Author: Dr George Raitt, Consultant
Earlier this year, the Full Court of the Federal Court handed down its decision on the ACCC’s appeal in the Pfizer case. In dismissing the appeal, with the result that the ACCC has lost yet another case alleging misuse of market power, the Full Court may well have cast doubt on the earlier majority decision in Baxter, a ‘bundling’ case in which the ACCC succeeded.
Dr. George Raitt, Consultant, discusses the implications.
The ACCC has since applied for special leave to appeal to the High Court.
The Full Court of the Federal Court of Australia delivered judgment on 25 May 2018 in ACCC v Pfizer [2018] FCAFC 78. It is not necessary for present purposes to consider the facts of the case in detail. It is of interest primarily for the implicit recognition the decision gives to the problem of separating self-interested competitive conduct (which necessarily harms rivals) from conduct which harms competition and consumers.
Pfizer is an ‘originator’ of patented medications. In the few months before expiration of a patent on one of Pfizer’s ‘blockbuster’ drugs in mid 2012, it sought to launch its own generic version of the product and to bundle it with supply of the patented product to gain a market presence ahead of anticipated entry by generics manufacturers. It was anticipated that generics manufacturers would flood into the market seeking, in the initial period after patent expiration, considerable benefits under the subsidy provided by the government under the Pharmaceutical Benefits Scheme.
The Full Court reversed the trial judge on the question of market power, holding that Pfizer still had market power and took advantage of that power when it established the bundled offer shortly before the patent expired. Nevertheless, the Full Court held that Pfizer’s substantial subjective purpose was neither an exclusionary purpose nor an anticompetitive purpose. Thus the ACCC’s claim against Pfizer under both ss 46 (misuse of market power) and 47 (exclusive dealing) failed and the Full Court dismissed the ACCC’s appeal.
