The Court of Appeal has upheld the CMA’s finding of cartel infringement relating to an illegal market sharing agreement in the supply of an essential medicine
The Court of Appeal (CoA) has today ruled in favour of the Competition and Markets Authority (CMA)’s appeal of the Competition Appeal Tribunal (CAT)’s decision to overturn its finding of a market sharing agreement on procedural grounds.
In July 2021, the CMA found that pharmaceutical firms Auden Mckenzie and Actavis UK had charged excessive and unfair prices for hydrocortisone tablets. It also found that to protect its position as sole supplier of the drug, Auden/Actavis UK paid another pharmaceutical firm called AMCo (now called Advanz) to stay out of the market.
Tens of thousands of people in the UK depend on hydrocortisone tablets to treat life-threatening conditions such as Addison’s disease. The inflated prices Auden/Actavis UK charged, and sustained through buying off its competitors, resulted in NHS spending rising from around £500,000 a year to over £80 million. The CMA imposed over £260 million in penalties to reflect the seriousness of this conduct and its impact on the NHS.
Despite upholding the CMA’s findings of excessive and unfair pricing and the existence of a “flagrantly anti-competitive” market sharing agreement in September 2023, the CAT issued a further judgment in March 2024 which found that the CMA had failed to observe due process by not fully putting its case on the market sharing agreement to former CEO of Advanz John Beighton in cross-examination at trial.
Following an appeal by the CMA, the CoA has today overturned that judgment and endorsed the cross-examination by CMA counsel as demonstrating “precisely how a case of anti-competitive conduct can and should be put to a recalcitrant witness”.
The CoA further decided that the procedure adopted by the CAT, in making findings and then engaging in “an entirely fresh examination and analysis of the CMA’s case” leading it to reverse those findings, was “inappropriate” and “unjust”.
Sarah Cardell, Chief Executive of the CMA, said:
Background on the Case
The Judgment
The CoA has today decided that:
(i) the CMA’s appeal from the Hydro 3 judgment should be allowed
(ii) the CMA’s application for permission to appeal from the Hydro 2 judgment should be granted and its appeal should be allowed
(iii) the companies should not be granted permission to appeal from Hydro 2
(iv) the CAT’s provisional findings in Hydro 2 that the companies’ appeals from the CMA’s decision should be dismissed, should be finalised and reinstated
(v) the CAT’s additional findings in Hydro 2 going beyond the CMA’s decision as to dishonesty and other matters should be overturned.
Notes to Editors