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The Loser Still Pays – The Supreme Court’s Judgment On Costs In Phenytoin

 |  June 2, 2022

By: Stijn Huijts (The Thicket)

The UK Supreme Court issued an interesting judgment yesterday involving the question whether the CMA should cover a party’s litigation costs when that party successfully appeals the CMA’s decision under the Competition Act.

The judgment is related to the CMA’s decision to impose penalties on Pfizer and Flynn Pharma for hiking up the prices of phenytoin sodium capsules, an epilepsy drug. This was a high-profile decision that sought to set a standard for determining when prices charged for drugs that had gone off-patent were excessive and unfair, and therefore in breach of the Chapter II prohibition (i.e., the UK prohibition on the abuse of a dominant position).

The CAT’s costs ruling

The CMA’s decision against Pfizer and Flynn was overturned on appeal by the Competition Appeal Tribunal (CAT) (and parts of the CAT’s judgment were, in turn, successfully appealed by the CMA in the Court of Appeal). The CAT issued a cost order at the end of the appeal, ordering the CMA to pay part of Pfizer and Flynn’s litigation costs.

The basis for the CAT’s order is currently rule 104 of the CAT’s Rules, which holds that the CAT may at its discretion make “any order it thinks fit in relation to the payment of costs”. The Rules add that in doing so, the CAT may take account of a number of factors, including whether a party has succeeded on part of its case and whether costs were proportionately and reasonably incurred and were proportionate and reasonable in amount. There is however no presumption that “the loser pays”…