Reverse payment settlements in the context of Article 102 TFEU: Abusive or not? By object or not?

Abstract: Pharmaceutical reverse payment settlements lie at the intersection of competition law and intellectual property law. In the recent years, these settlement agreements have increasingly attracted the attention of competition law authorities in the European Union. Generally, the focus of these cases, and of the literature concerning reverse payment settlements, has been on the collusive nature of the agreements. In 2014, however, the European Commission assessed such agreements as part of a unilateral strategy under Article 102 TFEU. The compatibility of reverse payment settlements has also been examined by the national competition authority in the United Kingdom. There is still lot of ambiguity surrounding the treatment of reverse payment settlements under Article 102 TFEU, including whether such settlement agreements can constitute an abuse of a dominant position in themselves, when, and what would be the most suitable legal test for their competition law assessment. This thesis will attempt to provide an answer to these questions. This will be done by first providing an overview of the complex legal framework in which these agreements operate, after which the Commission decision in Servier and the UK Competition and Markets Authority’s decision in Paroxetine will be examined in an attempt to shed some light into the current approach of the competition authorities. It will be argued that reverse payment settlements, especially where pursued by an originator in a dominant position as a consistent strategy, justify competition law scrutiny under Article 102 TFEU. Finally, the thesis will point out the unsuitability of the object-based analysis, as it effectively disregards the existence and relevance of patents and an argument will be put forward that reverse payment settlements should be assessed in accordance with the effects-based analysis, as it more effectively takes into account the complicated legal and economic analysis in which these agreements operate.