The Court of Cassation specifies the criteria for denigration constituting an abuse of a dominant position

The context of this judgment is that of atypical competition. On the one hand, Lucentis, which has a marketing authorization (MA) to treat age-related macular degeneration (AMD) ,  marketed by Novartis at a high price; on the other hand, Avastin, used off-label,  marketed by Roche, also in the treatment of AMD but at a radically lower cost.

The two laboratories have strong capital and contractual links with each other, as well as with Genentech, the developer of the two molecules concerned.

In 2020, at the end of its investigation, the Competition Authority took a sanction decision for abuse of a collective dominant position and denigration.

However, the Paris Court of Appeal did not follow the Authority, considering that the speeches of the laboratories were not denigrating, reproaching them with an alarmist, denigrating and misleading communication about Avastin to public authorities and health professionals.

The Competition Authority had then filed an appeal before the Court of Cassation which resulted in this judgment which offers useful lessons on the apprehension of potential competition (I) on the concept of collective dominant position in view of the importance of the capital and contractual links of the entities concerned (II), and finally the central point of the judgment on the concept of abuse by denigration (III).

On the notion of potential competition

The Court of Cassation begins by recalling a general rule concerning the examination of the conditions of competition, namely that it does not matter whether the companies concerned are in the actual competitive relationship, but that it is necessary to understand the potential competitive situation.

The Court of Appeal dismissed the competition situation after 2011 due to a legal prohibition of prescription outside of a marketing authorisation.

However, the Court of Cassation censure considering that it was necessary to investigate whether there were real and concrete possibilities “for Avastin to compete with Lucentis, despite the legal obstacle.

On the collective dominant position

A collective dominant position can be established when companies together have the power to adopt the same course of action in the market and act  independently of other competitors, their customers and consumers.

On this point, the Court of Cassation considers that the Court of Appeal did not sufficiently analyse the capital and contractual links between Novartis, Roche and Genentech.

The three laboratories – Novartis, Roche and Genentech – must be regarded as forming a “collective entity” within the meaning of competition law, given their capital and contractual links: in particular, the license agreements linking, on the one hand, Genentech and Novartîs for the marketing of Lucentis and, on the other hand, Genentech and Roche for the marketing of Avastin

However, it appears that in the AMD treatment market, this collective entity occupies a dominant position due to the cumulative market shares and the specificities of the sector in question.

On the Assessment of the denigration constituting an abuse

It is on this point that the most important contribution of the judgment is located.

The behaviour in question was the dissemination by the three companies of alarmist speeches on the risks related to the use of Avastin in ophthalmology to public authorities and healthcare professionals. The Court of Appeal had validated the discourse of the laboratories in the name of freedom of expression and public interest debate on public health.

The Court of Cassation rejected this argument, recalling that the speech of a dominant company, even on a subject of general interest, can constitute abuse.  It clearly states that a discourse, even if based on facts, constitutes an abuse when it resorts to means “different from those that govern competition on the merits” and aims to oust a competitor.

The Court recalls that the conduct must be analysed in the light of Article 102 TFEU only and not in the light of the freedom of expression enshrined in the ECHR .

The Court refers to a “by the effects” approach, enshrined in the Super League judgment of the CJEU, and considers that the provision of misleading information to administrative authorities as well as the use of regulatory procedures in such a way as to prevent or make it more difficult for competitors to enter the market, in the absence of grounds relating to the defence of legitimate interests, are relevant elements in determining whether a practice deviates from competition on the merits, underlines the Court of Cassation.

Implications Practices:

1. End of immunity from “public interest debate”: The anti-competitive purpose of a communication is the determining criterion.
2. Strengthened economic approach: “Effects-based” analysis is now the norm. A practice is abusive if it harms healthy competition.
3. Increased vigilance for dominant companies on any communication about competitors (direct or potential), even if the speech is factually accurate.