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Pharmaceutical companies granted permission to appeal ruling that regulators should not pay costs of a successful appeal against a decision

Posted on 26 February 2021

The Supreme Court has granted permission to Flynn Pharma and Pfizer to appeal the Court of Appeal ruling that required them to pay for the costs of their successful appeal against the Competition and Markets Authority's ("CMA") 2016 decision, which found that Pfizer and Flynn Pharma had abused their respective dominant positions by imposing unfair prices for phenytoin sodium capsules manufactured by Pfizer. We discussed the Court of Appeal judgment here.

The Court of Appeal ruling itself overturned a decision of the Competition Appeal Tribunal, which held that the starting point when exercising its discretion as regards costs is that the unsuccessful party should pay the successful party’s costs. The Court of Appeal ruled that there is a public interest in encouraging public bodies such as the CMA to take reasonable decisions without fear of financial consequences should their decisions be successfully challenged. It therefore held that the starting point should be that no order for costs be made against a regulator acting purely in its regulatory capacity unless there is good reason to do so. Good reasons were said to include a regulator acting unreasonably or where the successful party is likely to suffer substantial hardship should a costs order not be made. Whether this is in fact the correct starting point will itself now be challenged before the Supreme Court.

The Supreme Court judgment will have significant implications for businesses subject to regulatory investigations and the potential cost consequences of seeking to appeal any findings against them. We will continue to monitor the case and provide updates.

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