The Supreme Court today said the UK’s Competition and Markets Authority (CMA) could be forced to cover Pfizer and Flynn Pharma’s legal costs, following the collapse of its case into the two pharmaceutical firms.
The landmark ruling could see UK regulators made liable to pay the costs of those subject to failed investigations, after the CMA argued such a decision would have a “chilling effect” on enforcement activity.
In arguing its case, the CMA said forcing regulators to pay costs could see watchdogs take a more cautious approach to enforcement, due to fears of having to pay out costs, even in cases where they have acted reasonably.
The ruling comes after the CMA first brought its case against Pfizer and Flynn over claims the firms had inflated the price of a widely used epilepsy drug, by rigging the market.
At the time, the court said the CMA should not be forced to pay the two firms’ legal costs. Instead, the Court of Appeal said the assumption should be that regulators should not be liable to pay costs, when acting purely in their regulatory capacities.
However, the Supreme Court’s new ruling overturns the previous decision in stating watchdogs should not be shielded from paying legal costs to those at the centre of failed investigations.
A CMA spokesperson noted that the Supreme Court judgement simply “restores the position on payment of costs back to what it was in 2019,” prior to the Court of Appeals’ earlier decision.
Competitions lawyer Becket McGrath, a partner at boutique firm Euclid, said the Supreme Court ruling ensures companies made subject to failed investigations are not “scared off,” by the cost of litigation fees, from appealing decisions.
A Pfizer spokesperson said the firm is “pleased” about the Supreme Court ruling.