Competition Appeal Tribunal Imposes £69 Million Excessive Pricing Fines in Phenytoin Case

According to the CMA, the CAT found that the firms intentionally abused their dominant positions and characterised their pricing as unfair. The fines it imposed were almost identical to the CMA's, save for a 1% reduction to Pfizer's fine. The CMA had fined the companies £63,300,000 and £6,704,422 respectively in 2022.

The excessive pricing findings

The CMA's decision found that between 2012 and 2016 Pfizer's prices for the capsules rose by 780% to 1,600%, and that the combined prices charged by the two firms were between 2,300% and 2,600% higher than those previously charged. NHS annual spending on phenytoin capsules rose from £2 million in 2012 to about £50 million the following year.

The CAT agreed with most of the firms' grounds of appeal against the CMA's reasoning, including on the approach to calculating a reasonable rate of return, the assessment of unfairness and the procedure followed, but still concluded that the Chapter II prohibition of the Competition Act 1998 had been infringed.

A long-running case

The CMA's original 2016 decision was partly set aside by the CAT and remitted. After the Court of Appeal in March 2020 dismissed Flynn's appeal and upheld aspects of the CMA's appeal on the legal test for unfair pricing, the CMA re-investigated and issued its remittal decision in July 2022. The CAT heard the appeals against that decision in November and December 2023.

What it means

The judgment confirms that excessive pricing remains enforceable under UK competition law, including for off-patent medicines, even where the tribunal disagrees with the regulator's method. The CMA said it agrees the pricing was abusive and that significant fines are appropriate, but disagrees with the CAT's findings and reasoning on its decision and is considering whether to appeal. Suppliers of niche or genericised products in concentrated markets should keep pricing decisions and cost justifications well documented.

Sources

• GOV.UK (CMA): Tribunal fines drug firms £69m for excessive pricing after CMA investigation
• Competition Appeal Tribunal: Phenytoin judgment, 20 November 2024