GovWire

Despite initially confirming that the Competition and Markets Authoritys (CMA) decision correctly found flagrantly anti-competitive cartel behaviour by Auden/Actavis UK and AMCo/Advanz, the Competition Appeal Tribunal (CAT) has today allowed their appeals on what the CMA considers a fundamentally misconceived procedural point.

The CAT has allowed the appeals because it considers that the CMA did not fully put its case to former CEO of Advanz John Beighton in cross-examination at trial.

The CMA fundamentally disagrees with the CATs reasoning and decision to allow the appeals. The CATs reasoning overlooks critical evidence that formed the basis for the CMAs decision and was put to Mr Beighton over two days of cross-examination.

The CMA will be seeking leave to appeal the CATs decision to ensure the effective enforcement of competition law.

Sarah Cardell, Chief Executive Officer of the CMA, said:

The CMA imposed significant penalties on these firms after finding they engaged in a market sharing agreement that denied the NHS the potential savings from competition for this essential medicine.

We believe the Competition Appeal Tribunals decision to allow the appeals is fundamentally misconceived. The impact of this judgment is highly concerning. We will be appealing and remain determined to see this case through.

Background to the case

• The CMAs July 2021 decision found a market sharing agreement between Auden/Actavis UK and AMCo/Advanz relating to 10mg hydrocortisone tablets from October 2012 to June 2016. The CMA fined the firms and their current and former parents 106 million. All these parties appealed to the CAT.
• The CAT has today published two judgments on the appeals. In the first, the CAT finds that the decision was right on the facts and that all the grounds of appeal fail. In the second, the CAT finds that the appeals must nonetheless be allowed because the CMA did not fully put its case to a witness during cross-examination at trial.
• The CMA fundamentally disagrees with the CATs reasoning and decision and will seek permission to appeal. If the CMA successfully appeals the due process question, the findings in the CATs first judgment would stand.
• The CMAs decision to impose fines on Actavis UK and its current and former parents for excessive and unfair pricing infringements was unanimously upheld by the CAT in its September 2023 Hydro 1 judgment, and the firms in question must still pay fines of 129 million. Todays judgments do not affect that outcome.

The judgments

The CAT has today published 2 judgments relating to the CMAs finding that Auden/Actavis UK paid AMCo/Advanz to stay off the market with its own 10mg hydrocortisone tablets.

The first Hydro 2 judgment was handed down on 29 September 2023. The Hydro 2 judgment upheld the decisions findings and found that: All of the grounds of appeal fail. The 10mg Agreement is a by object infringement of the Chapter I prohibition. The object was flagrantly anti-competitive and the anti-competitive effects significant, in that an abused monopoly position was maintained and supported.

The CAT reached these findings conscious that we must be satisfied to a very high standard and exercising an extraordinarily high degree of care in finding the facts.

However, the Hydro 2 judgment expressed concern that the CMA had not fully put its case to Advanzs witness, former CEO John Beighton, in cross-examination. The judgment remained under embargo pending a further hearing on this point, which took place in October 2023.

The CATs second judgment in relation to the 10mg agreement (Hydro 3) was handed down today. The judgment finds that the CMA did not fully put its case to Mr Beighton in cross-examination and that for this reason the provisional findings in Hydro 2 are unsafe and the appeals must be allowed.

The Hydro 3 judgment states that without this due process question the CAT would be completely comfortable with the terms and outcome of the Hydro 2 judgment. It states that if the CMA successfully appeals the due process question, the findings in the Hydro 2 judgment would stand.

Notes to editors

1. For media queries, please contact the press office on press@cma.gov.uk or on 020 3738 6460.
2. The appeal deadline in relation to the Hydro 1 excessive and unfair pricing judgment was suspended pending determination of the appeals relating to the 10mg agreement. The parties now have until 29 March 2024 to seek leave to appeal the Hydro 1 judgment.
3. The CMA imposed fines of 106 million on Actavis UK and AMCo/Advanz (and their current and former parents) in relation to the 10mg agreement. The Hydro 3 judgment finds that these fines are overturned.
4. A small proportion of the fines imposed for the 10mg agreement (approximately 9 million) would have been overturned as a result of the finding in the Hydro 1 judgment that the penalties on Allergan, a former parent of Actavis UK, should be reduced to reflect that it was required to hold separate Actavis UK during 2016.
5. The due process question identified by the CAT also applies to another witness for Advanz, Robert Sully. However, the outcome in Hydro 3 turns on the question as it relates to the cross-examination of Mr Beighton.
6. Previous action taken by the CMA in relation to the pharma sector and the fines imposed:

• Paroxetine(2016): 45 million in fines for anti-competitive agreements and abuse of dominance (reduced to 27.1 million on appeal).
• Fludrocortisone(2019): 2.3 million in fines and 8 million redress to the NHS for market sharing.
• Nortriptyline(2020): 3.4 million in fines and 1 million redress to the NHS for illegal arrangements including market sharing and information exchange.
• Prochlorperazine(2022): 35 million in fines for an illegal arrangement that restricted competition in the supply of prescription tablets.
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