The Secretary of State for Health & Anor v Servier Laboratories Ltd

Under EU law, absolute res judicata attaches to an annulling judgment’s operative part and the ratio inseparable from it. It does not ordinarily extend to every evidential finding made in reaching the legal conclusion. A national court must avoid findings incompatible with EU competition law, but may determine factual issues relevant to domestic questions such as causation, mitigation and remoteness. Abuse of process is distinct and requires a broad, merits-based assessment. Limited participation in earlier European proceedings does not, without more, prevent a party from adducing contrary evidence in later national proceedings.

Three groups of UK health authorities brought damages claims against Servier arising from alleged infringements of Articles 101 and 102 TFEU and corresponding provisions of the Competition Act 1998. The General Court annulled the Commission’s Article 102 finding because the Commission had not established that the relevant market was limited to perindopril.

Servier argued that factual findings in the General Court’s judgment were binding as res judicata, or that it was abusive for the claimants to contest them in relation to a prescribing-based defence concerning mitigation, causation, remoteness and contributory negligence.

1. The General Court’s operative decision annulled the Commission’s finding of an Article 102 infringement. The inseparable and necessary basis of that decision was the conclusion that the Commission had not established that the relevant finished-products market was confined to perindopril. That conclusion was binding with absolute effect under EU law.
2. The principle explained in P&O Ferries v Commission EU:C:2006:356 attaches to the operative part and its inseparable ratio. It concerns legal questions settled by the judgment, not every factual finding or subsidiary evidential conclusion. The maximum extension here was the immediately preceding conclusion that perindopril was exposed to significant non-tariff competitive pressure from other ACE inhibitors.
3. The claimants could not pursue an Article 102 or Chapter 2 claim inconsistent with the General Court’s conclusion. That did not prevent them contesting therapeutic equivalence, prescribing practice or switching evidence for the separate prescribing argument. Those matters concerned mitigation, causation, remoteness and contributory negligence under domestic law.
4. The principle in Iberian UK Ltd v BPB Industries plc [1996] 2 CMLR 601 did not apply. The English claimants’ limited participation before the Commission, and the absence of participation by the other claimants, did not make it improper or manifestly unfair to require Servier to litigate the factual issues.
5. Servier’s propositions (a)–(c), and a qualified version of (e), reflected findings in the General Court’s judgment. Propositions (d) and (h) did not. None of the propositions was res judicata for these proceedings, and it was not an abuse of process for the claimants to adduce contrary evidence and argument.

The General Court’s judgment was under appeal to the CJEU. The High Court declined to adjourn determination of these preliminary questions pending that appeal.