## Facts

- Lundbeck marketed the antidepressant citalopram as an originator company; its basic molecule patent had expired, but it held process patents covering aspects of API manufacture.
- Several generic manufacturers prepared to enter EEA markets with generic citalopram, including by making investments, arranging API supply, and pursuing marketing authorizations.
- Lundbeck and multiple generics concluded settlement agreements to resolve potential patent disputes.
- The settlements included significant value transfers from Lundbeck to generics (e.g., stock purchases, lump-sum payments, or profit guarantees) paired with commitments by generics to refrain from, delay, or limit market entry for defined periods.
- The European Commission found the agreements infringed Article 101(1) TFEU and Article 53 EEA as restrictions of potential competition “by object” and imposed substantial fines.
- Lundbeck sought annulment in part and reduction of the fine before the General Court.

## Issues

1. Whether the generic manufacturers were potential competitors of Lundbeck despite Lundbeck’s process patents.
2. Whether the settlement agreements, involving value transfers in exchange for delayed or foregone entry, were restrictions of competition “by object” under Article 101(1) TFEU.
3. Whether Lundbeck’s patent rights and the character of “patent settlements” precluded application of Article 101(1) to these agreements.
4. Whether the agreements qualified for exemption under Article 101(3) TFEU or whether procedural and penalty-related errors required annulment or fine reduction.

## Decision

- The General Court dismissed Lundbeck’s action in full and upheld the Commission decision and fines.
- The Court held the generics were at least potential competitors because there were real, concrete possibilities of market entry supported by objective steps taken toward entry.
- The Court affirmed that the agreements were restrictions “by object,” emphasizing that substantial, disproportionate value transfers operated as incentives for generics to abandon competitive efforts.
- The Court rejected arguments that the agreements were protected exercises of patent rights or ordinary settlements; it upheld the Commission’s reasoning and fine methodology and found no procedural violation warranting annulment.

## Legal Principles

- Potential competition exists where there are real, concrete possibilities of entry based on objective indicia (e.g., investments, regulatory steps, and supply arrangements), even when entry may trigger patent litigation.
- A patent does not confer a right to conclude agreements with potential competitors that function as market-sharing arrangements or that pay for delayed entry.
- Patent settlements may constitute a restriction of competition “by object” when significant value transfers from an originator induce generics to stay out of the market or limit entry, especially when the transfers exceed what is reasonably necessary to settle a genuine dispute.
- A reverse payment is not per se unlawful; competition-law compatibility depends on the payment’s justification (including linkage to perceived patent strength and legitimate dispute resolution) and the absence of entry-delaying restrictions.
- Article 101(3) exemption requires proof of qualifying efficiencies, consumer pass-on, indispensability of restrictions, and no elimination of competition; failure to substantiate these elements defeats the exemption claim.

## Conclusion

The General Court upheld the finding that Lundbeck’s reverse-payment settlements with prepared generic entrants unlawfully restricted potential competition by object, confirming that patents do not immunize pay-for-delay arrangements from Article 101 scrutiny and leaving the Commission’s infringement decision and fines intact.


Lundbeck v. Comm’n, Case T-472/13 (Gen. Ct. Sept. 8, 2016)