Adding a New Dimension to EU Pharmaceutical Antitrust - Pay for Delay Settlements as Part of a Unilateral Strategy such as Product Hopping

Sven Gallasch
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Sven Gallasch: Centre for Competition Policy and UEA Law School, University of East Anglia

No 2015-02, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

Abstract: Pay for delay settlements are currently at the centre of the European Commission’s enforcement activities in the pharmaceutical sector. The focus in these investigations is on the collusive nature of the agreements between a brand company and generic companies and the associated anticompetitive potential. This paper advocates the broadening of the antitrust scrutiny of pay for delay settlements to unilateral conduct. It argues that pay for delay settlements could be used as a "facilitator" for broader unilateral conduct by the brand company such as product hopping. The developed theory of harm is based on the fact that pay for delay settlements in Europe are less likely to foreclose the market for generics than they do in the United States, but they ‘only’ delay generic entry in most cases. This delay could however ‘buy’ the brand company enough time to achieve a broader unilateral strategy. As part of the overall analysis, highlighting a more general issue of European competition law, the paper takes issue with the concept of ‘competition on the merits’ suggesting that there could be merit in considering the concept in the context of the actual facts of the individual case at hand and not in isolation.

Date: 2015-01-01
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