Generics (UK) v Competition and Markets Authority (CJEU, C-307/18, 2020)

Dhenne Avocats · 11 October 2026

Our analysis

Summary

On a reference from the Competition Appeal Tribunal (United Kingdom), the Court laid down the framework for assessing settlement agreements between an originator holding a process patent and generic manufacturers. Generic companies are potential competitors where they have a firm intention and an inherent ability to enter the market and face no insurmountable barriers. An agreement under which the generic company refrains from entering the market and from challenging the patent in return for transfers of value is a restriction by object if the net gain can be explained only by the parties’ common interest in not competing on the merits. An overall strategy of such agreements may also amount to an abuse of dominance.

Facts and procedure

After GSK’s patent on the active ingredient paroxetine (Seroxat) expired in January 1999 and data exclusivity ended in December 2000, GSK held « secondary » patents, including one covering four polymorphs and the process for producing them (paras 7 to 9). It concluded three agreements with generic companies: with IVAX in 2001, without prior litigation; with GUK in 2002, after infringement proceedings and an interim injunction backed by a cross-undertaking in damages; and with Alpharma in 2002, after infringement proceedings (paras 12 to 14). By decision of 12 February 2016, the CMA found infringements of the prohibitions on anti-competitive agreements and on abuse of dominance and imposed penalties totalling GBP 44.99 million (paras 15 and 16). The undertakings fined appealed to the Competition Appeal Tribunal, which referred ten questions (paras 18 to 21).

The applicable law

The Court interpreted Articles 101 and 102 TFEU, which also govern the reading of UK competition law under section 60 of the Competition Act 1998 (paras 26 to 29). It took account of the regulatory constraints in the sector, in particular Article 6 of Directive 2001/83, and of the high level of protection of intellectual property under Directive 2004/48 and Article 17(2) of the Charter (paras 40 and 41).

Question

Are an originator and generic companies in dispute over the validity of a process patent potential competitors, when is their settlement a restriction by object or by effect, and is a dominant undertaking’s strategy of concluding such settlements abusive?

Decision

On potential competition, there must be real and concrete possibilities of entry (para 36), assessed by reference to the generic company’s preparatory steps (MA, stock, patent challenge) and the absence of insurmountable barriers (paras 43 to 45). A process patent is not such a barrier in itself (para 46); neither its presumption of validity, nor pending litigation, nor an interim injunction rules out potential competition, a genuine dispute being rather evidence of it (paras 48 to 53). The competition authority need not assess the strength of the patent (para 50).

On restriction by object, transfers of value are not enough in themselves if they are justified, for instance by litigation costs or the supply of goods or services (paras 85 and 86). The characterisation applies where the net gain can have no explanation other than the common interest in not competing on the merits (para 87), and the transfers need not exceed the profits the generic company would have made had it won (para 94). Neither staying within the scope of the patent nor uncertainty as to its validity excludes it (paras 96 to 102). Proven and sufficiently significant pro-competitive effects may give rise to reasonable doubt (paras 103 to 107), which minimal and uncertain effects cannot do (para 110). For restriction by effect, the counterfactual does not require a finding that the generic company would probably have won (paras 119 to 122).

Under Article 102 TFEU, generics must be included in the product market if they can enter within a short period with sufficient strength (paras 133 to 140). Settling litigation is in principle one of the patentee’s rights (para 150), but a strategy of agreements keeping potential competitors temporarily out of the market is abusive if it has exclusionary effects going beyond those of each agreement (paras 157 and 172).

Key points for practice

• A generic company that has taken concrete steps to enter and is challenging the patent is a potential competitor of the patentee, even while subject to an interim injunction (paras 44, 52 and 53).
• The decisive test turns on the net gain transferred to the generic company and its explanation: only proven and legitimate consideration or waivers can justify it (paras 87 and 92).
• A precautionary settlement concluded before any proceedings may form part of an abusive strategy (para 158).
• Practical point: every payment under a settlement between an originator and a generic company should be traceable to identifiable consideration, failing which the agreement risks characterisation as a restriction by object.

Provisions applied

Treaty on the Functioning of the European Union

Art. 101; Art. 102

Directives

Directive 2001/83, Art. 6; Directive 2004/48

Other provisions

Charter of Fundamental Rights of the European Union, Art. 17(2); Competition Act 1998 (United Kingdom), sections 2, 18 and 60

Case law cited

Delimitis (C-234/89); F. Hoffmann-La Roche and Others (C-179/16); Huawei Technologies (C-170/13); Bayer and Maschinenfabrik Hennecke (65/86); Toshiba v Commission (C-373/14 P); MasterCard v Commission (C-382/12 P); Hoffmann-La Roche v Commission (85/76); Post Danmark (C-209/10); Intel v Commission (C-413/14 P); Tomra Systems (C-549/10 P)

Related decisions

• Huawei v ZTE, 16 July 2015, cited on the exercise of an intellectual property right by a dominant undertaking.

Prepared by Dhenne Avocats from the text of the decision (EUR-Lex, English version), consulted on 11 October 2026. Only the official text is authoritative.