EU Advocate General suggests pay-for-delay settlement agreements may be an abuse of dominant position

Adocate General Kokott proposes that the Court should rule

“the Court should reply to the Competition Appeal Tribunal that, subject to certain matters to be determined by that tribunal, an agreement in settlement of a patent dispute may constitute a restriction of competition by object or by effect and that entering into such an agreement may be an abuse of a dominant position”.

In particular, such an agreement in settlement constitutes a restriction of competition by object if the sole consideration for the payment from the patent holder to the Gx company is the undertaking from the Gx company not to enter the market and not to challenge the patent.

Also, when an undertaking in a dominant position enters into such an agreement, it may additionally constitute a prohibited abuse of a dominant position if said agreement (by itself or in conjunction with other agreements of the same type) is capable of influencing the structure of competition on the relevant market so as to hinder or eliminate competition on that market (unless benefits afforded to consumers by the agreement offset the agreement’s adverse effects on competition on the relevant market).

The CJEU press release (in English) is available here.

Advocate General Kokott’s opinion (in French) is available here.