U.K.’s CAT fines Pfizer, Flynn GBP 69M for excessive pricing after CMA probe

In a judgment handed down on Wednesday, the U.K.’s Competition Appeal Tribunal found that Pfizer (PFE) and Flynn abused their dominant positions by charging excessive prices for a life-saving epilepsy drug, phenytoin sodium capsules, between 2012 and 2016. The CAT set aside the Competition and Market Authority’s decision, but made its own infringement findings against the parties on 7 out of the 8 infringements originally found by the CMA. The CAT found that the parties intentionally abused their dominant positions and that “both Pfizer and Flynn were gouging the market in a manner that can only be characterized as unjustifiable or opportunistic or – in a word – unfair”. The CAT went on to impose combined fines on Pfizer and Flynn of GBP 69M, almost identical to the fine levels imposed by the CMA. The CMA agrees with the CAT’s conclusion that the firms’ pricing behavior was abusive under competition law, and that significant fines are appropriate in this case. However, the CMA disagrees with the CAT’s findings and reasoning in relation to the CMA’s decision, and is carefully considering whether to appeal the judgment. In Wednesday’s judgment, the CAT agreed with most of the drug firms’ grounds of appeal, finding against the CMA in a number of matters, including in relation to the approach to calculating a ‘reasonable rate of return’, its assessment of unfairness, and the overall procedure followed. The CAT concluded that the firms had infringed the Chapter II prohibition. On the basis of those infringement findings, the CAT imposed the same level of fines as the CMA, but for a 1% reduction of Pfizer’s fine.