In competition law, abuse of dominance requires demonstrating that a dominant undertaking has the ability to act independently on the market and impose unfair prices. The key legal test involves assessing whether prices are excessive by comparing them to costs plus a reasonable return, while considering legitimate competitive justifications such as product differentiation, portfolio pricing, and the absence of effective competitive pressure. The Competition Appeal Tribunal emphasized that dominance must be assessed on a phased basis, and that the presence of market entry and price convergence can indicate that dominance has ceased, even if prices remain above cost levels. The burden of proof regarding the basis of pricing lies with the regulatory authority, not the accused undertaking.
(1) Auden McKenzie Ltd & anr (Appellants) v The Competition and Markets Authority (Respondent)
Added:My lord Lord Justice Sakarelli asked about the origin of the actaris project Apple documents. Uh just for your logic reference the evidence that is that was before the tribunal and that comes in Mr. Stuart's statement which is in the uh reference supplemental bundle tab 1 page 12 and the re paragraphs are paragraphs 4.1 and 4.5 and six that's the evidence that is available on there are two more passages in the uh tribunal's judgment that I just wish to deal with hopefully very briefly the first which we were partway through dealing with is from 340 onwards the passage which we say contains some of the most egregious examples of the tiding or reversing the vertical proof. And I just wanted to highlight why we say that we look at 341 on page 461 of the bundle.
We can see the cardinal saying third line down where price exceeds costs for no prompetitive reason that can be discerned. In the question where the excess of price over cost is itself and abuse doesn't arise whilst normal market efficiency would explain some excess where one has a level of price substantially exceeding cost or in this case the cost plus value as calculated by CMA then absent an articulated and prompetitive explanation any excess will be abusive and we say that is a classic example of a presumption of abuse on the basis of cost plus absent justification.
We see a similar point.
>> Can I just ask you what does the tribunal mean by prompetitive? I raised this beforehand. I mean, it's it's a slightly odd phrase to use as opposed to just justification.
>> Justified.
>> In my submission, what it actually means is it's case two. And the reason I say that is if we look for example at 3421 at the end of the paragraph in our judgment. Therefore, if the case is a case, >> sorry, this is where you >> I'm sorry, I'm reading from 341 sub paragraph 1.
>> 342 paragraph.
>> I'm sorry. I'm so sorry. I've been given the wrong number. 342 sub paragraph one.
>> Yes.
>> And it says in the end in our judgment if the case is a case three case and not a case two case these prices are abusive because they cannot be justified by case one and no competitive reason for the excess producer surplus can otherwise be articulated.
And then if we look at 434 the footnote which of course is the difference between case three brackets where no justification for the producer surplus arises and case two where producer surplus in excess of case one is capable of being justified.
>> So if we go all the way back to case two um for definition for an understanding of what's meant by pro competitive >> well what's what's meant by what the tribunal considers to be legitimate.
Yes.
>> Yes.
>> So those are the two matters referred to in >> 3221 >> 322 >> 322 >> two is case two. Yeah.
>> So these so pro competitive means the matters identified here.
Uh, it's in in sub paragraph one they refer to product differentiation is anything any definable aspect of a offering that adds value to the buyer.
Uh, let me it maybe it's not worth the search to try and identify what is meant by pro competitive by reference to case two doesn't necessarily identify very readily what it is you're looking for >> you identify as a very narrow category product differentiation although that's the classic what it says is that the classic example is product product differentiation what it doesn't do in our submission very clearly is enable the sort of inquiry that this court directives which is any other factors that go to the fairness >> but also you could legitimately say if you're trying to sort of understand what's going on here that because he says um he talks about not being able to be justified by case one. So case one is relative interesting among sellers and that's so that that's a justified reason.
>> Yes.
>> So when they when he uses the words when they use the words prompetitive explanation they can't just mean justified because it'd have to include case one.
>> I think he means either case one or case two. Those are the two scenarios in which the tribunal >> Yeah. I follow >> considered it to be legitimate.
>> Yeah.
>> But your real point is that it's too narrower.
>> It's too narrow. It's too theoretical.
It bears no resemblance to the actual test set out by this court.
>> Yes. The only other example given is the face masks >> example beyond differentiation.
>> Plus the the one point that we say is correct which is that one the ability to supply a product that others cannot is a source of value. We do rely on that because we say that's the situation that we were able to supply.
>> Yeah.
>> Full label products.
But it may assist to look at 3422 as well where and again we say this is really quite striking. It's significant that none of the appellants advanced any explanation for the excess that was consistent with a competitive market or which justified a producer surplus through the maximization of economic value through product differentiation. So there again we have all that reference to uh the terminology case one case two case three. We of course do not agree that that is a correct characterization of our position at all.
>> Is the reference to consistent with the competitive market an indirect reference to comparables?
>> Uh no I'm going to show the court what it says in relation to comparables but it's not dealt with in this section.
It's dealt with in a in a very much as an article in a different section.
What it's saying here is we find that telling and then this which again is is important. This is a case where there was as we have found dominance on the part of all holders of the merkshar mas.
There was therefore an absence of competition that provided a platform for the generation of producer surface without any added value to the buyers.
Now what that is doing in my submission is essentially assuming simply assuming that this is pricing which is attributable to the dominant position.
That is the assumption that's being made. Then of course all excessive prices would involve dominance. All excessive pricing cases would involve dominance.
>> Well, it's providing a platform for it.
That's it's not quite saying it's not quite saying it equates to that.
>> In my submission, what it's saying is that the reason these are unjustifiable prices is because they relate to essentially pricing in a situation of dominance.
Yeah, >> we can see similarly sub paragraph 4 at the end. Sub paragraph 4 is dealing with what the court earlier described as the foothills of the matter. And what it says at the end of this paragraph the difference between the two cases that in case two the producer surplus is justifiable and in case three it's not.
The situation before us whatever phase is under consideration falls within case three. So this is essentially producer surplus in the circumstances of dominance and it follows that even if prices are falling provided they sit above cost or cost plus in this case they infringe the chapter 2 prohibition in our submission that is simply the wrong test. What the tribunal should have done is conduct a proper actual inquiry into the factors that users and consumers in this market in fact value and what they will reasonably pay for.
and the court has my submissions as to the demand side factors we say ought to have been taken into account in that exercise.
>> Can I helpfully just enumerate them for me? Um so what is it that was excluded from the cat's consideration by its wrongful tax? So >> first of all the intrinsic value of this life-saving medication as a product notwithstanding that it's old and off patent it still has intrinsic value.
Secondly, the fact that as canvas before the short adjournment, this is a product which would not have been on the market at all had it not been for ordinaris.
And we say in relation to that that the relevant counterfactual is not simply the same product available at a lower price. It's that this product wouldn't have been available at all. Your lordship was asking me in that context, well, can't one just assume that uh somebody else might have bought it. The dynamic here is that the party that has the power to make inquiry as to whether had Orin not bought it, somebody else would is the CMA. It has the power to ask those questions. We saw the document we actually looked at was the CMA section 26 question to Mercen.
had it wished to say actually somebody else clearly would have would have been the the beneficiary of this MA had ordin not bought it. That is something that it should have used its powers to investigate. We as the partner facing this uh allegation only have what the CMA chose to ask to develop an MA.
The next source of demand side value is the fact that Actarvis's MA was full label rather than skinny label.
>> Sorry, the it was the MA was >> full label rather than skinny lab >> for full label. Yes.
>> And the tribunal has found as a fact that that was a that was a relevant source of value for at least some prescribers. And that's paragraph 243 sub paragraph 8 sub paragraph Roman five sub paragraph C that I showed the court earlier.
And finally, we make the point that like most pharmaceutical companies, ordin acts approached its pricing during the material period on a portfolio basis.
And we say that that means that excessive profits made in respect of one drug may not be unfair when reviewed when viewed in context.
That's something the tribunal did deal with at 352 to 353. And it said portfolio pricing can't automatically justify a higher price. To be clear, we are not suggesting that portfolio pricing automatically justifies a higher price. We say that that factor together with the others that we've identified mean it is particularly important that both the CMA and the tribunal gave proper consideration to potential comparators in order fairly to assess the pricing which is being criticized and we say unfortunately neither the CMA nor the tribunal actually did so that >> what's wrong with 352 353 they it seems to be a conclusion on the facts that no evidence have been put forward to demonstrate that there was portfolio pricing and as you know we've had this in a number of other cases um I think it's probably started in now it goes back a long way but it's a question of fact we certainly haven't brought out portfolio pricing it's an important consideration but the question is was it on the facts and they say had a detailed justification of a price based on portfolio pricing been advanced we would have considered it but no such justification was advanced. Yes. The difficulty we have with this is that it's characterizing our submission as being that portfolio pricing automatically justifies a higher price which is not the submission we were making. The submission is because of portfolio pricing as one element of the context in in conjunction with the others that we've highlighted. It becomes particularly important to look at comparators and that's where we say the failing takes place because they just didn't.
And perhaps I could show the the court very quickly what was said on on comparators to locate it within the judgment. We look at page 462 in the uh bundle >> postcript on excessive or abusive prices. Well, it's after that there is a heading postcript excessive or abusive prices case 2 which is sub heading C over the page there is then D other points that require determination >> and then under 346 the starting observation is although they don't affect the conclusion we've expressed a number of other points are raised before us in these appeals with which we need to dispose so in our submission that's really not a very auspicious start in terms of according appropriate consideration to comparators.
We then have uh 348 and this is essentially where comparables are dismissed in a single paragraph.
It mentions a number of products notably plenag which sold at prices far higher than the focal products in this case. So that that there is a finding that there were at least higher prices in that context.
We don't consider such comparables to be of assistance in the present case for the reasons we've given at length in this judgment. Prices of medicinal products in the market were not competitive prices but were distorted for reasons that we have given. Nothing can be learned from them. And that is the end of the treatment of comparables.
Now in our submission that is fundamentally problematic for a number of reasons. First of all, the tribunal in itself in its own reasoning on market definition highlighted the oddity of excluding Penadrin from the market and it emphasized that it contains the same active ingredient is indicated the treatment of the same condition and it found that the CMA's decision contains no good basis to conclude it was distinguishable on clinical grounds.
It has found that it is a substitute for Warden Actav's hydrocortisone tablets and we say that makes it a very obvious comparator.
Now despite the fact that it took a different view from the CMA on market definition, it still says that nothing can be learned from Plenadrin because the prices in the market were not competitive prices.
We say that is misconceived for two reasons.
The first is again a finding the tribunal itself made at 211 doctors were inhibited from prescribing plenadin on grounds of price or cost because it was too expensive. So we say on the tribunal's own findings, the very reason was prescribed so infrequently was because Actarvis's same active ingredient product was cheaper. And that is self-evidently an absolutely fundamental consideration to take into account in trying to assess whether or not that same active ingredient product is or is not fairly priced. We say it makes no sense whatsoever simply to push aside and exclude a comparator that is that close particularly on the grounds that it is too expensive.
>> Could they not both be unfairly?
>> Well, that is the inquiry that we say ought to have been >> in the sense that your product is unfairly priced but plunder is unfairly price squared which is why doctors don't prescribe it. Well, my lord, I've shown the court the tribunals's findings that as far as it's concerned, it is not suggesting that there was any infringement in relation to pledge. It it it was at pains to say there was no unfair pricing. It said in it was making no finding of infringement, which of course jurisdictionally it couldn't do.
>> Yes.
>> I mean, there was a there was a lurking undertone >> to that statement. We can't find an infringement and we're not saying but we are saying it was not competitively priced.
>> Well, in so far as that's sought to be relied upon against me in my submission that would need quite substantially more reasoning than a lurking undertone to be a fairly not making a finding but it doesn't prevent us from saying that the price was super competitive.
>> They say it wasn't a competitive price is is what they say.
>> Yeah. Now, we say it is dangerous to be excluding pricing comparators, particularly ones that have been found to be within the relevant market and they substitute on the basis that they're not the products of a competitive market because by definition in cases of excessive pricing, products that are within the market, there will be a finding of dominance. And so you are in one fell swoop excluding those comparators that will be closest to the product that is alleged to be unfairly priced.
And that means that the undertaking that's accused of excessive pricing is deprived of the ability to rely on those most obvious comparators. And we say that can't be right as a matter of law.
And that in my submission is the point that was then being made in paragraph 249 of the court's recent judgment in Flynn Farmer 2. Because what we get from that is one doesn't just say it's not competitive. That's the end of the inquiry. To the extent that there is a concern to that effect, that needs to be uh bottomed out. One doesn't just disregard it as completely uninformative.
to make a similar point about um the exchange with the court about whose burden it is to do that exercise.
That inquiry is about the basis of pricing of a different product by its MA holder Shia Pharmaceuticals.
We as the party that's being accused of excessive pricing don't have the power to obtain information about the pricing basis of Shia Pharmaceuticals pricing.
The party that does have the power party that should have done this inquiry had they wish to exclude this comparator is the CMA.
The other pricing comparator as the court's aware that we advanced was hydrocortis.
I've shown the court the uh evidence we rely on to indicate that it was considered as a comparator both by ordinarvis and by other market participants.
The tribunal has not addressed hydrocorab at all. It's recorded our submission in respect of it but has not addressed it in substance at all. And in our submission that is a fundamental failure properly to consider the case advanced by Actarvis and it's a serious procedural and indeed substantive irregularity.
>> Um could you just give us the reference to where they refer to your argument >> on hydro stats? It was at the beginning of the section um 303 one.
So 30 303 I think is the in the section where they're summarizing the opponent's grounds of appeal and sub paragraph one within that they record the CMA the contention on behalf of the appent CMA failed to take into account price of comparable products brackets notably hydrocortical staby Mhm.
>> My lord's unconscious of the time. Those are our submissions on the uh on issue two.
Thank you very much indeed.
Mr. I'm grateful. Now I appear uh with Miss John for INTAS which acquired what's now known as Accord UK on the 9th of January 2017.
Now if the court accepts my learned friend's submissions on her ground one which I adopt and don't repeat then it follows that that uh has significance also in respect of the IMTAS period from the 9th of January 2017 ending on the 31st of July 2018.
But but my submissions uh proceed on the basis as they must therefore that there was an abuse of dominance by accord UK at least at some point before the INTA period began not because that's accepted or conceded but because otherwise there'd be very little value in my making any submissions to you at all. So before the tribunal as before the CMA Intas's position was first that by the 9th of January 2017 accord UK could not be said to be dominant any longer even if it had been dominant at an earlier stage. There's no longer any dispute before this. Even if the undertaking had been done that >> Yes.
>> Yes.
>> Given the level of market entry which had occurred by then and continued to occur and the fact that those competitors were inexurably putting downward pressure on Accord's prices as it fought to retain market share in the face of competition.
Secondly, that during the intas period, accord couldn't in any event be said to have abused its position if there was any dominance in that it only ever decreased prices in response to market pressure and at the same time provided substantial economic value to its customers which was reflected in those prices which were not unfair.
And thirdly, if notwithstanding at those first two points, there was an abuse of dominance, it was not an intentional one. And the nature of a chord's conduct was substantially mitigated by the fact that it never increased prices for hydrocortisone tablets. It only ever decreased them in response to competitive pressure and did so on the basis that it was rapidly losing market share and facing real competition with the result that the penalty imposed uh failed to have regard to the circumstances in the INTAS period in particular all reflect the mitigating circumstances and was in any event disproportionate.
So my submissions to my lords will essentially follow that three tier structure in that order beginning with the dominance issues which in fact is issue four on the list of issues. I'll start with that as does our skeleton argument. Let me start with some points on uh the facts many of which will be by now familiar to my lords which I'll point up in the decision. Uh so core bundle page 657 that's the CMA decision at paragraph 1.4 that's volume three isn't it?
>> It's volume three. It's on the screen as well very helpfully.
>> Oh yes.
>> Um >> I'm oldfashioned enough to mark up my hard bundles. So I still reach for them.
>> Page 657. It's page 657 paragraph 1.4.
This is the summary introduction section. It's a in effect introduction and summary of the decision. Right at the top at 1.4 we can see the decision and I point out first of all under a uh the uh infringement obviously stretched from the 1st of October 2008 to 31st of July 2018. So almost a 10-year period. The INTAS period concerned the tail end of that excessive pricing abuse as alleged by the CMA uh and restricted to that last 18 months of that period and that was the only infringement found in respect of the INTAS period. B was the 20 meg unfair pricing abuse which you can see terminated on the 8th of January 2017.
That's the beginning of the INTAS period. So it's accepted to have ended following Intas's acquisition and C and D respectively 20meg and 10meg concern the unlawful agreements which had finished some years earlier in 2015 and 2016 respectively and of course Intas had had nothing to do uh with that. So the focus of the INTAS case was that in respect of the excessive pricing abuse for 10meg uh the chord had ceased to be dominant uh and couldn't be said to have engaged any abusive uh uh uh conduct for the vast bulk of the period identified by the CMA that's the 10-year period uh accord had had a monopoly in the supply of hydrocortisone tablets that had ceased in October 2015.
I could take you conveniently to the judgment at paragraph 143. That's at page 355 of the core bundle.
There's a helpful table. Thank you. uh there which conveniently summarizes the timeline for entry from skinny labels.
Uh it doesn't there list accord obviously which is the full label competitor competing with these as they entered. Uh but you have the date the skinny label market authorization was granted and then the date of commencement of supply from October 2015.
So by the time of the beginning of the INTAS period, there were already four skinny competitors in the market and a fifth at Teor who came in a month the following month February having gained their marketing authorization a few months earlier. It was Teor of course uh who uh sold uh uh uh the business to Intas. If we go to 126 of the judgment paragraph 126, that's page 351.
126 to 128 just conveniently summarizes the Teor acquisition and then sale uh to uh Intas uh underneath from one to nine and the reason it was sold obviously because it was because of a merger so there was a pro competitive reason for the UK business uh uh uh to be um spun off and it was that circumstance of 129 9 that Intas acquired that business from Teor. But as it was negotiating that sale, as it well knew, Tever was busy acquiring its own uh marketing authorization for its skinny version of the very drug it was selling as part of the business to uh uh Intas.
And so we knew well knew therefore that there'd be another sixth competitor in the market immediately after sale as indeed happened. And within the INTAS period uh going back uh uh to the table page 143 there were two uh further entrance making seven and then eight competitors within the intas period and the ninth Renata was granted a marketing authorization in the event uh actually entered later after the INTAS period in February 2019. that that threat of entry uh was ever present and it was common ground that there were no uh effective barriers uh to entry.
Note that the CMA expressly rejected a submission by AMCO that the orphan designation acted as a barrier to entry for supplying hydrocortisone that appears in a number of places in the CMA's decision including most conveniently set out at footnote 1246 which appears on page 86.
No, it doesn't.
Which appears Hold on. 1246, which appears at page um uh uh 96.
Uh 986.
Go to the page.
where you have the AMCO submission recorded and then the final sentence of that paragraph given the substitution between full and skinny with 50% switching to skinny label tablets. The orphan designation did not act as a barrier to entry for supplying hydrocortisone tablets. There's a number of other references throughout the decision which I need to take you to. They're all set out in footnote six of our skeleton argument.
Further uh it was uh found that these skinny products form part of the same relevant market. You've seen that and it's at paragraph 256 of the judgment at page 417 sub paragraph 4 a paragraph you've already uh seen. This was applying its uh hypothetical consumer test to arrive at this uh conclusion.
Advance sought to appeal against that conclusion and we know uh that was dismissed as being hopeless in the words of the master of the roles. That's the peel bundle five at tab 57 page 1746 paragraphs 113 >> I think I think the um >> sorry authorities bundle >> authorities bundle you said appeal bundle >> authorities >> I apologize in that case I meant to say authorities bundle thank you >> this is from our judgment.
>> It it is my lord. Yes.
>> In the um by the court too.
>> Well well it is it's court composed of my lord and justice green with the master of the roles who gave the judgment which both other members of the court agreed.
>> So which >> and page 1746.
>> Yeah.
and paragraph 113 onwards through to 115. That's it. Thank you.
And um is that point B at 113 >> and then 114 is the meat of it. uh four lines down identifying that in the hydrocortisone 2 judgment, the one under appeal in this case, tried beyond sil that the two products were substitutes as had been decided in hydrocortone one. It's our judgment now as was supported by the evidence set out in hydrocortisone 2. And then the third point at the foot of the paragraph just below G as H2 found there was a downward competitive effect on prices when the skinny label product did actually enter the market. Continue to scroll down.
Par 11535 hydroquortisone 2. The tribunal said over time because skinny label was priced at below full label and because multiple entrance competed against each other an inevitable downward pressure on both skinny label and full label prices manifested uh it itself. So the market definition point along with the other was judged to be to be hopeless.
>> The facts are not are fairly clear on there. was there was multiple new entry prices were coming down it took a period of time but not an excessive period of time the question is did the cat analyze that sufficiently separately or discreetly in order to come to a conclusion which was relevant to your plan >> that's the point I'm going towards but that is very much >> in some respects it depends on whether the cat properly grappled with what you say is is a quite discreet set of facts >> yes >> it's the other end of the matter It is the other end. We're downhill skiing at this point.
>> Man on the clap and one of us is going we very fast.
>> Exactly. Exactly. So, and um we say it what comes out of what you see there is is the word inevitable. It's elsewhere described as uh inexraable. It was described by the CMA as a very significant price drop along with the loss of 50% of volumes. That's uh their defense paragraph 207. I won't turn it up. If you'll note, it's in the reference supplementary bundle at page 547.
What would be helpful I think to turn up is can I just ask you a sort of conceptual question?
>> Yeah.
>> Um in very very simplistic terms the definition of dominance is the ability to act independently on the market.
>> You say that during that period there's no evidence.
You can have a situation where which we had in sin prior dominance with a lingering effect.
>> Yeah. So this period could either be no it could be no dominance but lingering effects of prior dominance and then it's a question of whether or not you know we are actually seeing what is genuinely competitive market pricing during the m slide off the matter horn doesn't automatically follow that if you establish there's no dominance that there might not be abuse connected to what went before >> there might not there might be effects of the abuse which went before >> causally >> that that causally yes there might be um but not as a function as current current dominance as a function or continuing abuse abuse of dominance >> past dominance distorting the market >> past dominance past >> which for the purpose of my submissions I assume that there was at least at some stage >> and our case our case was by the time of the intas period that dominance andor abuse had ceased and that doesn't mean you know there weren't any effects continuing yeah >> we said to the contrary there there was clearly an effect in that the competitive pressure brought by the new market entrance was taking a while to unwind competition being a process not an outcome and to take pick up my lord Lord Justice Zacharielli's point earlier yes by the time it did get to the foot of the matter horn the structure of the market was still exactly the same as it had been by the time of the beginning of the intas period in fact there was some market exit along along the way as prices as prices dropped. This perhaps is again is part of the function of competition not unexpected. It was an unwinding and the the question for Intas coming in at this stage is well what can we expect of this process? Where is it going uh to land? Is it uh acceptable uh to let that process unwind and see what the competitive price level ends up uh being where the where the where the foot of the mountain actually is uh the extent to which that value there is uh uh value over and above cost costs plus and so forth. um by the time you've got a market at the end which the CMA accepted and indeed submitted was competitive by the time you got to the end the bottom of the of the slope. So in those circumstances given that there's no variation in the structure of the market and there is this process going on our case was well look our submission was first of all when with dominant principally because this is all inexraable we're losing market share yes we have a differentiated product so we can charge a premium over the uh skinny label but we're still being dragged down by those sk that skinny label uh competition and uh that is uh contraindicative of uh dominance And it's contraind indicative of of abuse. We're entitled to let that unwind um in response to to competition.
>> This question you say you're entitled to let it unwind.
>> Yeah.
>> If you are dominant exhypothesize >> and the price is unfair at you know 100 90 70 >> and to hit the competitive level you need to hit 20 25. Yeah, >> it's still abusive until you hit 25 or be it unwinding. Maybe very relevant to penalties.
>> It may even be that you're not dominant at that point. But you've acquired an organization that was dominant and it is the effect the abuse is still continuing.
>> So you inherit that.
>> Yeah. Because if if you start off during the dawn with a price of 120 >> when it should be 20 >> and at the time when you inherit the business when you take over the business that the price is at 100 but it should be should should be at 20 still then there there's still abuse the effects are still there are they not as my law says it may have an impact on on what penalties >> well I take this in in stages if I Okay, f first point you say dominance have been lost and if if that is right then there can't be abuse of dominance from that point on even if effects of previous >> but you've acquired an entity which was dominant and this is the lingering effect of that dominance >> into your period when you are perhaps no longer dominant that was exactly what we had in syndrome when the dominance might have finished and no one quite knew what the competitive level was the price was coming down and the the cat and the CMA found that it hadn't got to competitive levels where it should have done. So there was still abuse.
>> So So you could be no longer dominant.
You acquire a company that was dominant, >> but it shot a bullet and the bullet is still traveling during your period and and going through glass and window and causing injury. It's still continuing even though the act of abuse or the act of dominance is just a continuing effect of prior dominance.
>> Yeah. Yeah. So the point the point you're putting to me is that could still be >> an abuse of the prior dominance even if dominance doesn't continue for the undertaking as a whole remains >> remain remains liable. That that point I follow >> but we say not only had dominance been lost but also the abuse >> was not continuing. So that's our second string.
>> That's a question of fact.
>> Point is a question of fact provided you know >> what's directed according to the law.
But the point we make about that when I said the word entitled to wait >> you can't assume that the undertaking at that point has knowledge of what the market outcome following a competitive market process is going to be with with hindsight's point >> intention and penalties rather than anything else is the state of mind the men's ray of the company relevant >> well all of these matters I say yes I mean but all of these matters at least go to penalty that is certainly right and we say there was a wholesale failure to recognize that either by CMA or by the tribunal at any point. But equally, it is not abusive, we say, to let competition work once competition is established and the market structure has has changed to allow that process to find what the competitive pricing level is rather than to know it in advance and impose it by reason.
>> That's quite a discreet point.
>> That is a discreet point. Yeah. That >> but that would be the answer. Even if even if X hypothesize there is the lingering abuse of prior dominance it's not wrong on Int's part I suppose even if it was dominant to allow the market to find its own balance and over the course of what was what 12 months or so.
>> Yes. I the 18 month is the length of the inas period defined by by the CMA.
>> There were four new entrance by the time it acquired it. Yes. One came in shortly after and there were two or three more which came in over the course of the next few months.
>> Exactly. So >> So you had an increasing degree of market entry.
>> Exactly. Right.
>> Which itself is reasonably indicative of an absence of barriers to entry.
>> Yes.
>> And no evident ability of power over price because you're losing it month in month out.
>> Yeah. Exactly right.
>> Can I just explore this question of lingering effect a little bit more?
Are you there's a distinction between a dominant entity abuses its dominance until point X point X it loses its dominance thereafter prices remain high for a while and come down that's the effect you'd expect to see once compet competition starts to work its way um there's a distinction between that period exhibiting the effect the the lingering ing effect of the prior abuse of dominance and that period uh exhibiting the lingering do the lingering abuse of a prior dominance.
>> But is there such a thing as an infringement for abuse of dominance if the party is not a dominant?
>> No. No, there isn't.
>> Even if it has been but no longer is.
>> The the short answer is no. I mean you have to be dominant before you can be said to abuse dominant position. So the first uh point of analysis ought to be are we witnessing here a dominant company abusing its position as was the CMA's case or are we witnessing here a an undertaking which may have previously been been dominant but is no longer and so cannot be said any longer to be abusing a dominant position. I think as I understood the point that my my lord Justice Green was was putting to me is that there may have been an earlier abuse of dominance by the same undertaking notwithstand ignoring for present purposes the change of ownership.
>> Uh but that the uh and the effects of that may be continuing to be felt >> beyond the period of dominance. And then the question is well should that be laid at the door of the no longer dominant uh company in its new new ownership which I think was my mean penalty penalties point.
>> Yes.
>> You're shifting around there a bit Mr. because you say if you say it's the same undertaking let's just stick to it being one entity one one undertaking forget the the sales and so forth. And I think the question really from all of us is if you if you were abusing the dominant position for those five years and then on the 1st of January or the 9th of January 2017, you're no longer dominant, but the effect of the ab the previous abuse of dominant position is continuing into 2017, 2018, 2019.
though you're not long with dominant the effect of the previous abuse of dominant position is still continuing.
>> Yeah. So it's my lord's point going through the >> that goes to the seriousness of the conduct of the undertaking in abusing its dominance at an earlier stage >> in the first >> in the first stage. So in other words, in terms of penalty, if it was one undertaking, >> you could take account of the fact that the abuse, the effect of the abuse continued for another three years.
>> Yeah. You could take account of that and laying it at the door of um the undertaking at the time it committed the abuse of of dominance. the fact that it had that ongoing effect. What we say primarily is you can't lay that at the door of an acquirer who comes in who tries to do the right thing and let prices come down to reach their competitive level and the belief that there's a competitive market. If I'm ultimately wrong about that there is some blame >> lay that in the door in respect of what I mean 10 year period 9 years of dominance dominance ends but the abuse continues for another 12 months. So 10 years of infringement if you like. So you come in and you acquire the undertaking during the period where the dominance ends but the abuse is continuing. So the question is what is your liability? You've acquired a company that presumably can be penalized for nine years of dominance and one years of lingering abuse. I >> is that really a point about penalties rather than infringement?
>> I I I would resist the um characterization of that of continuing abuse. I would recategorize it as as continuing effects of an earlier abuse.
>> All right?
>> Because there cannot there cannot be an abuse >> still at a level which is unfair. It continues to unfair until it hits that point there.
>> Could it it may be lingering effects but the price which is being charged >> is still super competitive and too high.
So >> on the assumption that it is, we say we say it wasn't and we have arguments about about but if it if it were to be found >> that the price during that period continued to be >> to be unfair then that is a consequence >> of an early abuse unwinding. It's the overhang period. The fact you wouldn't have an overhang period at all if it wasn't for the previous abuse of dominance. So you're identifying an overhang period. You're saying that is part of the effects of the original abuse of dominance that has to be reflected no doubt uh in the um penalty which is applied in respect of that earlier abuse of dominance. It should not we say be characterized or reflected in a continuing penalty for the action of the >> absolutely I think we understand that this could be categorized as a serious penalty issue.
>> Yeah. We're trying to get our heads around whether it how it is to be analyzed in terms of both dominance and abuse. I suspect my analogy of a gun is is wrong. It's more like I I run you over and I caused you serious personal injury and that injury then becomes more and more serious. It evolves over the next 12 18 24 months that the original torsious act finished but the effects for which I will end up paying compensation in tort at least >> are going on and may run into millions because of the way the injuries evolve >> because it all goes back causation to the original tor visa >> and the original the original thought >> um so those effects may continue what's wrong to to say oh well look sees on those effects we see those effects we see the mountain horn slope We're therefore going to characterize that as an abuse of dominance during the INTAS period by an INTAS owned accord.
And that's where we have multiple we have mult disagreements and uh uh and appeals against the CMA's decision and now the tribunal's decision on each of the limbs of dominance uh abuse and and penalty saying at some stage we hope all of them um uh matter for my lords that we succeed in establishing that intas was in a radically different position to that which had come earlier.
>> I think I can take it >> we understand the difference. I mean this is regulatory not torturous but the torchious analogy would say that the tort was committed at the outset and then finished and thereafter it was the effects the damage >> was the breach of duty occurred and then the damage continued.
>> We shouldn't be laid at the door of the undertaking during the intas period but should be no doubt taken into account.
>> That's the question.
>> Yeah.
>> Um so just I'm sorry to about this Mr. Palmer but just to follow that through because we are dealing here with the fact that the the although it may have been the same undertaking the entity is it changed.
>> So is it your case so far as your client is concerned in the example we've been discussing that you shouldn't be liable for anything at all in terms of penalty.
>> Yes.
>> But that should as it were um continue to be liable because of the because of the the overrun of of the effects of abuse into your period. Well, that would f on the assumption that there is no abuse of dominance on the assumption there is one.
>> Of course, I don't it's not part of my case it is on that assumption >> on the penalty that could lead to an increase in penalty for those who sold the the company but not on you.
>> Well, theoretically, although not in the fact of this case where the complaint is is already too high. Um, I'm just trying to get the >> Yeah. Yeah. But it if if one were to divorce it from the facts of this case and say well where does where does blame lie then it lies with the talk visa we would say effectively >> but you will then have been the beneficiary of the super competitive profits during the coming off the matter horn period.
U yes that is true although that would have been reflected in the purchase price and so ultimately that would go back uh to the vendor and to the original uh talk fees as well. So um if there was some expected level of profits uh uh being obtained >> I'm not certain when you purchase the company you presumably pay some sort of PE ratio based upon existing profits not necessarily assuming that they're going to sliding down to an tenth of where they were.
>> Well they were they were sliding down rapid and the tide had turned because of the market entry and it was it was absolutely we had witness evidence about this which wasn't cross-examined. It was it was absolutely expectation that it would continue.
>> Yeah.
>> Downwards and there was no no illusion that or or intent to to maintain uh uh those high prices, let alone any ability to do so.
>> Okay.
>> Um I was just going to show you I mean we've been talking about it but I might as well turn it up uh now. Uh figure 4.1 of the CMA's decision which is in the core bundle at page 947.
What's the page of the decision?
>> 947. Oh, the internal page number is 299.
>> Thank you.
>> All right.
So there you have the we've got a number of graphs but that that's the entire infringement period and uh beyond you got the narrow 18month period that don't know how your eyes are but on assumption I know better than than mine and a useful place to look at is the key the 10meg competitors price which the dotted red hashes in the key at the at the bottom is round about where the intask period is. It begins just before that red line dot just before February 17 and uh it ends obviously just just after the word uh uh or just in the middle of the word price or thereabouts. Um so that is the period you can see and it's a useful graph not only for the shape of the matter hole as a whole but also because it maps onto it the shift in volumes. Uh and you can see from the gray bars, the dark gray bars of the ordin activists volumes uh the lighter gray is the competitors volumes. So you can see that shift away at the very same time as the price is is is dropping and it's a vivid illustration.
>> They were trying to maintain the differential but volume was disappearing very rapidly. was disappearing and you can see there is a premium that the the red line obviously being our price the hash line uh being uh an average of the competitor's uh prices and uh the extent of the premium varies over time and and begins to narrow as you as you get on as you'd expect. There's a lot of reference in my own friend submissions to the percentage change or the percentage uplift from the skinny price to the you know uh increasing over time. That that's purely a function of course of the of the lower price dropping dropping down. The more you bring the prices down, the greater the percentage um margin is is going to be. I'd urge you to be cautious of those sorts of statistics, but you can see a a helpful a helpful illustration of what was happening uh there. And so these were indeed significant drops. It drops uh 72% from the peak of £72 to 20 at the end of infringement. But within the intas period alone, it's a 63% drop from £54 to 20 within that relatively narrow uh period of time. And there was a finding by the tribunal not just in the passage uh that I referred you to which was cited and repeated by the court of appeal in H2 but also in the judgment uh in this case uh at paragraph 64 61 uh which is uh at page uh 30 uh Three internal 326, right? 326 of the core bundle.
This is the culmination of of a of a discussion of uh the drug tariff and the position of others. You can see at 661 the drug tariff acts as no real constraint at all. Rather it is competition in the market that acts as the uh constraint. So that was uh what was recognized. Uh and last couple of points on this factual background to all of the topics. Uh, Professor Valleti, the CMA's witness, also expert witness, accepted that Accord UK was unable to resist.
Uh, we go to the um reference supplementary bundle at page 1611, 1,611.
unable to resist what competitive pricing >> uh the the decrease in in Accord's own pricing in response because of effects of competition. Yeah.
>> So uh I just want to show you exactly what he did say. So it's in the U reference supplementary bundle.
That's the not the core supplementary bundle. No reference the number 11 there. Updated there. That's the reference supplementary bundle at page 1611.
Uh you can see on that page is my cross- examination of professor Valleti at line 10 putting into court UK was powerless was my words to resist those price reductions couldn't simply freeze its prices or increase them by this stage and he took issue with the word powerless uh when there was a bit of a two and fro that over the page page at 1612 line N again put it I said didn't put it that way but please concentrate on the question I said they were powerless to resist those price reductions and what he said was uh um uh uh incredibly high profits at the beginning very high margin profits excessive profits excessive returns those returns were coming down because of those uh constraints they could not keep the same level of profits because I said earlier automatically if you start from 72 bands you're going down to2 nothing changes your cost obviously the margins are going down the fact they're going down he said doesn't tell me anything whether or not they're exercising market power so they had to do some changes powerless again is a word he still doesn't accept maybe we disagree on the term but they had to do this to obviously reduce their profit their prices they had to I agree that they had to because of all the combination maybe of the regulatory mechanism etc etc so etc etc does appear to include competition. That tells me nothing about their own margins relative strength. The president intervene intervenes and said language is difficult thing. If we substituted unable to resist for paralyst, would you have less difficulty? Uh unable to resist I mean they're not able to keep the price at the same 72. Yes, absolutely. I agree with that. Thank you. Very helpful. I just think that the the labels are always difficult, but the facts are the price came down dramatically over the course of 12 plus months to a level in which the price was more or less converging with that of the new generic entrance.
>> And uh that of itself doesn't indicate the loose term power over price.
>> It's power responding to other prices.
>> Yeah. Um and whether you call it powerless or whatever, >> but the facts speak for themselves.
>> Yes. Well, I hope so. Um >> question is now how we analyze that.
>> Yes.
>> And whether the cat properly addressed this to those particular issues >> to which I'm obviously going to come.
>> Um and that accompanied not only those prices but also dropping obviously from the 100% pre-entry uh to 40 to 50% by the time uh of the INTAS period. You have that in the judgment at uh paragraph 289.
That's core bundle 439.
Whereas the tri, as the court will recall, uh this is where the tribunal um breaks response to my submission that needed to analyze this on a phased basis which is accepted. um it did this provided this table for the INTAS phase of 289 and you can see that as of January 2017 in period 109 as the tribunal call it the percent by volume market share was 52.58 by revenue is obviously higher I'll come back to that the top of the next page going on six months uh to period 27 it's 50.1% and it's down on value and then then at the end of the the final period you can see it's dropped to 40.5%. That's further down that page.
There it is 40.5% and the value at 63 uh 2 uh%.
And um uh the reason that these volumes were dropping is because by this time two of the largest chains that's Tesco and D Lewis had switched entirely or or almost entirely to skinny and 97% of independentarmacies who together made up 27% of the entire market had switched.
That's if you'll notice at the decision area 4.122 which is in the core bundle at page 988 and also a number of uh NHS tenders might just turn that up. that is in the core bundle at page 991 paragraph 4.1 uh 28 which refers to hospital purchasing.
uh but this was that uh full and skinny hydro zone tablets were treated that the same generic medicine. It's confirmed by the fact the NHS didn't distinguish between them in its hospital tenders in England, Scotland and Wales. That's three separate tenders there which included hydrocortisone tablets amongst a range of other drugs. Indeed, these tenders were awarded suppliers of skinny tablets which is consistent with full and skinny label tablets being considered as interchangeable. And you've got footnote 100 1260 there at the foot of the page setting out those three tenders and their results. In English, England activis lost on price to Amco and to Bristol 1020. Scotland lost on price to Teor for 10meg, awarded the supply of 20 meg and then Wales lost the supply of both uh to uh Teor. So um I'll come back to this but what was clearly happening was at a high level at central level these decisions being made on a bioe equivalence level there's no there's no material difference between full and skinny it's the same product for the same uh indication and that they are interchangeable you've got 97% of independenties approaching this on the same basis you've got two of the largest chains doing so as Well, and then you've got eight out of 10 of the largest change.
So, at this point have not yet switched, but there is nothing to prevent them from switching at any point. Nor is there anything to prevent any of our um prevent us from competing to win uh skinny customers uh back.
But neither of those two things are going to happen. Retain existing comp uh existing customers or or win back former customers unless we're competing on price. And that is what is driving.
That's the very reason why there is this competitive constraint. Why the presence of these skinny labels in the market is driving our price down as the tribunal clearly accepted and and found a market in which these two products are fully interchangeable.
So that's some of the background. I want to move to the dominance theme now. Our intask ground one or issue four.
Uh now the assessment by the tribunal in its judgment of dominance begins in the uh judgment at page 1,26 of the core bundle.
Sorry, sorry I should say misspoke. The CMA's decision begins at page 1,026 of the core bundle.
Uh, and it runs through to page 169 if you'll note. Now, the summary of its approach is at page 1027.
Next page, paragraph 4.230.
And you can see its approach is first to look at market uh shares.
That's at a both pre and post entry.
Secondly at B to look at pricing behavior and financial performance.
Uh thirdly over the page at C to look at market context as it terms it. And that includes Roman 1 through to three three factors. The first is the unlawful agreements.
The second is the orphan designation granted to Penadrren which created a barrier to expansion. It's not entry but expansion and provided ordin activists with an assured customer base the 10meg hydrocortisone tablets and thereby preserve its ability to behave to an appreciable extent independently.
And thirdly, the absence of counterveailing buyer power.
Now, none of those three factors were said to be conclusive in their own right. An overall assessment was made by the CMA and that was in respect of the whole infringement uh period. So, there were three uh main criticisms which we leveled at that approach. uh the first two of which were accepted uh by uh the uh tribunal. The first was that it needed as the CMA should have broken down the infringement period to consider whether there was dominance and abuse and if so penalty on a phased uh basis, if it was going to hold intas responsible uh for uh uh this abuse of dominance it had identified, it needed to respond to INTAS's case which was by January 2017 it had ceased to be dominant and had ceased to abuse and it had not done that.
>> So both of those factors in C little one and two have changed as from 2017 three is probably just a neutral factor which remains constant throughout.
>> This is absence of a negative. Yeah. One one has long since ceased by the time you get to 2017 and um the all yeah 2015 and 16 respectively for the two different drugs two different size 10 meg and 20 meg. The orphan designation granted to to Plenadrren remained uh in the uh CMA's decision an absolutely critical part of its reasoning and the identification of what it called an assured customer base later described in its defend in its defense as captive customers and that was these eight out of 10 large chains.
But you say that changed?
>> Uh no, not during the not during the INTAS period. Those eight out of 10 stayed with Accord UK. Two had gone over to skinnies. That's D Lewis and Tesco.
And as I say, almost all of the independent sector, which is a quarter of the market overall, had gone over to skinnies.
But the CMA's case was that the remainder of the market, 50% which hadn't switched, formed an assured customer base and were captive. That was its argument and that's I'm going to show you featured in its uh decision.
Uh so anyway, that was the um uh the first point is he say well you need to break this down.
And if I can just give you the references I'll turn it I'll turn it up.
Um, it's in the uh supplementary bundle, reference supplementary bundle at page 916 and um on that look like it's just further down the page. Yes, further down the page, three key respects in which CMA fails to charge discharge burden of proof and then it was the first one was failure to assess developments by and during the intas period. So this was our opening skeleton argument and it ran from there through to paragraph uh 28 and we annexed at page 963 a list of all the areas in which the decision had relied on the pre-intentas period matters for its dominance finding which we say was illegitimate in respect after the intask period and at 967 the same for the penalty assessment and we say there hadn't been sufficient differentiation of the INTAS period. Uh now that point was upheld by the tribunal at I'll give you the references need to turn that up seen it uh paragraphs 178 to 179 and 264 to 266 of the judgment. That is what caused the tribunal to undertake its own phased assessment of dominance.
Note that it recognized that that um phased approach was also relevant to penalty and I'll return to that later.
Obviously the second initial criticism we made of the CMA's position uh is uh was also accepted uh by the tribunal and that is in the approach uh that the tribunal the CMA should take in regard to absolute levels of accords prices. The tribunal agreed that particular care needed to be taken in approaching accord's prices as a factor in a dominance analysis given the potential risk of a bootstraps argument an excessive pricing uh case. what the tribunal said in its judgment at 268.
That's page 423, core bundle 268 to 269, is it's more rigorous to consider whether and why it is that an undertaking can price without constraint rather than just looking at absolute price levels.
Now the last sort of initial point that we uh made is a crucial uh one and that is uh the question of whether Accord UK had an assured customer base during the INTAS period.
Now there's a dispute it seems between us and the CMA as to what the tribunal made of the argument.
Suffice to say at the moment and I will show you this a moment there was a sustained and lengthy attack on that conclusion by the CMA that INTAS could treat that custom base as assured by the time of the INTAS uh period. There was lengthy cross-examination on both sides both of professor Valleti and indeed of our expert witness Simon Bishop. There were lengthy submissions running into one hundreds of pages on both sides.
You will not find a discussion of that evidence in the judgment. It is completely absent. It now appears that there is a dispute between us as to whether or not the tribunal actually upheld the CMA's case that there was an assured customer uh base. I want to show you that there wasn't such a finding. Indeed, what we said in our initial skeleton argument, the foresight of the uh CMA is rather surprising. Such >> you're going to show us that there wasn't which finding? There wasn't a finding of an assured customer base.
>> Yeah.
>> They didn't make that. did not make that finding. Indeed, the reverse implicitly in finding that um the skinny and full label products fell within the same market.
>> But then ju just I'm sorry. So this is relevant because otherwise Mr. Holmes is going to say this is a fact finding and therefore we shouldn't be interfering.
>> Yeah, but he he would say that. We say no such find fact was found >> if it was found, but you say it wasn't found or it's not sufficiently clear.
>> And and Mr. Holmes says it it was >> it was don't >> we we have two responses to that one is it simply wasn't the implicitly at least >> yes >> secondly if it was it would have to be very implicitly I'll show you the passages of the judgment which I relies upon it was found without any reference to any of the submissions made on either side despite the fact I'll give you the headline figures now of our written closing arguments following evidence all that evidence from both experts and a lot of documentary evidence of our I think it's 112 page closing written submissions over 20% of it was dedicated to this issue and it was accompanied by an annex of a 100 pages long uh detailing all the detail of the documentary evidence. I'll show you where that is. I don't expect this court to to get into all that detail. I'm not going to ask you to. But you can see that that was a dispute to which there was equally a response some weeks later, 6 weeks after the close of the trial with the permission of the tribunal, the CMA put in a counter table, a counter schedule seeking to respond to all of our points. And what it was was a detailed analysis of the documentary evidence underlying the CMA's conclusions that in some sense these eight supermarkets and pharmacy chains could be assured.
That was a matter of hot dispute between us and it was because this was a fundamental feature as I'll show you in a moment as well of the CMA's reasoning which tips not only into the dominance assessment but also later into the abuse assessment as well. And so um what appears to be the either implicitly they accepted our case on this or they simply considered the tribunal it is considered that it didn't need to resolve this one way or the other at all for the purposes of its dominance assessment which uh you know may may well be the conclusion that the court comes to having looked at what they do.
They simply don't address it at all.
They must have thought they could reach their dominance assessment conclusions without regard to this at all. And if that is right, we say that's a further error in their dominance uh assessment.
They concentrate on market shares and what they call a relative disadvantage in respect of not having a full label and only having a skinny label which is a long way short of finding an assured customer base who for some reason despite being exact same regulatory position as the independenties exact same regulatory position as Tesco and D Lewis the proposition was somehow could be relied upon whatever the price to stay with Accord at UK because they were captive. We said it made absolutely no sense on any level and wasn't supported by the documentary evidence. So, let me just show you some of the references to support what I've been uh saying to you.
The first reference I'm going to give you is to the CMA uh decision uh at um core bundle 1029.
So, this is following on from the summary of the dominance findings which I showed you earlier. They first deal with the pre-entry period. we could ignore. There's no skinny products. Then uh if we go to 1,033, we get to the post entry period and the conclusion comes first in that first paragraph on the page. Now, uh activist retained its dominant position throughout the post entry uh period.
4.244. The next paragraph explains why the loss of market share and decline in pricing which we were looking at earlier was not determinative.
Uh and um uh uh looking at its ability to charge a premium and then this at 4.245 an explanation as to how it could charge this premium. Activis was able to retain its position of economic strength despite the emergency competition due to the barrier to expansion created by orphan designation. Actavis had an assured base of customers that had no choice but to purchase ordinct activis's tablets that allowed Actavis to profitably charge a significant premium above its uh competitors uh pricing.
And there's a reference uh back to an earlier section. If you'll note, it's easy. The paragraph number is 3.280 which is at page 782. I won't go to that yet. I will go back to it later. This point was developed under the heading of market context from page 1052 onwards.
the foot of 1052 from paragraph 4.288 and go on to the rest of the paragraph you can see at the end of that same paragraph on the next page.
Keep going down please. Okay. Uh, CMS concluded the orphan designation was a key factor contributing to this ability because it formed a barrier expansion and provided Actavis with assured uh, customer uh, base. And at 4291 further down the page, you can see there the regulatory is the regulatory circumstance. The orphan designation meant a significant proportion of the market had no choice but to purchase ordinacious tablets and were not able to switch. Again, a reference back to which we'll come and just as you're going through this, you're emphasizing a regulatory intervention which means there is quote no choice.
>> Yeah, >> that's the point which you are and >> which we challenged. Yes. that the the the the suggestion was that well while 50% of the market could switch.
>> Yeah.
>> 50% of the market perceived there to be a regulatory risk attached to dispensing skinny label tablets to adults.
>> Is is it a perception or is it >> I'm just reading the decision. I didn't I haven't read anything which you cited to us as referring to a perception as opposed to the existence. I'll I'll show you. Yeah, I'll show you that in due course. Um uh uh I'll show you there was in fact no regulatory risk as as shown by the fact MH was there.
>> Was there any regulator which prevented it?
>> No, none at all. that the regulation, the orphan designation regulation had limited the ability of uh uh producers, manufacturers of uh pharmaceuticals uh to market them for in this case adults rather than than children. That that was the prohibition on the marketing. But anyone could look at them and say these are bioequivalent. These are absolutely identical in clinical terms. uh and that they're a straight swap as seen for example in the NHS tenders as seen as we'll see by what the the regulator of the MH said as the unanimous medical opinion of those CMA >> assume it's true there's a difference between market the restriction on marketing and the restriction or an absence of restriction on prescribing or dispensing >> is that totally different you can market it >> is that the point that is the point >> the regulation applies at the marketing level and it's been >> you Ever since I started at the bar, I've been doing cases about the difference between marketing restrictions and dispensing and restrictions.
>> Completely different.
>> Yeah.
>> And there is guidance on dispensing what is known off label.
>> Yes.
>> But that is all aimed at the traditional the traditional scenario in which a pharmacist or do doctor might be tempted to prescribe off label is because they think a particular drug will help a patient for a condition for which that drug has never been indicated. But that's not the position here. It's not that the drug has never been indicated or you know for for that to treat that condition. It's just that the marketing authorization on the label is this is why we call them full label and skinny label. The label is the only difference uh which says well this should be marketed for adults. It should be marketed for so strictly that is off label but not substantively.
So if you are going to they if you're going to prescribe or dispense a drug to a patient for which that drug has never been indicated or authorized the marketing author that needs that needs a clinician to take responsibility for that whether >> I remember I don't know if it's changed but the medicines act used to impose a restriction on marketing but it was very clean that GPS had prescribing freedom right it was their it was their discretion as to what they prescribed and if they saw that a generic or something else was going to work they were entitled to do that was no offense committ Well, that's absolutely right.
And it was all set out in in the in the judgment and explained.
>> Are we to assume that pharmacies, all pharmacies knew that what was in the box was exactly the same.
>> Yeah. Well, they would the difference was that they would know that it was clinically identical. Now, to what extent they concentrated on that fact and the difference between off label dispensing in this scenario as opposed to the usual scenario, it is another matter. Our essential Especially with the small campus >> the usual scenarios especially with a small pharmacy speaking from personal experience they just prescribe whatever they've got you go to prescri prescript doctor is gener is general not generic but general >> yes >> and the pharmacy just prescri >> they dispense rather dispense rather not they dispense whatever they've got in at the time >> which will reflect what they stock with and what they order in >> precisely and so they can make a judgmentally at some point they're making a judgment what they prescribe but what they just >> they they purchase >> but the doctors normally wouldn't be saying well you must >> dispense X >> not normally no they write again this is all >> know it was X Y and Zed >> this is all in the CMA's decision and and considered by a tribunal so I'm not speaking on that basis but yes that they found that most doctors would would generally write what was called an open prescription >> question but but coming back to the point >> that your your point is that the decision says there is a regulatory obstacle. You say that in so far as there was any regulatory obstacle, it operated at the marketing and promotional level, not at the dispensing or prescribing level.
>> Right.
>> And therefore, given the way the pharmacists and GPS were, they're generally reasonably aware of bioequivalent chemistry.
>> Yes.
>> Which is exactly why 50% of the market had switched.
Some of the a good a good number of the remaining 50% those who had thought of it and did the evidence or some of them hadn't thought about it at all. They just took what their wholesaler sent them. But others who who made a decision on this perceived that there was a regulatory risk in in doing this.
>> Understood. But but that evidence again it varied from dispatch. We not to get into the detail of the evidence but some >> but the reason I started them is because I was reading the decision and I didn't read the paragraphs you cited to us in terms of risk as opposed to the existence of some regulatory obstacle.
>> I'll show you how it boils down to to risk and perception of risk in due course. But the um uh the point is of course early on at the first stage of market entry so 2015 2016 which is where much of the evidence relied upon from the CMA stemmed from this is a new thing there might not be familiarity uh there may well be pharmacists who express some reluctance to to go first on this but by the time our case by the time of the intas period two years in after market entry when 50% of the market has shifted. There's been no adverse regulatory action. Indeed, the MH, if you asked them, would say, "No, it's fine." They were asked to issue a circular about it, they said, "No, because we only issue circulars when there's a problem, not when there isn't a problem." So, u but at any point any pharmacist who had previously said, "Oh, I'm a bit worried about the reg could re-evaluate that and could could have another look at it." And that is precisely why to retain those customers uh we're forced to drop our prices if there's no reason if if they're that assured why are we dropping our prices at all. Uh we're keeping them on board.
We're maintaining the premium roughly where it is. Obviously we want to retain those but the suggestion that they are captive or assured and that at no point could their evaluation of any perceived regulatory risk where there is none. in fact as the CMA fan and the tribunal fan uh ever be re-evaluated.
Our case was that was just a nonsense.
Now it was made at length and I've given you a flavor of it but you will find nowhere in the judgment where that is resolved or any view express now understand the nature of the dispute between you and the CMA.
>> We're looking at the way the CMA describes the issue in the decision.
>> Yes.
>> And then we're going to come to the judgment to see how they do or don't address it. We're going to do exactly that. Yes. Thank you, Mel. So, it was going back to the references uh from the judgment. If I could take you just I think we're on 4292.
Yes. And um >> um uh you can see at the bottom that page footnote 1460 >> again we had submitted to the CMA that is that the position was precarious. So had the two largest customers that's Boots and Lloyds switched well then our share would have fallen from 50% to 13%.
Um and uh the answer to that is well they didn't. Uh but again we said that's why we were having to compete to retain uh business over the page at 4.293 to four again emphasizing five lines down on 293 the no choice day factor incontestable assured customer base at 4294. The assured customer base activists enjoyed the result of regulatory circumstances effectively provided a flaw. So it was always assured of that 50%. So it was always able to retain that again repeated references to to no uh choice. Mhm.
>> Now, um uh uh also page 1055, the next page, paragraph 4299 at the foot of the page.
This is the response to our if we go up a little bit, you can see the heading there is representations on dominance in the post-ry period. And it's responding to our submission to the CMA, the no effective barriers. uh and over the page again it's ultimate answer to this at 4301 it is the same and again it's relying on no choice and not able uh to uh switch and uh 4306 the following page again it's the persistence of the features remaining high and stable and 4.3.11 on page 1059 again uh starting with a reference back I've said it a couple times I'll come back to that that's where you'll find what I've told you that there is um but again at the same point in relation to the operation of the drug tariff in this section reliance on not able to switch no alternatives sustained the market uh power and even on If you look at the bottom of 311, >> uh it is evident the pharmacies reached different positions on whether to dispense full or skinny. Both are reasonable positions once taken do not imply an element of choice where there is only one supplied the type of product in question.
We say this made made no sense. What what what they're trying to say there is that if you make a choice we will only stock full label tablets then there's only one supplier of full label hydro hydrocortisone tablets and that is a cord right we understand that but what's wrong with that is it assumes that you make a once and forever choice in 2015 when market entry of skinny labels begins and you never revisit it that even as 50% of the market shifts, you never think, oh, actually, uh, we could save some money here, we could go for the cheaper product, and it doesn't appear to be any regulatory risk at all.
>> Well, the the underlying premise is that it is reasonable to switch.
>> Indeed.
>> And if it's reasonable to switch one way, you can always use the leverage of switching back.
>> Yes.
>> Particularly when one when the prices are beginning to move. Yeah, indeed. I mean, switching was well possible and um uh obviously for so long as people didn't switch uh in well Accord was able to maintain a price premium which is why the value market shares are higher than the volume market shares. 50% volume charging higher price your value market share is going to be higher. But it's it's no more informative than saying we're charging premium we've got 50% of the market. So as time goes on, uh obviously you have a greater share of the revenue from the market. In terms of your market power, it's reasonable to switch at any point.
And unless you're bringing those prices down in extra bits, we're forced to do you're you're increasing the chance of that switch happening. That's precisely why you're constrained.
And just to to roll off here, even the absence of canvailing bio power, it's the same point again, but just for a ref note, it's 4.344 to 345 uh which is on uh page 1066 again in relation to wholesalers.
It's the same point again. I need to labor it, but you can see this running right through the CMA's original analysis.
And putting at its lowest, this played no part in the tribunals's uh determination, tribunal judgment.
It's highest. They actually concluded the opposite in in that consideration of market definition as I'll show you as well. Now, I said I'd take you back to the earlier sections which are referred to. Time won't be won't allow me to take you through them, but can I identify them and ask the court to read them in in due course? It's page 752 of the bundle. Core bundle.
>> So, just give us an overview of what we're looking at here.
>> Yes, I'm just going to do that.
>> Exactly.
>> So, it's par from paragraph 3.2. 215 is section Roman 3. You can't be alone in finding the numbering very confusing of the CMA decision. Um, >> where does it go until?
>> It goes until this section goes until page 764, uh, which is 3.245.
That's section 3E, Roman 3. What it does is it describes the regulatory framework and then critically sets out provides a section on the impact of that regulatory framework on prescribing and dispensing of skinny label tablets for off label use that begins in particular from page 760 through to 764.
That that's the particular bit of this section I'd ask you to read. So that's paragraphs 3.235. 235 through to 3.245.
It's only four pages or so, but that's what sets out the views of the MH, the chief pharmaceutical officers for NHS England, Scotland and Wales and the advice that was being given contemporaneously uh and the reaction which the CMA sought from a professor consultant of endocrinology at Oxford University who said it's all bio equivalent. I'm not even aware of these label things but it's all perfectly safe. Um so that's that section. Now the next section rolls straight on. That's section 3E Roman 4.
That is at page uh 764.
There's a summary paragraph at 3.247.
And you can see uh in that summary at the beginning there was uncertainty over how much demand there was expectation from the incumbent that customers would buy it. So uncertainty was the scale of demand and it would have come as no over the page surprise to market participants that skinny label t skinny label tablet suppliers would enter and go on to take sales. And then from October 2015, this is B.
You can see about six lines down, increased competition in the market caused prices to fall. The last four lines, skinny label tablets accounted for approximately 50% total market within two years of the first entry in October 2015 with off label dispensing of skinny label tablets becoming widespread. Well, it may have taken some time to become widespread, but you can't freeze the frame in 2015 and look at regulatory risk perception then and not refer then to it becoming uh widespread and assuming everyone who initially made a choice to stay with full will remain.
Um uh that's the whole point is why consider this position to be precarious.
If you go to page 782, which is within this same section of the CMA's report, you can see there's a section there beginning pharmacy and wholesale purchasing and dispensing decision after skinny label entry.
And that um uh runs uh through um uh to paragraph 3.294.
Can I take you in particular at this stage to page 783?
That is the table.
If we can just move down just one more line in the table. Thank you. Um of whichies did what.
And you can see from the relative volumes, Boots and Lloyds are obviously big ones, not as big individually as the collection of independents together, a quarter of the market at the foot of that table. 271,000 packs ordered by by them. This is in uh the period from March 2016 to November 2017, the heading tells us.
Um so starting almost a year before the intest period and running into it and you can see that on from the percentages that you get very high percentages from day Lewis Tesco and the independents and variable percentages from others but including some very low ones which include Boots Lloyds Roland's sainsburries and wells but it it varies and what the CMA made of this underneath that table 3.282.
So if we can just scroll down through the next paragraph. Thank you.
So despite them being bye equivalent readily dispensed off label by manyies and sold at significantly lower prices.
There were somearmacies that determined they could not or should not dispense skinny label because of their assessment of a potential regulatory risk from dispensing off label. So in those circumstances only full label tablets were able to meet theseies needs and these customers had no choice and were not able to switch. That of course implicitly assumes that they're going to keep that assessment of the potential regulatory risk for all time uh and had that as a as a need and that is the basis upon which this assured customer base has identified just going over the page.
>> Now is there the evidence of this so-called potential regulatory risk is it accepted it's false? Um the tribunal found that it was reasonable to have this fear didn't engage >> the same thing as no it being objectively correct or not. It >> it's objectively incorrect. Um and >> does the decision address the nature of the risk?
>> Uh yes. Um let let me um the the I think the area goes would be going back to page 760.
um uh you can see um it doesn't sort of try to quantify the risk. It essentially explains why there isn't one, but from 3237 it says prescribers overwhelmingly issued open prescriptions which didn't distinguish. And then 3238 overwhelmingly majority were prescriptions were open didn't specify the condition. So pharmacies were able to dispense anything full label or skinny label as both were licensed.
That's at the top of the next page at three um uh to uh 40 contemporaneously important word and before skinny label tablets were launched the regulator the MH and the chief pharmaceutical officers did not consider that off label use of skinny tablets created any risks to patient safety that would justify taking any action to limit or prevent off label use 3241 the M >> consider that so the relevant regulatory authorities did not considered there to be a risk.
>> Yeah, >> they did not clarify the position.
As a result, the CMA concluded there was some regulatory uncertainty which affected the purchasing decisions of some pharmacies.
some some of thesearmacies expressed the view that there would be regulatory risk dispensing these off off label. Um >> that was not the view of the MRA or >> not the H. It was not the view of any identifiable doctor.
>> You could you can have presumably a barrier to switching caused by uncertainty.
>> That's just a fact. It either exists or it doesn't. Of course, >> the question is here when you've got a significant level of switching whether the and the absence of an objective regulatory obstacle whether uncertainty should govern the definition of dominance.
>> Yeah, exactly. So, and and whether you can actually realistically say you're assured of a customer base over time. I can understand you know the uncertainty may be highest at launch of skinny products in 2015 but they take that three four years later even when 50% of the market has shifted.
>> That was the focus of our attack. Um and >> so I'm just coming back to where we Are we subsequent?
>> Yeah, >> probably helpful.
>> So I I'm just a bit worried about time.
So if I can ask you to read that the rest of that section.
>> You want to take us to the cap judgment to show how it actually dealt with this?
I mean I think we've got the measure of the decision and I'm sure that Mr. Holmes will come back to it if needs be.
>> Yes. Um yes, I will do that. Can I um uh um I think I've covered all those points.
just going to boil down to a failure properly to address >> set of facts.
>> Yes. I mean at its lowest it's also a flaw in the dominance analysis substantively. I'll come to that in due course. The first the first thing is um >> but sorry I'm sorry to interrupt you Mr. P. I know you finished, but just going back to that table you gave us and the the paragraph after which was 3282.
Um, and the reference there to to that some of theies were concerned they had an assessment of potential risk.
>> There was no evidence was that they ever changed their position on that.
>> Not not within this period.
>> Not within this period. No, >> but um that that is a separate point.
But the fact they didn't isn't knowable to accord in advance. Advance can't reasonably, we said, assume to itself this is an assured customer base because their perception of a regulator regulatory risk is an immutable feature of thesearmacies for reasons not shared by the other half of the market. You can't count on that.
That was essentially there was no good reason to take. They might initially have taken that view and then at some point ask the MH having noticed that 50% of the market has shifted, can we do this? Yeah, of course you can do it.
There's no problem at all. Oh, right.
Well, yeah. There's no way. You don't want to give them a reason to make that sort of inquiry by refusing to drop your your prices. What they're interested in financially is the maintenance of the difference between the price they are paying and the rate at which they're being reimbursed under the drug tariff.
And if if that's not changing uh and then you know they got less reason to investigate and to ask and of course it's our interests they shouldn't look too closely at the regulatory position. We had a lot of other advantages to our product to rely upon an economic value which they would actually plenty of other reasons why they wouldn't have wanted to shift from us. But so far as this regulatory risk perception is concerned, there is just nothing to indicate that that could be treated by accord at the time or should be treated by the CMA in its decision as some kind of immutable characteristic of those pharmacies which means they were assured and had no choice and were not able to switch.
>> Yeah, >> that was the point and supported by a very detailed analysis of the internal documents from all of those. What were they thinking at the time contemporaneously? What had what had the um uh uh what had the um the CMA relied upon? And just for your notes, immediately after that table, it's paragraph 3.283, page 784, which was the decisions analysis of each of those eight. had one short subp paragraph on each of those pharmacists in turn going through in alphabetical order starting with Asda and Boots and so forth with footnotes to various documents. And our concern was that that was a very selective uh presentation of the underlying documents, hence the 100page annex which attempted to bring together all the evidence and hence the CMA's response to that annex which which put its own spin and view on on how those documents should be interpreted.
So that was the scope of the dispute and I'll just give you before I come to the um to the what the tribunal did with all this I'll just give you the references need and turn them up but our opening skeleton on this is at the reference supplementary bundle page 920 paragraphs 29 to 36. Can I ask you to note paragraph 34 in particular where we made the point that this theory was inconsistent with the market definition adopted by the CMA putting them both in the same market. Closing submission after the evidence is at pages 1302 to 1325.
So that's 23 pages, fifth of our total, accompanied by 100page annex which is at 1391 through to 1489 which dealt in turn with pharmacies at 1391, wholesalers at 1435, shortline wholesalers who tended to supply independence at 1449, suppliers own perceptions at 1463, and then the NHS purchases, the tenders so forth at 1482.
too. I'm not asking you to read all that in detail. I just want to show you where it is so you can see the scope of the dispute and the centrality of this to our case. The point that the uh tribunal did deal with was to accept that the market did not divide into two separate markets for full and skinny as advance and sin had argued. Uh, and you see that in the judgment at paragraph 233, page 403.
That's core bundle 403.
Uh, 233.
This is recording the submission. So this is the sinvent and advance appellants suggesting that there were two distinct customer groups who are cautious and less cautious again as if that was immutable.
Uh and uh then at 4 uh on the following page 235 to 236 uh we accept interaction between full label and skin level represents an extremely odd case of substitutability.
Presence of some switching isn't necessarily sufficient to indicate products in the same market.
need to understand why switching is occurring. In this case, despite a really quite material price differential, a significant party of the mark part of the market did not switch the skinny label.
>> So, what period of time are we looking at here? Is this preintas?
>> Uh um this is on the market definition.
So, it's it's at large without concentrating on Intas.
>> But it must be post 2011, mustn't it?
Because >> that's when um skinny label came in.
>> Yeah. 2015. Yeah. And 236. What can be said is the nature of the constraint was patchy certainly didn't fully constrain full labor prices because significant portions of the market were indifferent or prepared to forsake the additional margin afforded by skinny label products.
Um it's not quite clear what's meant there about being indifferent or or prepared to forsake the additional margin. They either saw advantages in our product or valued that some extent and or perceived a regulatory >> but doesn't that go I mean that's reflecting isn't what the CMA said in the passage you just looked at in the table which was that the the large pharmacies specifically boots and loyals took the view I mean rightly or wrongly they took the view that the licensing regime in this country required them to to purchase full um full label rather than skinny lab and they were they were concerned that skinny label didn't comply with the licensing requirements.
That's what it says.
>> That is what it says.
>> It says >> that is that is what it says. But that is one way a long way short.
>> I asked you the question earlier about you know does that is there any evidence that that ever changed?
>> Not within this period. We don't know.
We don't have about what happened later.
>> Two points. One I made the point we didn't know whether it would change. So couldn't treat them as assured. And secondly, it's a long way, this finding is a long way short of saying they are captive that they are assured in that sense because that regulatory risk and perception of it can change from 2015 16 which is when the boots documents for example were taken from >> by years later when half the market has has changed and the regulators you ask them would confirm it's fine. Um so and then the last reference there is um uh that at uh uh sorry um uh paragraph 2564 page 417 which you've seen that that's the only other place where this is dealt with here which is skinny label with a hypothe pathetical consumer uh is would would have no compunction about switching to uh skinny because they'd appreciate the regulatory happen stance had nothing to do with it.
Essentially, it's an identical product.
Demand elasticity would be extremely high. It's important to understand where that comes from. this hypothetical consumer. The court will now be familiar with how that hypothetical consumer was constructed. But he has assumed this is at page 408 to combine the salient at paragraph six the salient characteristics of doctor pharmacy and patient.
And that means that they'd have a diagnosis. that want to treat their condition. And at three, a level of knowledge about adrenaline sufficiency in the various medicinal products commensurate with that of a doctor. And over the page, this is assumed, this is where the pharmacist comes in. Uh Roman four at the top, an understanding of the difference in this case between skinny and full label offerings and the regulatory regime that has created that distinction.
That is what the hypothetical individual with the knowledge of an ordinary pharmacist would have. And indeed that's precisely why all the independents voted with their feet and did in that in that way. So um that rejection for market definition purposes of sinven and advances submission was uh made. Um but this was not dealt with beyond that in the dominance assessment at all.
Um, this removes a major plank of the CMA's reasoning, but the CMA boldly in my submission suggests that the tribunal clearly endorsed its findings.
It has three main references.
The first is that paragraphs 235 to 6, which I've just shown you. My submission is that they declined to accept the sin of an advanced argument on market definition and declined to adopt the language of the assured customer base and this played no part in the dominance assessment.
Next at uh page 118 of the judgment that is uh or 411 and this is this is the sub paragraph C that we went to earlier with the internal string of characters. It's uh 2438 Roman 5C which is the high point of my friend submissions on this but this is still a market definition for context. The context of this is deciding the price which should be used for the purpose of the snip uh uh test and rejecting Plenadrin's uh price and saying in that context that C uh instead of skinny label products being rendered non-s substitutes pharmologically identical nature of the skinny label products combined with the off label dispensing regime that we described meant that somearmacies generally the small pharmacyes ies not exclusively regarded fully label and skinny label immediate release hydrocortisone tablets as substitutes whereas otherarmacies generally not exclusively the largeries regarded skinny label as a different and nonsubstitutable product I'm just pausing there that might be true in 2015 but our point was you could not take that even though those eight remained with us as we dropped our crisis inexraably as meaning that they are captive or would never change their views. And indeed, the the tribunal here does not go so far as to say that they were. They're simply explaining why they wouldn't take the price uh uh uh and instead would take in the next paragraph they take a£10 price uh instead.
>> And there's nothing here which tells you what time frame these general conclusions >> are being applied to. There's no consideration at all of regulatory risk perception changing over time as as as as as the practice as they became commonplace widespread that doesn't that doesn't feature and and then uh at um uh um I'm done with that um uh and must be read in context uh of Paragraph 256 4. Oh, I've done that. Sorry, I'm just catching up my notes. I've gone slightly out of order. Uh, and the only other passage is at page 442. We can get straight to that.
Paragraphs 294 to 295 are relied upon by the CMA as showing that their assured customer base theory was accepted. Now where are we now in decision? Now we are in the dominance section. If we just scroll up so the trading is kind of located after two line one. You can see this is under the heading of conclusions. So this is just after we've had all those lengthy tables phase by phase of market share and it's immediately after that we get to conclusions and we can see from 291 first point on dominance is they all have a uh we conclude that they're all dominant in all five f five phases. So why there are a number of indicators that justify this conclusion in particular one the ability of merc sharpen domes mas to raise the price substantially. Well that was not during the intas period obviously it only ever dropped. Two in circumstances where demand did not fall away as a result of such price increases. Uh well again not intas demand was falling away despite price decreases.
and three where constraints on the holder whether competitive or regulatory appear to have been either minimal or or non-existent again not intask we know that the uh uh there were strong constraints strong enough uh to uh reject the market definition uh points so 292 all of these directly related to price so we're going to be cautious of them anyway that 293 relevant market shares clearly denoted dominance and we regard regard this conclusion dominance I assumes as inevitable from the data we have set out it's true that the market share fell over time yeah particularly in the inas period phase one it was 100% but it was rarely if ever less than 50% whether by volume or by revenue that we say ought to be the starting point of the inquiry and not the end point 294 it's also significant that many of these competitors and here's what the CMA rely upon namely those selling skinny label products s will have labored at a competitive disadvantage when compared to the holder of the marketing authorization. We've described the nature of that disadvantage already, but its effect will have been twofold.
First, such competitors will have sold at lower volumes than if they had a full label product to sell. Secondly, to the extent there was demand, that demand responded to a significant discount in the price of skinny label products relative to full label products. Thus, even where there was competition, it was of limited effect. And that's reflected in the market shares that we've recorded. And then they therefore set out their conclusions that are uh dominant at all times at 296 and that's it on the dominance assessment. So all of that prior analysis I showed you the balanced view of the CMA which they arrived at looking at market share the pricing differential but critically the market context including this assured customer. All of that is gone or not relied upon, not not necessary to resolve one way or the other in favor of this hyperabbreviated uh assessment that basically market share tells you all you need to know.
294 to 295 does not contain an assessment or an acceptance of the CMA's case that there was an assured uh customer uh base.
It conspicuously avoids that language.
It doesn't suggest that any pharmacy had no choice or was not able to switch. We say rightly is that's clearly a complete fiction and it's emphatically not and this is my friend skating in the paragraph 18 not a reference to the tribunals's earlier findings of fact that there was an assured customer base as there was none.
So we say this is a heroic effort by the CMA to contend that there was a finding in their favor on this issue. But we say that is unsupportable.
And if they were at all right that you could somehow read that in then take their high point at paragraph 24385C that would have in the market definition section. That would have been a wholly inadequately reasoned basis upon which to reject one of the main stays of our case with our 120 pages of written closing submissions and plenty of oral submissions as well. It's a bio sidewind. I mean, it's just not present and not considered. And so with it lowest, I say they clearly didn't think it was relevant and so dropped that aspect of the CMA's case and relied on market shares and the fact that if they if skinny holders also had a full label, they would would have sold more and that they competed by pricing beneath the level of of full. That tells you nothing about this assured customer base supposedly. Just coming back to the inference from 291 the cat's analysis you say assumes continuity of market circumstances.
>> Yeah.
>> And you say just just for example by by looking at the pricing tables you can show that at least from 2017 onwards there was no continuity.
>> There was >> the three factors >> price rises demand did not fall away >> uh and minimal or non-existent constraint.
>> Those may have been true for some years.
>> Yeah. But they didn't continue >> and exactly so and and and having accepted in principle our argument that the intask period had to be considered separately and not lumped in and for all the reasons that we discussed that actually isn't done. They do set out the market share separately, but then they treat that effectively as determinative uh and inevitable that dominance follows from that. And I've got some further submissions to make about that. But the the submissions will the so the court will be fully familiar with the endless um case law about the presumption arising from market shares, but none of that case law suggests that it's conclusive and you stop there. All of them say you've got to look further.
Sometimes language of exceptional circumstances is used depending on the market share and how great it is.
Certainly by the time we're down to 40 to 50% we're not in in that territory and we're inviting the tribunal to take an overall view of this including the precariousness of our position. The fact our volumes are going the fact that prices >> stability of market share is always important over time.
>> Sorry they >> stability.
>> Yes.
>> Over time is always relevant.
>> Yes. and and um having lost 50% because because the remaining 50% were effectively eight big customers well some of them bigger than others but eight customers you lose one of those and your market share would go down don't lose them you would have that stability but there is a package of of office again come to a package of reasons why we say that they would want to stay with us because they order bulk from us we provide a free service of all kinds you know there were good reasons why they wanted to go with us. We had unchallenged evidence from Mr. Bert about that which wasn't cross-examined.
Economic value that was offered that in some level combined with a continued perception of regulatory risk perhaps in some cases more than others. It's difficult to tell but hence the review of all that documentary evidence, the forensic analysis of it all led to a situation where we said we could not be taken to be uh to be to be dominant. And my submission to this court is that this assessment of um uh uh uh dominance is woefully inadequate even on the terms which the task it set itself the tribunal set itself of examining each phase individually because significant characteristics of the entas period vanish. Having having engaged on the that exercise of looking at five different phases separately, they then collapse it all into one conclusion for the whole period.
>> Yeah, that's exactly what happens.
>> Where does this take us? I mean, jumping right ahead. You you you you've um identified what you say is a failure to deal with this at all.
Does that mean we can reach our own conclusions about market dominance or is because of all that evidence we haven't seen, does this have to go back?
>> Um, if you're right about I I have I have alternative submissions about that.
Um the the the first is that you can reach your own conclusion that we were not not dominant uh for the reasons that I've outlined to you that on any sensible approach when you've got those crashing prices, loss of market share um yes an ability to remain to retain a premium but only on the basis you're continuing to reduce it because you're offering something uh which is differentiated um uh but you're not assured of that remaining uh custom. If you're able to reach that conclusion, then the answer is that you can you can find that in during the intask period accord was not dominant. If you're not able to reach that conclusion, then it needs to be uh remitted. And my primary submission on that is it needs to be remitted back to the CMA because this assured customer base thesis was uh plainly uh wrong. But if you're not prepared to do that, then the further alternative is to remit it to the tribunal uh to have another go.
um you'd have to consider in that circumstance whether it's the same tribunal or a different tribunal, but you wouldn't make a judgment about that on the basis of a single issue alone.
You'd see where you've got to at the end of all the issues and see where that where that took you as a whole.
>> So I won't address you further on that now, but obviously that's the that's the order of of preference and it's very sensitive to what you find and what you don't find.
Um can I just show you one more thing before I move on uh from uh uh uh dominance? Um um uh this uh so prioritization of market shares is is not what the CMA was inviting the tribunal to do either any more than we were. I can give you the references.
CMA defense paragraphs 176 through to 179 which is at reference supplementary bundle page 538.
The CMA's closing at paragraph 241 reference bundle 1212.
uh uh uh treated market share conventionally as a starting point and of course wanted to say that we needed to demonstrate exceptional circumstances and all the rest apart from that we say you have to look at that all as a whole consider it in that light not treated as conclusive can I just show you our closing submissions on this subject again just not dealt with at all by the tribunal it's in the core supplementary bundle at page 235.
We'll see there is a section on the weight to be attached to these market shares. We make the submission at 37 can be no more than the starting point.
They're not determinative.
And then a review of the case law. I won't take time over it now, but 38 going down to 39 referring to the text textbooks. we scroll on to the next page >> and then you'll see that um no doubt because of limitations on page lengths uh the annoying habit of lengthy footnotes from page 237.
>> Mhm.
>> Um and a review of all the cases on how market share obviously the main plank of the CMA's case should be should be dealt with. I don't propose to go to go through it all now, but that those submissions on this point ran through to page 243 of the bundle.
I tell you what, none of this is dealt with. There's just no consideration of the of these points at all.
And we're just told for reasons we don't understand. Well, this this lower market share in your intas period is nonetheless conclusive and um no real consideration of whether whether any further inquiry from that is is necessary.
Notably and tellingly, the CMA therefore put in respondents notice eating to butresses. It's paragraph five of the respondents notice the core bundle at page 67.
What this does is to seek to rely on its own decision in respect of matters which form no part of the tribunal's decision.
It's a it's a foray into factual argument.
More telling is my own friend skeleton at paragraph 71 where there's an attempt to argue that the tribunal's approach simply differed as a matter of form and not substance.
a hopeless assertion in my submission entirely ignoring the extent of the departure from the CMA's approach not just on market definition but the dominance analysis adoption of purported adoption of a phased approach and then the concentration on market shares which is precisely what the CMA had not done and did not contend should be done it was seeking in its response notice and skeleton to resurrect its own decision in preference to the tribunals's flawed analysis our appeal against that decision we say effectively remains outstanding.
>> So those are my submissions on on dominance.
>> Can you just my help um give me a where I can find the market share set out because I think I've seen you talk about 40 to 50% the CMA talk about it's always over 70%. You're obviously talking about different metrics. Yes, I think I showed you in the um uh tribunals's judgment um there is um tables beginning uh from page 437 of the core bundle.
Um uh which goes right back to August 20.
Oh, sorry. It's earlier begins earlier.
Sorry, not giving the right reference there. Um, sorry. Beginning at page 428, which goes right back to October 2008.
So, the market shares the the last two columns.
Uh, so starting at 100% obviously in October 2008.
And so that then there I think I showed you earlier page 439 which is when they get to the INTAS phase and I showed you those percentages for market share >> and it ended with the final period periods 10927 >> that's big >> that was when you get to 40.5% volumes and and of course the revenue >> market shares so we can look at that >> is that yeah >> that's not uh I'm not Sure, that that's not intask yet. No, that's 439 for inas.
I think we went 438 there.
Then the intask phase begins. And if we continue down from there, >> go down a bit more.
>> That's the beginning of the intask phase.
>> The beginning and then the >> and then on the bottom of the following page >> is the average >> is the average periods 109 to >> 40.5 >> 27. It's 40.5 is average over the whole period. Yeah.
>> Yeah. And which is the correct way of looking at it, volume or revenue?
>> Well, the straightforward answer to that, my lord, is is is both. You shouldn't ignore either. Um the CMA advanced a case before the tribunal which it did not accept which is that revenue was more more significant. Uh in the case of differentiated markets, you look at you look at revenue and therefore value of the market um and and not just volume.
Now you can see why that would be the guidance in most cases involving differentiated products because otherwise how do you comparing like with like. But here you've got a situation with 50% of the market going one way 50% the other going the other way. Um with the market supposed market power lying in the assuredness of that remaining 50%.
Of course if you're charging that 50% a higher price than the skinnies are charging then your market share by revenue is going to be higher. I'm not sure that's an indication of greater market strength and the dynamics of this market.
You're you're looking at here the threat that someone could re-evaluate the regulatory risk and take the money uh simply for example by asking the MH can we do this in which case they say yes.
Um so um the answer is I it's all an evidential picture that CMA's case that you should prefer and concentrate on the value was rejected. you have on that is um uh uh two paragraph 293 of the judgment bottom of page 441.
They say the relevant market shares brackets by volume and by revenue. So they look at both without preferring one over the other.
I can take my abuse submissions a bit more more quickly. They don't be relieved to hear. But um and that's partly because I've I've covered some of the ground in particular this point about u the assured customer base because that runs into the abuse arguments as well.
Uh and we had an argument which is issue one on this court's list uh that um we were not imposing excessive or unfair prices as the statute and indeed the underlying treaty refers to directly or indirectly imposing unfair selling prices.
That is what the statute says in a non-exhaustive way. But that is the abuse which Accord UK was accused of committed.
That's in the decision I showed you earlier paragraph 1.4A of the decision on page 657 which is expressly using the language of the statute which is then repeated and set out from paragraph 5.23 and following page 1076 of the core bundle.
Now the short point is this. Offering a price to the market which a buyer is free to accept or decline.
It is not to impose an unfair price. A seller can only be said to be imposing a price when it's one which a buyer has no choice but to pay.
Could >> that would be true of an essential facility.
>> Yeah. But if we've got a company with say 50% of the market but still has power over price demonstrabably customer still have a choice to go to the other 50%. But for whatever reasons it doesn't. Does that mean on your analysis it cannot in principle be an abuse because it isn't coercively imposed?
>> Well the question is where does the dominance not lie? I mean there must be a re it's very facts sensitive.
The fact that someone has 50% of course doesn't mean they're dominant. They may be in which case there'd be something else which indicates why that is or an absence of other things which indicate why that isn't. So what is it >> definition? If you've got 50% and the rest of the market got 50 perhaps dispersed between three or four competitors still dominant. They're all in the same product market >> and you've got a degree of it's a degree of power over price. It isn't absolute power. But but nonetheless there may one of the sources of your dominance if dominant you are may be because some customers or significant proportion of customers are assured for example you cover a certain geographic area or wider national market whereas your competitors are more focused on on lucrative local areas they're in Manchester Birmingham and London have captured big parts of the market there but aren't competing in rural Scotland. Now um in those circumstances you may well have only 50% of the market but you're still able to impose a price profitably which is excessive.
>> What about instead of impose get away with because you've got a sufficient degree of power over price.
>> Yeah. Yeah.
>> I mean impose is I mean I we understand that one sense of it has a coercive element to it.
>> Yeah. But I'm not certain in the context of to sufficient degree of power over price that you can impact a snip test in your favor. That doesn't suggest absolutism.
>> You you don't need to have absolute power over the whole of the market in order to be able to exercise that market power over the segment the part of the market which you have captured. And you may still be able to charge an unfair and excessive price. And if you can, >> you might do so without imposing it. And as I understand your argument, there's an element of you you are so powerful that they've got zero choice at all.
>> Yeah.
>> If you if you if you have 60% of the market or 70% of the market, >> 30% of the market is elsewhere, press can always choose to go elsewhere.
>> Well, not always.
>> That's not imposition in that sense. But >> that is coercion. M is is is the customer can't always choose to go elsewhere.
>> No, I understand that. Can't >> and if if in sufficient number they can't then that that is likely the explanation as to why that undertaking is dominant.
>> But is that is that the same as imposing a price >> on those customers? Yes. On your >> customer you ask us to find imposed means. You're assuming that imposed means there's a captive audience who cannot escape under any circumstances >> which is exactly >> which is an example of dominance but it's not the full definition of dominance is it?
>> No that that is that is not the full definition of dominance but it is a likely scenario in which um uh u in which um uh a dominant undertaking could be excessively pricing. How do they get away with that?
>> I suppose there's any disagreement to that proposition. I mean, but if you're you're defining dominance and abuse around that definition and not accepting that it goes wider.
>> Well, classic classic examples of where excessive pricing can can arise. One is where you you are unavoidable in in some sense. Another is uh maybe where there's primary and secondary markets where they they've they've bought the watch, now you're going to charge them for repairs or or or whatever it is. You may not be dominant in the market for for watches.
You may be dominant in in the market for repairs of that watch. Whatever it is, you you there are circumstances in which you can get away with charging an unfair price where the customer is not in a position to upsticks and leave. That's the normal response to a customer who feels they're being treated unfairly.
Now, you've got a range of of scenarios and they are facts sensitive. Uh and in Lataterel for example, you had those um single uh fixed uh phone line services uh with a market um exemplifying or said to be exemplifying in in at least in part of the part of that market a degree of inertia. perhaps typically one imagine sort of elderly people are affected and not interested in getting broadband or whatever and um not not not motivated to look around and and and see what alternatives there are in that circumstances. Sorry, >> they weren't coerced. They weren't they weren't they weren't coerced but if >> they might not have been a nurse >> but if the if the operator if the undertaking knows that they can impose a price which is not going to be met by a choice being exercised then they are imposing a price. So you could have the theoretical ability to to walk away, but if in practice you're not going to then you're not imposing um uh then you are imposing a price. And that is why in this argument, the CMA's argument about this assured customer base filtered in to their argument about abuse as well because they were saying it's because they're assured that you can charge these higher prices and that's the only reason you're getting away with it.
>> Is there any authority on what what's meant by imposed?
>> Yes, I'm going to show you some uh some fairly recent uh authority.
Um I'm going to show you uh um uh two in particular.
>> Okay.
>> Uh one is this court's decision in in in Lio Letharan uh very brief reference.
>> Yeah.
>> But then there was a more developed discussion in a more recent decision the tribunal chair by Peter Roth uh in the GMAN and first trains case. I'll show you that in a moment. Um uh but the um uh what I the point I do start by making is that one thing for the CMN's decision to say well you imposed this price on a captive class of customers. We appeal that and we say well there is they're not captive and we didn't impose it. Um, and the two are linked to that extent, at least on the facts of this case.
>> There's a >> because if they're not captive and they're not assured and they can switch if they don't like the price, there is nothing stopping them from doing so.
>> Would you I mean, I I think you'd accept that if they in fact had no choice for they were regulatory required to to dispense full label, then >> that would be an imposition. um that I I you might accept that if they have a choice but they perceive they don't because they perceive there are risks in relation to dispensing skinny labor then you might still be imposing a price if you take advantage of that >> perception >> by maintaining high prices. If if it was possible to assume yeah >> that no matter what you did with the price say you didn't because you actually dropped the price >> dropping the prices and they say well not fast enough is the argument you should have gone down down faster and so you're imposing these prices the answer is we're not imposing them because at any point they can say we don't like this price we are going to look again at this risk because we've noticed 50% of the market are doing this what is what is the position and so again this where the supposed immutability of that view of that assessment of risk when in reality there is no risk uh cannot be counted on and it's not what by by INTAS by accord it's not what the core was doing in dropping those prices um and so this again for time reasons uh uh I'm just going to give you some references Dr. James Burke gave evidence saying we didn't impose prices at paragraph 49 of his witness statement as in the reference supplementary bundle page 20 uh page 39 uh wasn't cross-examined. The point was most fully argued in our reply paragraph 67 to 73 that's page 734 of the reference bundle and our closing submissions of 114 to 116 page 284 of the core supplementary bundle. So we raised all this. What did the tribunal make of it? The answer is it didn't make anything of it at all. It didn't address it. And you see that uh in the judgment of paragraph 304. It's on page 444.
Number of other gs of pill we can deal with. Now it suggested the cord UK's prices were not imposed on its customers but the customers exercise choice in favor of the product because it had additional value to them. This adds nothing to the points we set out at 3032 above. Let's scroll up to that 3032.
That's the point about economic value.
So there's there's no discussion with the submissions we made. I've given you the references for about what the nature of imposition is to show you the authorities on that I've indicated uh in the authorities bundle page 2078 it's the liar fyronine decision paragraph 193 synd Then yes, where the nature of the abuse summed up by my lord in the last five lines, the abuse arises from an imbalance of power between the parties which gives the dominant party the power to impose unfair terms. It's this which accounted for as unilateral characterization not negated merely because economic power is exercised through medium of contract.
This is responding to an argument made by advance that while they contracted with us it was all agreed um we didn't impose it and the answer is that you're exercising unilateral power notwithstanding the medium because of your market power that's the imposition of unfair terms wasn't discussed beyond that but in uh good man it is discussed that's at page 2171 from paragraph 83 three.
So this is the uh the boundary fairs paragraph 83 where just in some context it was um obviously uh fundamental to the class representatives case in that in in that case that in some way the operator was imposing unfair prices on consumers by not easily making available or making obscure the availability of boundary fairs for those who have travel cards in London and want to travel from the edge of London rather than be charged for traveling from the middle of London.
Uh but there's a discussion of the authorities on this and at 83 uh uh Sir Peter Roth uh uh having gone through the authorities noted in particular all the discussion is premised on an unfair contractual term which has beenized imposed on the victim of exploitative abuse. As we've noted in both Deutsche Telecom and DSD, the customer wishing to use the service had no practical alternative to paying the impuged charge. In Meta, the court stressed that the German courts finding that consumers wish to use the Facebook social network had no alternative but to consent to the terms entitling Meta to broad access and use of their data and the reference to the recent commission decision in um music streaming and Spotify. If if the findings are as they're described here, then it's plainly correct to say they were imposed. If there was no choice, >> I think our concern is that that defines the category of unfairness too narrowly.
>> Yeah.
>> Is there anything else below that citation from the commission?
>> Not not very much of interest there apart from recognition imposition could be de facto.
>> Let me just drop down the page just to see the rest of Okay, we move on.
What there is I was just going to show you briefly is the references to Deutsche Telecom and DSD which are uh paragraphs 54 onwards.
>> So I'm sorry to just go to the next page please.
>> Oh yeah. Okay. Yeah.
>> I'm not sure it's going to assist much further but going back to page 2158 just the references to Deutsche Post.
That was a case where the German postal service was charging the full internal Germany postal rate to packages which were being posted from Holland, people wishing to take advantage of Dutch international postal charges. Uh and uh what the tribunal drew is at paragraph 56.
Two points notable. when it posted demand on Holland to its German customers, there was no way the bank could avoid paying the postal charges demanded by Deutsche Post and Deutsche Post were effectively double charging there. um >> de facto unavoidability >> de facto unavoidability and in relation to DSD uh uh that is from par power paragraph 57 that's discussed and this was about fees for packaging uh and again what the tribunal drew from this is that paragraph 59 is that customers of DSD had no practical alternative to fixing the DGP logo to all their waste package packaging, but they would get paid by those customers for collection of packaging which they didn't in fact collect at all. So again, it left the customers with no choice. So they're imposing unfair terms on them. I mean what you can say is that if on the facts or on if reading the cap decision the cap judgment or CMA decision the evidence doesn't suggest there was this unavoidable trading f then you've got a serious question mark over whether there was imposition >> exactly >> whether the law stretches to that that's that may even >> even if the court's not with me on the full breadth of my submission in this case can Can it be said once you knock out the assured customer base or at least there's no finding in the tribunals response to our challenge either way of assured >> that about 50% of customers do switch.
>> Yeah. Then are you imposing price on those who choose to remain and we say no or not >> whether you're in the >> Yeah.
>> Okay.
>> So that's that point. Um then uh last five minutes today there's the end of the abuse uh topic which is the issue uh three on the court's list which was concerned a related argument that we raised which is that far from imposing prices.
Our prices were the product of a normal and sufficiently competitive pro uh pro process characterized by high levels of market entry and exact an exact inexurable price reduction.
And um the short point is it didn't require a perfectly competitive outcome on day one of Intas's ownership. There was a process of workable competition. I think in in that we covered a lot of this territory earlier on in my exchanges with me before the outset of my submissions. Um uh and I told you earlier that the CMA had accepted in their closing submissions to the tribunal that um there was an effectively competitive market at that point. That is in their closing submissions at paragraph 310 which is at page 1239 of the reference supplementary bundle.
And the point that we make about uh that is that um uh uh the market structure as I discussed earlier with my odds um had not had not changed. It was the same structure. It's the same level of uh market competition.
I think that takes us back to the submissions which I made at the earlier uh stage.
Uh this issue is also raised my friends uh submissions and um uh of course they say from their point of view uh that the writing was on the wall as early as 2015. That's not part of my case but for completeness that that's their submissions in their skeleton argument and they say that same argument therefore runs back further.
And there's reference in both our skeleton arguments the case of NAP which is in the authorities bundle at page 362 390.
which is a reference to the director of fair trading. In that case, stating as a matter of principle, the price is excessive. And the quote from director's decision at the top of page 363. It's above that which would exist in the competitive market where it's clear that high profits will not stimulate successful new entry within a reasonable period. Therefore, to show that prices are excessive, it must be demonstrated that prices are higher than would be expected in a competitive market. And secondly, there is no effective competitive pressure to bring them down to competitive levels, nor is likely to be uh at 391 that was accepted as being soundly based in the circumstances of that case. It was recognized that there might be other ways of approaching the issue in other circumstances. No doubt.
Now that authority only takes either of us a limited way but it's the same nature of the inquiry we submit in this case which is in the circumstances of this case properly understood and approached was uh uh was there likely uh to be entry and certainly from the start of the intask period well there was and it was likely it would be increasing as there was over uh time so we had that competitive market which reduced uh the prices relatively rapidly uh ultimately to the level >> you have a set of facts which I think you have to rely upon because um if the price had been a thousand and there had been entry it had come down to 980 as in you know as in Simon I always find that easy in the tongue twister of describing the drug name but in the Simon case you it was accepted that there was some sort of I think they called it sticky or gelatinous pricing once new entry came in and there was a degree of polyopoly conscious parallelism that prevented at least for quite a long time the price coming down to a competitive level. So it just to say new entry or likelihood of new entry doesn't necessarily get you very far doesn't tell you where the price is going to end up. You can say here on the facts that it did come down from the height of the matter horn >> almost to ground level when it began to converge with >> the new entrance prices. So you're not stopping halfway down and putting down base camp and saying this is fine. you you you managed to get more or less to the bottom. Now quite what you know how you analyze the period as you're coming down you know you're still earning prices above the competitive level. What that means in terms of abuse is something we'll have to grapple with.
>> We need to grapple and >> but you've got better facts than perhaps the tribunal.
>> Yeah. Um but then in this case we said the tribunal didn't didn't grapple with our submissions about this and the effectively competitive market. again um you've had lots of submissions already uh from my learned friend on on the abuse and I don't want to repeat any of that sort of for sure in the um in the intas period.
>> Yeah.
>> Um other words I see the time I'll break off. I think I have to do my sums. I think I've got about 50 minutes left tomorrow leaving 15 minutes for a reply at the end of the case.
>> Um I think I can refine and and reduce what I was going to say on the economic value in light of the submissions that you heard. There are some int specific points. I'll make those as brief as I can and then I'll be moving to penalty.
>> Maybe you can just tell us where we are in terms of submissions and so on.
>> Well, >> we haven't given a time table somewhere.
>> We have it's at the end of the reference bundles which the last it's the end of the reference bundles. I think the penultimate tab page number that's the wrong bundle.
Yes. One. It's 1984. The reference supplementary bundle.
>> It's not very illuminated. I've got Is that the one which just says they're still discussing? Has that been updated?
>> No, that substitute >> reference.
>> We did we did update that um admittedly admittedly comparatively recently.
>> It's too late. I mean the problem is if it's updated that late if start marking things up, I can't start transferring things. Um that that is the version.
Yes, that is the correct version that you have on the electronic assistance.
>> Um so that was the breakdown of issues amongst the appellants. If we just drop down to the bottom of the page, you can see that the time allocations page I think time allocation usually about four and a half. So because my defense submissions are split half and half between >> I'm the sandwich.
>> You're going to tomorrow deal with some penalties.
>> I'm going to deal with the penalties and then my learning friends between them their submissions will follow on to complete the appellent case within those overall >> Mr. Johnson.
>> Yes, I also have something to say as well. The entirety of our penalty appeals remain to be dealt with.
>> We gather that. Yes.
>> And you'll finish by >> I'm going to have to do the sums. So I think I've got 50 minutes, but I'll be corrected if if I'm wrong.
>> Well, put it this way. When's the When do you hand the bat to the CMA?
>> Oh, uh that I haven't done the summons on, but it would be presumably about lunchtime tomorrow would be a or something on the ballpark. May May I ask if the if we did ask I know it's only 15 minutes um but if the court is prepared to Well, we we we're conscious that people have applied to squeeze in an extra 15 minutes so you get precisely >> heavily negotiated.
>> Heavily negotiated. We can squeeze in bits and bobs here and there. We could start a little bit earlier tomorrow.
>> Yeah, >> we could start at I mean I have a couple of precourt meetings, but I should be we should be able to start at say 10:15.
>> Thank you.
>> And then um we may have a bit of time the following day to start early. So we may be able to grab a bit of time back.
Should we aim for a 10:15 tomorrow?
Thank you.
>> Very grateful to the court. Thank you.
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