Secretary of State for Health & Ors v Servier Laboratories Ltd & Ors [2014] EWHC 2720 (Ch)

[2014] EWHC 2720 (Ch)Case Nos: HC11C01423,HC12E02766 and HC12B03451
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Rolls Building,, Royal Courts of Justice, Fetter Lane, London, EC4A 1NLDate 31/07/2014
Before
MR JUSTICE HENDERSON
Between
(1) SECRETARY OF STATE FOR HEALTH AND OTHERSClaimants(1) SERVIER LABORATORIES LIMITEDDefendants(2) SERVIER RESEARCH AND DEVELOPMENT LIMITEDDefendant(3) LES LABORATOIRES SERVIER SASDefendant(4) SERVIER SASDefendantAnd between:Claimants(1) SCOTTISH MINISTERS AND OTHERSClaimant(1) SERVIER LABORATORIES LIMITEDDefendants(2) SERVIER RESEARCH AND DEVELOPMENT LIMITEDDefendant(3) LES LABORATOIRES SERVIER SASDefendant(4) SERVIER SASDefendant(1) WELSH MINISTERS AND OTHERSClaimants(1) SERVIER LABORATORIES LIMITEDDefendants(2) SERVIER RESEARCH AND DEVELOPMENT LIMITEDDefendant(3) LES LABORATOIRES SERVIER SASDefendant(4) SERVIER SASDefendant
Paul Lasok QC, David Drake and Philip Woolfe (instructed by Peters & Peters Solicitors LLP) for English ClaimantsDaniel Beard QC and Julian Gregory (instructed by Reynolds Porter Chamberlain LLP) for Scottish and Northern Irish ClaimantsLaura Elizabeth John (instructed by Geldards LLP) for Welsh ClaimantsHelen Davies QC and Kelyn Bacon QC (instructed by Bristows LLP) for DefendantsHearing Hearing dates: 9 & 10 June 2014
JudgmentMr Justice Henderson :Introduction
[1]On 9 and 10 June 2014 I heard a case management conference in three related actions in the Chancery Division, in which United Kingdom health authorities claim damages for alleged breaches of competition law contrary to Articles 101 and 102 TFEU against four companies in the Servier group (to which I will refer collectively as “Servier”). Servier manufactured a proprietary drug, Perindopril, which was widely used in the treatment of heart disease. The general nature of the claims is that Servier engaged in various forms of anti-competitive conduct, mainly between 2003 and 2007, which unlawfully impeded the development and marketing of generic versions of the drug after the expiry of Servier’s main patents. The total value of the claims is of the order of £260m.[2]In the first action (“the English proceedings”), begun by a claim form issued on 3 May 2011, the principal claimant is the Secretary of State for Health. Numerous other bodies concerned with the purchase and supply of drugs in the National Health Service (“NHS”) in England were also joined as claimants, including all the English Strategic Health Authorities and Primary Care Trusts. In 2013 the NHS in England was reorganised, the Strategic Health Authorities and Primary Care Trusts were abolished, and their rights of action were transferred to the Secretary of State. It is therefore agreed that the English proceedings now need to be re-amended so as to remove those bodies as parties, leaving as claimants only the Secretary of State and the NHS Business Services Authority.[3]In the second action (“the Scottish/NI proceedings”), begun by a claim form issued on 18 July 2012, the claimants are the Scottish Ministers, the 14 regional Scottish Health Boards, the Department of Health for Northern Ireland, and the Regional Health and Social Care Board of Northern Ireland. The public health authorities of Scotland and Northern Ireland are, of course, independent of each other, and the Scottish NHS is itself separate from the English NHS, the delivery of health services being a devolved function in each region of the UK. Despite these structural differences, however, the Scottish and Northern Irish authorities have been able to make common cause, and have joined in bringing a single set of proceedings.[4]In the third action (“the Welsh proceedings”), begun by a claim form issued on 10 September 2012, the claimants are the Welsh Ministers and the seven Welsh Local Health Boards.[5]The allegations of breach of Articles 101 and 102 TFEU made by the Scottish, Northern Irish and Welsh claimants are substantially similar to corresponding allegations made by the English claimants in the English proceedings. There is also a considerable degree of overlap between all three sets of proceedings in relation to issues of causation, and some aspects of quantum. There is, however, one claim made in the English proceedings which (for whatever reason) the other health authorities have chosen not to pursue. It is a claim that between 2001 and 2007 Servier tortiously interfered with the English claimants’ economic interests by unlawful means, in that it procured, defended and enforced a particular patent (“the 947 Patent”) in the European Patent Office and the English courts in reliance on claims which it knew to be untrue, or as to the truth of which it was reckless. It should be emphasised that this is a purely English tort claim, which does not depend on establishing any breach of either English or European competition law. The factual allegations about Servier’s conduct which are relied upon in support of the claim are, indeed, a sub-set of those relied on in support of the English claimants’ Article 102 claim; but there is the important difference that the common law claim for unlawful tortious interference does not require the claimants to prove dominance by Servier in the relevant market.[6]In parallel with the three sets of proceedings in England, the EU Commission (“the Commission”) is conducting an investigation into Servier which it opened as long ago as 8 July 2009 (“the Commission proceedings”). It has at all stages been common ground that the UK actions cannot be tried until (at the earliest) the Commission proceedings have been concluded. The reasons for this are explained in a judgment which I handed down on 12 October 2012 in the English proceedings, rejecting an application by Servier for a complete stay of the English proceedings until after the conclusion of the Commission proceedings, but granting a more limited stay until three weeks after the end of the oral hearing requested by Servier following issue by the Commission on 27 July 2012 of a Statement of Objections addressed to Servier and a number of other companies in relation to Perindopril: see [2012] EWHC 2761 (Ch). This judgment (which I will call “the October 2012 judgment”) was originally confidential to the parties, because it referred to various confidential communications between the Commission and the court. The Commission has, however, subsequently agreed that the judgment may be published, so it is now in the public domain.[7]Reference should be made to the October 2012 judgment for a fuller account of the background to the litigation, the issues in the English proceedings, the extent of the overlap between the Commission proceedings and the English proceedings, the history of the Commission proceedings down to the issue of the Statement of Objections, and the difficulties allegedly caused to the French defendants (i.e. the third and fourth defendants) by the French Blocking Statute in giving any form of disclosure in the English proceedings. I will not repeat most of that material, but will take it as read for the purposes of this judgment.[8]Since October 2012, there have been the following main developments: i) Servier appealed to the Court of Appeal against my decision in relation to the French Blocking Statute. The appeal was dismissed by Laws, Rimer and Beatson LJJ on 22 October 2013: see [2013] EWCA Civ 1234. The Court of Appeal refused permission to appeal to the Supreme Court, and on 20 December 2013 the Supreme Court itself refused permission. The French Blocking Statute issue has therefore been conclusively determined against Servier. ii) Meanwhile, by various orders the temporary stay of the English proceedings had been extended until 21 days after the refusal of permission to appeal by the Supreme Court. The stay therefore expired on 10 January 2014. iii) By my order of 12 October 2012, I had given directions for the initial stages of disclosure in the English proceedings once the stay of those proceedings (later extended to 10 January 2014) had ended. I directed the parties within 35 days of the end of the stay to exchange disclosure proposals, to be followed by a meeting of the parties’ legal representatives to discuss them and if possible reach agreement. In default of agreement within 9 weeks from the end of the stay, the claimants were to file an agreed list of issues in dispute and take steps to list a hearing for their resolution. iv) By a consent order dated 9 October 2013, the Welsh proceedings were stayed until 90 days after the publication of the Commission’s decision, coupled with a direction for a case management conference to be convened as soon as practicable thereafter. v) In the Scottish/NI proceedings, however, no agreement was reached on the question of a stay, and on 2 October 2013 Mann J heard and dismissed an application by Servier to stay the proceedings until after the conclusion of the English proceedings. I will need to examine later the reasons which Mann J gave for refusing a stay. It is enough to say at this stage that he recognised there was a real problem to be addressed, but considered that the solution to it should be found at a joint CMC in all three sets of proceedings. vi) Following the expiry of the stay in the English proceedings, the parties exchanged disclosure proposals on 12 May 2014. The claimants’ proposals included a completed electronic documents questionnaire pursuant to Practice Direction 31B, and a detailed statement of the categories of documents which they expected Servier to search. By contrast, Servier’s proposals were set out in a short letter from its solicitors which contended that a “targeted approach to disclosure” should be adopted. More specifically, the proposal was that Servier should identify those documents within the Commission’s file which were within Servier’s control and make disclosure from those documents, subject to the exclusion of documents which were irrelevant or privileged. The letter then gave a description of the documents on the Commission file, emphasising how many of them there are and the variety of matters to which they relate. vii) The English claimants were dissatisfied with Servier’s disclosure proposals, and on 21May 2014 they issued an application asking for a further CMC to be listed for the first available date after 10July 2014, and an order that Servier be required to serve revised disclosure proposals and a completed electronic disclosure questionnaire by 25 June. Servier also issued an application notice on the same day, asking for orders(a) that there should be a stay of the Scottish/NI proceedings until after the conclusion of the English proceedings, i.e. renewing the application which had been dismissed by Mann J in October 2013, and(b) that disclosure be given on a standard basis in accordance with CPR 31.6, but with its scope limited to the documents in the Commission’s file which were under Servier’s control. The two applications were supported by witness statements made by the parties’ solicitors, Mr Jonathan Tickner of Peters & Peters Solicitors LLP for the English claimants and Ms Maria Isabel F. Utges Manley of Bristows LLP for Servier. viii) At this stage the Commission’s decision was still awaited, but there was reason to think that it would be forthcoming in the relatively near future. A more precise indication of the probable date of its release was given by Ms Manley in a confidential section of her statement. In these circumstances, the question arose whether it would be more sensible to postpone the CMC, together with argument on the stay and disclosure applications, until a reasonable time after the decision had been released. The question was canvassed with me in correspondence, and I decided that on balance the better course was to hold a joint CMC at the earliest convenient opportunity. There was otherwise an appreciable risk that it might not take place until early 2015, or even later, and meanwhile the process of disclosure would not even begin, despite the desirability of making an early start which I had emphasised in the October 2012 judgment at [53] to [54]. In the light of this decision, the parties then filed further evidence and the CMC duly took place on 9and 10 June 2014. At the CMC I heard argument on both the stay and the disclosure applications over one and a half days. I then reserved my judgment. ix) A month later, on 9 July 2014, the Commission issued its decision (“the Decision”). The Decision itself is at this stage confidential, although a redacted version of it will be published in due course. It was accompanied by a press release which contained a summary of the Commission’s main findings and particulars of the fine which the Commission had decided to impose. The Decision was adverse to Servier, and companies in the Servier group were fined a total of €330,997,200.[9]The Commission found breaches of both Articles 101 and 102 to be established, and appears to have concentrated in particular on the so-called settlement agreements which Servier entered into with five producers of generic medicines between 2005 and 2007 when they challenged Servier’s patents. According to the press release:
“This was not an ordinary transaction where two parties decide to settle a patent claim outside of court to save time and costs. Here, the generic companies agreed to abstain from competing in exchange for a share of Servier’s rent. This happened at least five times between 2005 and 2007…In total, cash payments from Servier to generics amounted to several tens of millions of euros. In one case, Servier offered a generic company a licence for 7 national markets; in return, the generic company agreed to “sacrifice” all other EU markets and stop efforts to launch Perindopril there. Servier thus gained the certainty that the generic producers would stay out of the national markets and refrain from legal challenges for the duration of the agreements. It is legitimate – and desirable – to apply for patents – patents including so-called ‘process’ patents, to enforce them, to transfer technologies and to settle litigation. However, Servier misused such legitimate tools by shutting out a competing technology and buying out a number of competitors that had developed cheaper medicines, to avoid competing on their own merits. Such behaviour violates EU antitrust rules that prohibit the abuse of a dominant market position (Article 102…). Each of the settlements between Servier and its generic competitors was also an anticompetitive agreement prohibited by Article 101 TFEU.”
[10]I was informed of the Decision by letters from Peters & Peters dated 9 July 2014, and from Bristows dated 17 July 2014. In a press release of its own issued on 9 July, Servier stated its intention to appeal to the General Court, and said it “strongly disagreed” with the “unprecedented theory” developed in the Decision. It is common ground that the period for filing such an appeal is two months and ten days from the date of receipt of the Decision. This deadline cannot be extended, so it will be necessary for Servier’s lawyers to devote their main attention to preparation of the appeal during this relatively short period.

The application to stay the Scottish/NI proceedings

[11]Before coming to the arguments now advanced by Servier in support of its application to stay the Scottish/NI proceedings, it is instructive to look at the reasons given by Mann J for dismissing the similar application made to him by Servier (in the absence of the parties to the English and Welsh proceedings) in October 2013: see paragraph 8(v) above. The neutral citation of Mann J’s approved judgment is [2014] EWHC 2955 (Ch). The parties to the application were represented by the same counsel as before me, Ms Helen Davies QC and Ms Kelyn Bacon (now QC) for Servier, and Mr Daniel Beard QC and Mr Julian Gregory for the Scottish and Northern Irish claimants.[12]After briefly setting out the background, and observing that in terms of liability there is an almost complete overlap between the Scottish/NI and the English proceedings, the judge recorded the main submissions which had been made to him. The principal basis upon which Servier sought a stay was to avoid duplication of effort on both sides, when in the absence of a stay virtually identical cases on liability would be proceeding in parallel. It was argued that this would lead to an increased, unfair and unnecessary burden on Servier, which is not a normal commercial organisation but is a foundation whose profits are used only for the purposes of further research and development. Against that background, the English proceedings should go ahead because they were further advanced and more valuable than the Scottish/NI proceedings, and also because they were the only ones to raise the separate economic tort issue. Further, a stay would not be too prejudicial to the Scottish/NI claimants, because it was likely in practice that a decision on liability in the English proceedings would be treated as determinative in the Scottish/NI proceedings, even if it was not technically binding. All the necessary evidence would be preserved in the context of the English proceedings, and there was no additional evidence at risk of being lost.[13]On behalf of the Scottish/NI claimants, Mr Beard accepted that the two sets of proceedings should be case-managed, but not by the imposition of a stay. The Scottish/NI proceedings could quickly catch up with the English ones, and they were brought by separate claimants with their own views on the law, the case and the evidence. They should not be excluded from bringing their own case until after the English claim had been determined. Issues of causation and quantum were in any event different in the two sets of proceedings, and there was a risk of a very long delay if the Scottish/NI proceedings were stayed, possibly for as long as ten years allowing for possible appeals. The right solution, said Mr Beard, lay in proper case management which would remove, or at least greatly reduce, the risk of duplication of effort and activities.[14]Mr Beard also cited two authorities to Mann J. In Bollinger v Goldwell Limited [1971] FSR 405, Megarry J said at 416 that a litigant should not “be delayed in the determination of his dispute without good cause”. In Hardy v Elphick [1974] Ch 65, Buckley LJ said at 74G:
“It has often been said that the jurisdiction of the court to dismiss or stay an action in limine should be exercised sparingly and with great caution. A plaintiff whose statement of claim discloses a cause of action should be allowed to have his case tried, unless his conduct in bringing the action is clearly frivolous, vexatious or otherwise an abuse of process of the court.”
[15]Mann J then stated his conclusions, as follows:
“17. This is a case management decision, as all parties sensibly accepted. It is of the essence of [Servier’s] case that the only sensible way of managing this case, having an eye to the English proceedings, is to have a stay of these proceedings, and that that is sufficiently apparent at this stage that there is no need to engage in any active consideration of any other matters and no need to do so in conjunction with the English claimants in the context of their action. For reasons that will appear, I have not considered that to be a correct approach. 18. I accept in this case that all the major issues on liability are common. Mr Beard has not satisfied me that there is any significant risk of there being any real divergence or differing points on liability. Even some of the causation issues relevant to damages are likely to be common issues to the two cases, although at that point, I accept, there will be ultimately some divergence between the three cases. 19. I also accept that the two sets of claimants cannot assume that they are entitled to proceed with their own separate actions with no particular regard to the common nature of the issues and expect the court and the defendants, and particularly the court, to treat them as if the two actions are entirely separate and independent, with their own separate lives, which they are entitled to pursue. Prima facie it is not easy to see the commercial justification for two sets of representation for two sets of proceedings in litigation such as this, at least to the extent of liability. I, for my part, would question whether two sets of commercial entities, with obvious similar commercial interests to the two sets of claimants in this case, would themselves insist on two sets of representatives; but at the end of the day, claimants cannot be forced to share. I make these remarks because the claimants should not assume that these proceedings or, indeed, the English proceedings will necessarily continue to their end on the footing that two entirely [separate] sets of proceedings, with two sets of representation, are justified in this case, with the consequence, as far as those claimants would no doubt hope it to be, that case management, the ordering of events and the recovery of costs would be treated as though the separate tracks were in all ways justifiable. 20. However, at the moment the real point is two-fold. It is, first, whether decisions about the important case management decisions…should be taken now…without the English parties being represented; and second, if it is sensible to decide such things at this stage, whether the answer and the only real sensible answer is a stay. The answer to both questions, in my view, is no. 21. I agree with Mr Beard that this matter should be dealt with as a case management decision to be taken in the context of both cases being taken together. There may be other solutions to the problem of duplication of effort, and the English parties should be party to any discussions about such arrangements. Various case management techniques can be brought into play to ensure that duplication of effort is controlled or eliminated, including – and these are examples – having one set of lead solicitors, limiting the costs recovery or one or other [or] both of the claimants either at various stages of the action or throughout, or, conceivably, enhanced costs recovery for Servier if they incur additional costs because of the presence of additional and conceivably unnecessary parties. 22. None of these sorts of things have been considered in the context of a proper case management hearing. It would only be right to jump straight to the stay solution if it was obvious, and obvious at this point in time, that it is the plain and sensible solution. In my view, it is not plain. The Scottish Ministers have the right to have their own case and to have their own case advanced (by their own representatives), and they should be given a fair opportunity to influence the events in the litigation, including final decisions at trial, even if causes of action are effectively identical to those run by the English claimants. A stay now would prevent that. 23. It does not follow that the fair opportunity to which I have referred requires the full pursuit of the Scottish claim in parallel with the English claim, but it does require that the Scottish claimants should have their appropriate chance at some stage or stages. It is not clear to me at this point that the stage at which they should not be able to influence the litigation and to be informed by the disclosure is the present point, and it is certainly not at all clear to me that that point in time is a point after the English case has actually been decided. Were I to decide in Servier’s favour on the present application, then that would be the consequence…Bearing in mind that the stay application is in substance an invitation to treat the English litigation as a de facto test case, that seems to me to be somewhat unfair in the present circumstances. 24. At the moment the risks of duplication are not sufficient that the court has to take drastic avoiding action now. These proceedings are not yet at the point of disclosure or even the disclosure meeting… 25. The solution to the case management problems posed by these two sets of litigation (three sets if the Welsh case is not settled) is to make sure at a proper CMC, or a series of proper CMCs, that the litigation is properly conducted. No party can assume a free hand in terms of running their own actions and the possibility of a stay of one or more of the sets of proceedings will be on the table as a possible direction if, on a proper consideration of that, and all alternatives, it turns out to be the answer to the problems that have been (and will be) thrown up. It is far from unknown for stays to be granted in parallel actions, because that happens when there are test cases in a large number of instances. 26. There is a real problem to be addressed here and, as I have indicated, the two sets of [claimants] cannot assume that they will be allowed to proceed in parallel at all times. But other solutions need to be canvassed and a joint CMC is necessary to that exercise. 27. I therefore consider that the application made to me on the material on which it is made (and at the stage at which it is made) fails. Other case management techniques will quite possibly and, indeed, in my preliminary view, are likely to provide a better and fairer solution to the problems which will otherwise arise. I therefore refuse the application.”
[16]At the risk of over-simplification, it seems to me that three main strands can be identified in Mann J’s reasoning: i) the issue was ultimately one of case management, and should be decided at one or more joint CMCs held in all three sets of proceedings; ii) the Scottish/NI claimants were entitled to be separately represented, and to have their independent views properly taken into account when the court decided how the litigation should be conducted; and iii) the appropriate solution was likely to lie somewhere between the extremes of a complete stay (which would be equivalent to treating the English proceedings as a de facto test case) and allowing the full pursuit of the Scottish/NI proceedings in parallel with the English proceedings.[17]The arguments advanced to me by counsel for Servier in support of the renewed application for a stay of the Scottish/NI proceedings were to a large extent the same as those which they had urged on Mann J. It was submitted that Servier should not simultaneously have to face multiple sets of proceedings based on the same underlying facts, with three different legal teams each incurring their own costs and imposing costs on Servier and its legal representatives. For Servier to have to defend multiple claims in this way would be contrary to the overriding objective under the CPR of ensuring that cases are dealt with justly and at proportionate cost. The CPR provide the court with a number of case management tools to enable claims to be tried with the minimum duplication of effort and expense. They include: a) staying the whole or part of proceedings, either generally or until a specified date or event (CPR rule 3.1(2)(f)); b) the consolidation of proceedings, in whole or in part (rule 3.1(2)(g)); c) the trial of multiple claims on the same occasion (rule 3.1(2)(h)); d) the making of an order for representative proceedings (rule 19.6); and e) the making of a group litigation order (rule 19.11).[18]The immediate problem, submitted Servier, is not the conduct of the eventual trial, but the case management of the pre-trial process. Dealing with multiple sets of solicitors all raising different case management issues on an individual basis, and needing to be copied into everything that was happening in the other sets of proceedings, would place an unreasonable burden on Servier’s management and lawyers, and would lead to inevitable duplication of effort and cost. The burden would be still greater if, as has now happened, the Commission adopted a decision adverse to Servier, and Servier decided to appeal to the General Court. Servier would then have to prosecute its appeal while at the same time managing the multiple sets of domestic proceedings.[19]If the court was not persuaded that the Scottish/NI proceedings should be stayed, Servier submitted in the alternative that the three sets of domestic proceedings should be consolidated pursuant to rule 3.1(2)(g) at least up to the point of determination of liability, with one set of solicitors and counsel given the conduct of the liability claim. This alternative was not, however, advanced with much enthusiasm, and counsel referred me to the note in volume 1 of the White Book (2014 edition) at paragraph 3.1.10 on p 74, which says:
“The better course may be for the court not to order such ‘partial consolidation’, but to order that one claimant’s claim should proceed to the trial of liability with the other claimants’ claims being stayed pending the outcome, especially where the other claimants are prepared to consent to an order that they should be bound by the decision on liability.”
[20]In oral argument, Ms Davies QC emphasised that Servier’s disclosure was going to be the same in each of the actions, and Servier would also deploy all of its factual evidence in the English proceedings. Accordingly, there was no risk of material evidence being lost on Servier’s side if a stay were granted. So far as their own disclosure was concerned, the Scottish/NI claimants could take whatever steps were necessary to preserve their own documents and evidence.[21]Mr Beard QC prefaced his submissions on behalf of the Scottish/NI claimants with a number of preliminary observations. First, he submitted that the application for a stay was on any view mis-timed because it preceded the Decision. It was agreed on all sides that the parties would need to study the Decision with great care, and consider their respective positions, once it had been released. It would be wholly inappropriate, he said, for the court to order a blanket stay of the Scottish/NI proceedings at a time when the Decision was expected in the relatively near future, and before the parties had taken stock of their positions in the light of it. It needs to be remembered, in this connection, that the Decision is determinative, so far as the national court is concerned, in relation to the matters which it covers (see paragraph 4 of the October 2012 judgment).[22]Secondly, Mr Beard confirmed his clients’ willingness to cooperate with the other claimants in managing the cases together in a way that would minimise duplication of effort and expense. He said that (unlike the English claimants) they were content with Servier’s proposals for initial disclosure, and (subject to discussion with the English claimants) could see real merit in Servier’s disclosure being treated as effectively a shared database. I then expressed the hope that the parties would in those circumstances “discuss the matter with a view to adopting the most economical and sensible way of ensuring that a review was carried out which respected divergent underlying interests, but minimised costs and set up a single channel of communication vis-à-vis Servier”, to which Mr Beard replied: “That is all eminently sensible so far as we are concerned” (transcript, page 67).[23]Thirdly, Mr Beard said the fact that the Scottish and Northern Irish claimants had been able to make common cause and instruct the same legal team was itself a good indicator of their commitment to work together and save public money where it was feasible to do so. He also made it clear that the estimate of their combined costs of the whole of their case in their allocation questionnaire, which exceeded £3.5m, and upon which Servier had understandably relied, was an estimate of the cost of the litigation on the assumption that it was freestanding. Once arrangements had been made for the combined management of all three cases, the estimate would be “far, far lower”.[24]In relation to the likely length of a stay, on the assumption that Servier appealed against an adverse decision, Mr Beard reminded me that an appeal to the General Court would lie as of right, with the possibility of a further appeal to the CJEU on questions of law. All those avenues of appeal would have to be exhausted before there could be a trial of the English proceedings, which might itself generate an appeal to the Court of Appeal, and possibly thence to the Supreme Court. Only then, if a stay were granted, could the Scottish/NI proceedings begin to progress from the early stage which they have now reached, with pleadings closed but no start yet made on disclosure. Furthermore, in the absence of agreement, the final judgment in the English proceedings would not be binding on the court which had to determine the Scottish/NI proceedings, giving rise to a potential need to re-litigate the same or similar issues, with a serious risk of inconsistent decisions being reached. Mr Beard also emphasised that the overlap between the English and the Scottish/NI proceedings was by no means complete, and that there were also significant issues raised in all the UK claims which did not appear to feature at all in the Commission proceedings, notably the key allegation that Servier knowingly or recklessly made false representations to the European Patent Office. Furthermore, the claimants in each set of UK proceedings were operating under a different legal framework, were subject to different financial pressures, and were ultimately responsible to different sets of voters. Against that background, it would be fundamentally unjust to impose a blanket stay which would prevent the Scottish/NI claimants from pursuing their claim, in the public interest, within the same timeframe as the English proceedings.[25]In relation to Servier’s fall-back position, Mr Beard submitted that to deprive a claimant of his choice of legal representation is a very intrusive case management tool which the court should be extremely slow to adopt. Parties should not in general have legal representation imposed on them against their wishes. Furthermore, enforced joint representation could prove impractical because of the scope for conflicts of interest to arise. The evidence filed on behalf of the Scottish/NI claimants instanced an earlier case where the UK health authorities had all been jointly represented, but a conflict arose and the arrangement could not continue. The possibility of conflicts of interest arising in the present case could not be dismissed as theoretical, given (for example) the separate status of the English claimants as interested third parties in the Commission proceedings, and the differing approaches to disclosure already adopted by the English claimants and the Scottish/NI claimants.[26]More generally, Mr Beard emphasised the basic point that the prima facie right of a claimant with a properly arguable case of very substantial value is to have it tried and decided by the court as soon as is reasonably possible.[27]I also heard brief submissions on this part of the case from the Welsh claimants and the English claimants. The Welsh claimants had an interest in both limbs of Servier’s application, because if Servier succeeded in obtaining a stay of the Scottish/NI proceedings, it could confidently be predicted that Servier would seek a similar order against the Welsh claimants once the temporary stay of the Welsh proceedings had come to an end. The English claimants were not threatened with an application for a stay, but Servier’s fall-back submission would have affected them in the same way as the other UK claimants, forcing them to be jointly represented at least until liability had been determined.[28]On behalf of the Welsh claimants, Ms John adopted the submissions of the Scottish/NI claimants and added some observations of her own on the factors which she said I should take into account. She helpfully referred me to agreed directions which had been given in July 2012 in follow-on proceedings brought by the UK health authorities against the Reckitt Benckiser group relating to an established abuse by Reckitt of its dominant position in the supply of certain drugs in the UK, as an example of the way in which four concurrent claims could be case managed together in a cost-efficient manner. She emphasised that joint representation had been tried in that case, but had failed when a conflict of interest arose between her clients and the English claimants. This was, as I understand it, the same episode to which the Scottish/NI claimants had referred in their submissions. Ms John also emphasised that her instructing solicitors, Geldards, had long experience of acting for the NHS in Wales, and it was most unlikely that costs would be saved by forcing the Welsh claimants to change their legal representation.[29]On behalf of the English claimants, Mr Lasok QC made it clear that they too opposed any suggestion that there should be joint representation of the claimants at this stage of the proceedings. He accepted that issues of duplication of effort and costs would need to be addressed by the court in due course, and agreed with Ms John that directions such as those in the Reckitt Benckiser litigation might be appropriate at a later stage in the case. He also referred me to a letter sent on 14 May 2014 by Peters & Peters to Bristows, which stated that agreement had been reached between the English, Scottish and Northern Irish claimants to cooperate in their approach to any dispute concerning disclosure. No further details were given of the form which such cooperation might take, and on the first day of the hearing I asked if a fuller indication could be given of the kind of cooperation that was proposed. Mr Beard informed me, in some brief supplementary submissions on the second day, that the claimants were unable to submit concrete proposals until the scope of disclosure had been determined, but in principle there was willingness on the part of all the claimants to consider appropriate mechanisms for the review of electronic disclosure by Servier and the allocation of tasks between the three firms of solicitors representing the claimants.[30]In the light of all these submissions, I have come to the clear conclusion that Servier’s application for a stay of the Scottish/NI proceedings should be dismissed. In my judgment the right way to deal with the “real problem” identified by Mann J, particularly at this relatively early stage of the UK proceedings, is by active case management of the three actions as they proceed in parallel, and not by the imposition of a blanket stay which would, in effect, turn the English proceedings into a test case. Even though the English claim is by far the largest in terms of value, and even though it raises essentially the same issues on liability as the other two claims, I think it would be wrong in principle to compel the claims brought by the other UK health authorities to wait in the wings, probably for several years, until the English proceedings have been finally resolved.[31]I accord considerable weight, in this context, to the fact that all three sets of proceedings have been brought in the public interest by the health authorities of constituent parts of the UK, each operating in a significantly different legal framework and answerable to a different electorate. In a situation of that kind, I consider that a very strong justification would be needed to prevent the claims from proceeding simultaneously.[32]It is, of course, crucial that all reasonable steps should be taken to reduce duplication of effort and expense to a minimum, and I have already made it clear on several occasions that I expect the parties to work together energetically and in good faith for that purpose. Even so, it cannot be denied that Servier and its legal team will, overall, be put to significantly greater expenditure of time and money in dealing with the three actions together, instead of the English proceedings alone, over the next few years. But this prejudice to Servier is in my judgment decisively outweighed by the much greater prejudice which would be caused to the Welsh, Scottish and Northern Irish claimants if their claims were now to be stayed. I need to remind myself that Servier has now been found guilty by the Commission of serious breaches of both Articles 101 and 102, and has been fined a very substantial amount. If Servier finds itself obliged as a result to defend all three actions simultaneously, while at the same time prosecuting its appeal against the Decision to the European Court, I cannot help reflecting that this is a self-inflicted problem which Servier has brought about by its own conduct which (subject to any successful appeal) the Commission has now determined to be unlawful.[33]For similar reasons, I am even less attracted by Servier’s fall-back argument that the Scottish/NI proceedings (and in due course the Welsh proceedings) should be consolidated with the English proceedings, thereby compelling all the UK claimants to have the same legal representation. I would regard that as a wholly disproportionate step to take, when the alternative of allowing all three sets of proceedings to go forward under active case management is available.[34]When the time comes, it will be necessary to give careful consideration to the way in which the three actions should be tried, and it may well be that directions similar to those which were agreed in the Reckitt Benckiser litigation will be appropriate. It would, however, be premature to give directions of that nature at this early stage, before the parties have had time to consider the impact of the Decision on their respective cases, before disclosure has taken place, and before witness statements and expert reports have been prepared. But it is not too soon for the parties and their advisers to begin giving serious thought to the way in which the actions should ultimately be tried, with the minimum of duplication in relation to common issues. It will plainly be necessary to hold a further joint CMC once the parties have had a reasonable opportunity to take stock of their positions in the light of the Decision, and by that stage I would expect the claimants to have made serious efforts to reach at least a preliminary agreement between themselves, and if possible with Servier, on how best to minimise duplication of effort and expense in the preparation of their cases for trial, and in the conduct of the trials themselves.[35]Nor, for the avoidance of doubt, do I rule out the possibility that some form of sequential determination of issues may be appropriate, with one set of proceedings taking the lead while the others are stayed in the meantime. All options will remain on the table, and no party should assume that it has an unqualified right to have the whole of its case tried in full at the earliest opportunity. In saying this, I am merely repeating the sensible warnings which Mann J has already given, and emphasising that all I am rejecting at this stage is Servier’s application for a blanket stay of the Scottish/NI proceedings until after the final determination of the English proceedings.

Disclosure

[36]Although I heard full argument on a number of disclosure issues from counsel for the English and the Scottish/NI claimants, most of it in private because of the confidential nature of the Commission proceedings, I propose to deal with the question briefly. The reason for this is the recent issue of the Decision, very much at the beginning of the period during which its appearance was contemplated when the hearing before me took place. This has two important consequences. First, everybody agrees that Servier should be allowed to give its undivided attention to preparing its appeal against the Decision in the period of two months and ten days during which an appeal must be brought, that is to say until Monday 22 September 2014. Secondly, it is also common ground that all the parties now need to take careful stock of their positions and pleaded cases in the light of the Decision, bearing in mind the determinative effect of matters which the Commission has now decided, at any rate as a matter of EU and domestic competition law. This process of review and reconsideration is likely to lead to both clarification and reduction of the issues in the three sets of proceedings, and this in turn will have a significant impact on disclosure.[37]In these circumstances, it seems to me that the balance now comes down firmly in favour of Servier’s proposal, which is that Servier’s disclosure should be limited in the first instance to a review of the documents held on the Commission’s file. As I have already explained, this is a substantial archive which Bristows estimate to contain around 30,000 pages, reflecting the extensive searches and enquiries carried out by the Commission in the course of its investigation. Furthermore, the review and giving of disclosure from this archive will itself be a major exercise, which is likely to occupy Servier’s lawyers for several months. Although the documents are stored electronically, I was told by Ms Davies that they are not arranged in a way which makes them easy to review. Many are not in English, and some of the documentation is technical in nature. Questions of privilege and relevance will also have to be considered, not least because the approach of the Commission to issues of privilege differs significantly from that of English law.[38]There are three further points which encourage me to accept Servier’s proposal at this stage. First, as Ms Manley emphasised more than once in her written evidence, Servier is not saying that its disclosure should necessarily be confined to the documents on the Commission’s file, but only that in the interests of proportionality this exercise should be undertaken first. Secondly, the Scottish/NI claimants were content that matters should proceed in this way, even before the issue of the Decision. Thirdly, in at least one recent case of parallel EU and UK competition law proceedings, the English court has considered it appropriate to limit disclosure in the first instance to material already disclosed to the Commission: see Infederation Ltd v Google Ireland Ltd [2013] EWHC 2295 (Ch), [2014] 1 CMLR 13, at [37] to [38] per Roth J.[39]In the light of what I have said, I hope that the parties will now be able to agree a timetable for this first stage of the disclosure exercise, bearing in mind that it cannot start (so far as Servier is concerned) before 22 September 2014 at the earliest. Unless there are any other aspects of disclosure on which the parties consider it essential for me to give a ruling now, I think that further consideration of disclosure-related issues should be postponed until after the parties have fully digested the Decision and the issues have crystallised. Meanwhile, I emphasise the need for all parties, and Servier in particular, to take active steps to ensure that all potentially relevant documents are preserved.

Cited in 2 later judgments