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Pfizer Inc. won a court victory against Australia’s antitrust regulator over charges that it abused its market dominance in the blockbuster cholesterol drug Lipitor to cut out generic competition and keep prices high.
The Full Federal Court dismissed an appeal May 25 by Australian Competition and Consumer Commission (ACCC), which sought to overturn a trial court decision in favor of Pfizer. The ruling lets Pfizer off the hook, but the ACCC could win similar cases in the future because a change to Australia’s competition law in November makes it easier to prove abuse of dominance. The Pfizer charges were brought before then.
“The ACCC remains committed to pursuing cases involving anticompetitive conduct, particularly misuse of market power, because of the harm that can be caused to the competitive process and ultimately to consumers,” ACCC Chairman Rod Sims said in response to the ruling. “The ACCC is carefully considering the judgment.”
The ACCC instituted proceedings in February 2014 alleging Pfizer misused its position as a patent holder of Lipitor “to prevent or deter competition” from other suppliers selling the generic version. The ACCC alleged that Pfizer used bundled discounts for Lipitor in 2012 to lock in buyers just as its patent was expiring, creating a roadblock to generic competitors getting traction in the market.
Under Australia’s competition law at the time, the ACCC’s case turned on whether it could prove that Pfizer’s conduct was “for the purpose of substantially lessening competition in the market.” The lower court held in February 2015 that the ACCC failed to prove an anticompetitive purpose.
The Full Federal Court heard the ACCC’s appeal the following November. The court’s reasoning in upholding the lower court’s decision isn’t yet available.
The change in the law means that the ACCC need no longer prove what Pfizer’s purpose was in attempting to bring an abuse of dominance case. Now, the ACCC can point to market effects to show harm from an alleged abuse of dominance.
The ACCC rarely brought abuse actions under the old law, which Sims called “almost unusable” in press reports. Sims told an economic development conference in February that “misuse of market power and concerted practices will be key ACCC enforcement priorities in 2018.”
“As you would expect, the ACCC fought hard for these provisions, and we will be using them,” he said.
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