise of the statutory power to re-make an infringement decision. • Third, even leaving aside the vires and procedural unfairness issues, the CAT’s reasoning in the re-made infringement decision is in any case flawed and the decision is wrong as a matter of law. First, there is no logical basis why, even on the CAT’s own fictional patient test, the fictional patient would not pay the Pfizer/Flynn price. Second, the fictional patient test is the wrong test. It leads to an under estimation of the distinctive value of phenytoin. Further, the Tribunal’s focus on distinctive value alone, as defined in its Case 2 framework, is unduly narrow and inconsistent with the existing authorities in relation to excessive pricing. Third, the decision ignores probative evidence of comparator prices which supports the fairness of Pfizer’s price.”
“The OFT’s submission in favour of the Tribunal’s continued jurisdiction depend, in our judgment, on a construction of our powers which is not supported either by the wording of the statutory provisions or by earlier jurisprudence. According to paragraph 3 of Schedule 8 to the 1998 Act our primary duty is to determine the appeals on the merits by reference to the grounds of appeal set out in the notice of appeal. Rule 8 of the Tribunal Rules specifies the content of the notice of appeal, requiring it to spell out the ways in which it is alleged that the decision challenged is wrong. The evidence that must be served with the appeal is directed at supporting the appellant’s attack on the decision. The defence served by the competition authority responds to those allegations and that evidence. The parties’ decisions about what factual and expert evidence is needed and the Tribunal’s case management decisions in preparation for the final hearing are informed by and directed towards the case pleaded in the notice of appeal.”
“Appellants cannot be expected to appeal against an evolving infringement, still less one that emerges for the first time in the CAT’s judgment following trial (as occurred here). It also reflects the limitation that the CAT should not transform itself from an appellate forum to a forum of first instance as that would alter the structure of competition law enforcement in the UK whereby the CMA conducts a lengthy investigation leading to an administrative decision which becomes the subject of a judicial appeal. The model is not a prosecutorial one where the CAT starts afresh and makes, or re-makes, the decision.”
“Neither the patient nor the CCG has any particular agency in what product is prescribed: that is a matter for the clinical judgment of the doctor treating the patient.”