Competition and Markets Authority v Flynn Pharma Ltd & Anor [2022] UKSC 14 (25 May 2022).
Citation:Competition and Markets Authority v Flynn Pharma Ltd & Anor [2022] UKSC 14 (25 May 2022).
Subjects invoked: 'Procedure', 'Competition', 'Licensing',
Rule of thumb:If a Government Licensing/Competition body raises a complaint against a person or company, as behaviour on the surface appears by them to be a breach of the law, but once the legal action is finished and the full facts explained the complaint is not upheld as a valid one & has no reasonable prospect of success, can the person or company be paid their costs and expenses in their defence of this complaint? Yes. If a complaint is raised by a Government regulatory body against a person or company, and it is not upheld, the person or company is entitled to the costs and expenses they incurred in defending the complaint. Pfizer, Flynn Pharma and other pharmaceutical companies were entitled to their costs and expenses when The Competition and Markets Authority raised a complaint against them which they successfully defended.
Background facts:
This case invoked the subjects of procedure, licensing & competition. It invoked the principle of ‘loser pays’ for the costs and expenses of an action, and the principle of public regulatory bodies not being liable for pursuing what look on the surface like prima facie legitimate complaints due to chilling effect.
The material facts of this case were that the Competition and Markets Authority (CMA) issued a complaint against Flynn Pharma, Pfizer and other pharmaceutical companies for what the CMA believed at that time were legitimate competition law breaches by them. However, although these at first viewing of the facts appeared to the CMA to be clear competition law breaches, once the full facts of the case were explained by Flynn Pharma, Pfizer and others during the legal action, it quickly became clear that the complaint had no reasonable prospect of success and it should never have been raised in the first place.
Flynn Pharma, Pfizer and others sought their costs and expenses from the CMA, which they argued was standard procedure based on the ‘loser pays’ principle. However, the CMA argued that the principle of ‘Public Bodies not being liable for costs and expenses in pursuing what appear to be prima facie strong cases due to chilling effect’ applied instead, which meant that they were not liable for the expenses.
Judgment:
The Court upheld the arguments of the Flynn Pharma, Pfizer and others. The Court held that a body, private or public, raising a complaint in a legal action against someone which is successfully defended, owes this person the costs and expenses of defending it due to the loser pays principle. The Court held that there were no in-point statutory or regulatory provisions to support the CMA’s arguments about them not being liable for raising prima facie strong complaints such as these ones which only turn out to be innocent after further investigation, and so the default position applied.
Ratio-decidendi:
‘154. The analysis in the CAT’s Costs Ruling and the order it made disposing of the costs of the appeal brought by the appellants was… a proper exercise of its costs jurisdiction, arrived at after considering all relevant factors… 155. The CAT was entitled to apply the starting point it had established in the earlier Eden Brown decision… It has, to paraphrase the Chancellor’s words in that case, considered in detail the arguments on “chilling effect” advanced by both sides and adopted a consistent and sustainable approach, based not on fine distinctions between the routes by which cases reach the CAT, but on applicable legal principle, the specific industry position best understood by the CAT itself, and its own procedural rules. The CAT was entitled to conclude that the substantive legislative framework and the applicable procedural provisions relevant to assessing the starting point in Competition Act cases do not point towards a different answer’, Lady Rose
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.