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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> AAH Pharmaceuticals Ltd & Ors v Pfizer Ltd & Anor  EWHC 565 (Ch) (05 March 2007)
Cite as:  EWHC 565 (Ch)
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Royal Courts of Justice
London WC2A 2LL
B e f o r e :
|(1) AAH PHARMACEUTICALS LIMITED|
|(2) PHOENIX HEALTHCARE DISTRIBUTION LIMITED|
|(3) MAWDSLEY BROOKS AND COMPANY LIMITED|
|(4) MUNRO WHOLESALE MEDICAL SUPPLIES LIMITED|
|(5) F MALTBY AND SONS LIMITED|
|(6) NORCHEM LIMITED|
|(7) P.I.F MEDICAL SUPPLIES LIMITED|
|(8) SANGERS (MAIDSTONE) LIMITED||Claimant|
|(1) PFIZER LIMITED|
|(2) UNICHEM LIMITED||Defendant|
Wordwave International Ltd, A Merrill Communications Company
190 Fleet Street London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
Mr C QUIGLEY QC and Mr B Rayment appeared on behalf of the First Defendant.
Mr N GREEN QC and Mr A Robertson appeared on behalf of the Second Defendant.
Crown Copyright ©
"Under the agreement Pfizer retains a complete control of the service to be provided by UniChem. A series of electronic and manual interfaces between UniChem and Pfizer are used to show that UniChem is performing its obligations under the agreement. Pfizer also has a right to audit UniChem's performance of the services."
"Pfizer wanted to ensure that UniChem maintains high standards in storing and delivering the Pfizer products. As a result the agreement requires UniChem to provide the services to a very high standard. UniChem is required to store Pfizer products according to Pfizer's requirements, which include requirements as to location, security, quality and health and safety."
"(a) The termination of existing supply arrangements with the claimants will deprive them of an essential attribute of a full-line wholesaler since they will no longer be able to stock and supply the products of a major pharmaceutical manufacturer that accounts for 10 per cent of all Ethicals in the UK.
"(b) Pfizer's agreement to supply only through UniChem distorts competition between UniChem and the claimants since UniChem will thereby become the only full-line wholesaler able, 1, to take orders for the full range of Ethicals and, 2, to deliver all those products in the same delivery to pharmacies and dispensing doctors.
"(c) As regards Pfizer's products, Pfizer will thereby be reserving the downstream market of supply to pharmacies and dispensing doctors to itself, excluding all competition in the supply of those products.
"(d) It will cause serious and irreparable damage to the claimants in that they will be placed at a considerable disadvantage in competing with UniChem for the custom of pharmacies and dispensing doctors, such that independent pharmacies and independent doctors in particular are likely to switch to UniChem for all their supplies. There is a considerable risk that such switching will take place prior to the OFT eventually taking a decision on the substantive issues, which on past precedent is likely to take at least a year."
"(2). The first case is where there are reasonable grounds for suspecting that there is an agreement which (a) may affect trade within the United Kingdom and (b) has as its object or effect the prevention, restriction or distortion of competition within the United Kingdom.
"(3). The second case is where there are reasonable grounds for suspecting that there is an agreement which (a) may affect trade between member states and (b) has as its object or effect the prevention, restriction or distortion of competition within the community;
"(4). The third case is where there are reasonable grounds for suspecting that the chapter 2 prohibition has been infringed;
"(5). The fourth case is where there are reasonable grounds for suspecting that the prohibition in Article 82 has been infringed."
"(2). If the OFT considers that it is necessary for it to act under this section as a matter of urgency for the purpose (a) of preventing serious irreparable damage to a particular person or category of person or (b) of protecting the public interest, it may give such directions as it considers appropriate for that purpose.
"(3). Before giving a direction under this section, the OFT must (a) give written notice to the person or persons to whom it proposes to give the direction, and (b) give that person or each of them an opportunity to make representations."
"OFT still had concerns about supply chain, concern about lack of immediate harm, message of immediate harm not coming through, maybe if another supplier takes similar action."
"Could not give me a date for decision on interim measures but unlikely for 5th March."
"We appreciate the complexity of the issues the OFT faces, and recognise that the OFT may wish to seek, for example, expert economic analysis in respect of the structural changes to the market that will be caused by Pfizer's new distribution arrangements."
"You said that the decision was likely to be negative on interim measures on the basis that there was insufficient evidence of serious harm to the supply chain, but you said that the OFT had not made a decision on the section 25 thresholds but would do so later."
"The OFT was intending to write a letter to us within the next few days and that it was proposing to reject the application for interim measures on the grounds that there was insufficient evidence of any serious harm to the supply chain. You said that this did not mean that the OFT had decided not to pursue the case. A decision upon whether the section 25 thresholds had been satisfied was yet to be made. That would probably not be made until after 5th March 2007."
"2. You said that in fact you were about to ring me to let me know that a decision on IM [interim measures] was now unlikely to be taken before 5th March 2007. You said that the OFT had been distracted from its main task of deciding whether the section 25 thresholds had been met to trigger a formal investigation. You said that you could not decide on IM until a decision had been made on the section 25 point. The OFT had finite resources. It would not make the section 25 decision until after 5th March and the IM issue would have to be considered after that. You said that we would receive a letter confirming this by the middle of next week. The present situation was that our application for IM was not formally rejected.
"3. I asked whether this problem had arisen because of the new material we had sent during this week. You said no. You said that the OFT would welcome further material if we wished to provide it."
"I would concur with this passage as providing detailed guidance to the approach of the court when considering an application to grant a mandatory interlocutory injunction. A more concise summary, which I would commend as being all the citation that should in future be necessary, is the following passage in the judgment of Chadwick J in Nottingham Building Society v Eurodynamic Systems  FSR 468 at 474."
"In my view the principles to be applied are these. First, this being an interlocutory matter, the overriding consideration is which course is likely to involve the least risk of injustice if it turns out to be wrong in the sense described by Hoffmann J...
"Secondly, in considering whether to grant a mandatory injunction, the court must keep in mind that an order which requires a party to take some positive step at an interlocutory stage may well carry a greater risk of injustice if it turns out to have been wrongly made than an order which merely prohibits action, thereby preserving the status quo.
"Thirdly, it is legitimate, where a mandatory injunction is sought, to consider whether the court does feel a high degree of assurance that the plaintiff will be able to establish this right at a trial. That is because the greater the degree of assurance the plaintiff will ultimately establish his right, the less will be the risk of injustice if the injunction is granted.
"But, finally, even where the court is unable to feel any high degree of assurance that the plaintiff will establish his right, there may still be circumstances in which it is appropriate to grant a mandatory injunction at an interlocutory stage. Those circumstances will exist where the risk of injustice if this injunction is refused sufficiently outweigh the risk of injustice if it is granted."
"I do not consider that there is or can be any general principle to the effect that an injunction cannot be granted in cases such as these. If there were, it would seem to me to represent a deficiency in the law. Had I been satisfied that Sockel has an arguable case for relief under Article 82 which deserves to go to trial I think it probable that in all the circumstances of this case I would in principle have been prepared to grant an interim injunction, since I consider that, overall, the grant of such an injunction would be less likely to result in an injustice than would its refusal. I add, however, that I would also have given directions with a view to the trial being expedited and coming on at the earliest possible date."
"The analysis of the competition implications of Pfizer's actions are not straightforward, and we do not yet have a firm view on whether this is something we can or should pursue under the Act."
"You suggest that as a result of UniChem being Pfizer's sole LSP, purchasers may switch to UniChem for all of their Ethical pharmaceutical requirements and that such switching would have a devastating impact on the turnover and margins of other full-line wholesalers and could render supply to certain locations unviable. Were the Pfizer/UniChem agreement of itself capable of inducing a significant switch in pharmacies' purchases of non-Pfizer Ethical pharmaceuticals, the OFT accepts that it may be capable of causing significant and irreparable harm in this sector. However, discussions with major Ethical pharmaceutical retailers have indicated that such switching is certainly not an anticipated consequence of the agreement in the short-term. We have not received any evidence that the customers of BAPW members intend to switch purchase of non-Pfizer products to UniChem following implementation of the DTP scheme."
"I would also add that an interim injunction at this late stage would be extremely damaging to the reputation of Pfizer, the largest pharmaceutical manufacturer and research and development investor in the world, which has taken a lead in setting up a distribution scheme that it believes will better serve the interests of patient safety and product security. There would almost certainly be further unknown consequences which cannot be quantified at this time."