Europe’s highest court, the EU Court of Justice (ECJ), has upheld a fine of 85.8 million euros (approximately $100 million) against the German company Knauf Gips KG for participating in a plasterboard price-fixing cartel.

The cartel consisted of Knauf Gips KG, France’s Lafarge SA, Britain’s BPB Plc, and Belgium’s Gyproc Benelux.  The decision upholds part of the European Commission’s November 27, 2002, total fine of 478.32 million euros (approximately $605 million) imposed on the four companies. 

The fines stem from the cartel’s price-fixing of plasterboard for builders in Germany, Britain, France, Belgium, the Netherlands and Luxembourg between 1992 and 1998.  The Commission found that the companies implemented their cartel through a clandestine system that exchanged information and monitored the market to avoid competition.

A few weeks ago, on June 17, 2010, the ECJ upheld a fine of 249.6 million euros (approximately $300 million) against Lafarge for its role in the cartel.  As part of that decision, the ECJ found that the Commission had correctly doubled the fine against Lafarge based on Lafarge’s prior infringement of competition laws.

The General Court of the European Union has upheld a 2005 ruling by the European Commission that AstraZeneca engaged in anticompetitive behavior to shield its anti-ulcer and heartburn drug, Losec, from competition by blocking generic copies from entering the market.

The Commission fined AstraZeneca 60 million euros ($74 million), which the Court reduced to the still significant amount of 52.5 million euros. 

The Court found that between 1993 and 2000, pharmaceutical giant AstraZeneca engaged in anticompetitive behavior in order to preserve its market dominance and prevent generics from entering the market.  AstraZeneca’s scheme was wildly successful.  By 2000, Losec was the world’s highest-selling drug with global sales exceeding $6 billion. 

AstraZeneca was found to have shielded its drug from competition by misleading European patent authorities into granting it additional periods of patent protection.  To gain these additional periods, AstraZeneca told the patent authorities in various European countries that it did not receive approval to market Losec until1998.  The trouble is, AstraZeneca actually received approval in 1997, yet concealed this information from the patent authorities. 

The Court also found that AstraZeneca attempted to block generics from entering the market by changing the form in which Losec was sold from capsule to tablet.  Competing pharmaceutical companies are able to introduce generic versions of brand-name drugs into the market only if the original product is still for sale.  To keep generics off the trail, AstraZeneca asked various European countries to actually withdraw their approval of the capsule form in favor of the new tablet form that AstraZeneca had developed.  The Court found that this was yet another of AstraZeneca’s anticompetitive tactics aimed at creating a roadblock to a rival company introducing a generic version of their blockbuster drug.

In 2008, the European Commission began a probe into the name-brand versus generic rivalry, finding that drug companies routinely engage in anticompetitive practices to shield their name-brand drugs from competition by generics.  The Court’s upholding of the Commission’s ruling against AstraZeneca will provide the Commission with strong precedent to help stop pharmaceutical companies from engaging in such anticompetitive behavior.