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Astrazeneca Ltd v Commerce Commission

Astrazeneca Ltd v Commerce Commission

Case [2008] NZCA 479 11 November 2008

Anti-Competitive Conduct

Market Power

Exemption

Jurisdiction

Statutory Interpretation

Limitation Periods

Commercial Law

Competition Law

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IN THE COURT OF APPEAL OF NEW ZEALAND
CA241/2008
[2008] NZCA 479
BETWEENASTRAZENECA LIMITED
Appellant

ANDCOMMERCE COMMISSION
First Respondent
ANDPHARMACEUTICAL MANAGEMENT AGENCY
Second Respondent

Hearing:21 August 2008

Court:Glazebrook, Fogarty and MacKenzie JJ
Counsel:M N Dunning and T P Mullins for Appellant
K L Clark QC and M M Davie for First Respondent
M G Colson and R E Brown for Second Respondent

Judgment:11 November 2008 at 4.00 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellant must pay each of the respondents costs for a standard appeal on a band A basis and usual disbursements. We certify for second counsel for the first respondent only.

____________________________________________________________________
REASONS
Glazebrook J  [1]
Fogarty J (dissenting)  [19]
MacKenzie J  [79]
GLAZEBROOK J
Introduction
[1]        AstraZeneca Limited (AstraZeneca”) appeals against a judgment of Panckhurst J (HC WN CIV 2007-485-002580 16 April 2008) which upheld the validity of a notice given to it by the Commerce Commission under s 98 of the Commerce Act 1986. AstraZeneca argues that s 53 of the New Zealand Public Health and Disability Act 2000 (NZPHD Act) provides it with a total exemption from the Commerce Act in the circumstances of this case.
[2]        I agree with Panckhurst J that it would be premature to make a definitive ruling on the scope of s 53 of the NZPHD Act at this stage. This can and should be done only in light of the full factual background as it may be ascertained after the Commission’s investigation. This means that I would uphold the validity of the s 98 notice.
[3]        The background to this appeal, including relevant extracts from Panckhurst J’s judgment, and the issues, are set out at [19] ‑ [31] of Fogarty J’s judgment.
Panckhurst J’s reasoning
[4]        Panckhurst J’s main reason for finding in favour of the respondents was that it was not clear at this stage whether there had been any anti-competitive behaviour on the part of AstraZeneca and, if there had, whether it took place in the context of contractual negotiations and was for the purpose of securing an agreement. As such, the Commission was entitled to take the view that it was necessary and desirable to investigate further and thus to issue a s 98 notice.
[5]        Panckhurst J’s secondary (and confirming) reason was that the scope of the exemption from the operation of Part 2 of the Commerce Act provided by s 53 of the NZPHD Act must be interpreted in line with its purpose, as ascertained from an examination of the statutory context and the legislative history.
[6] Panckhurst J referred to ss 47 and 48 of the NZPHD Act, which set out the objectives and functions of Pharmaceutical Management Agency (Pharmac). He characterised the statutory purpose of Pharmac as being to secure “pharmaceuticals which promote the best health outcomes achievable within the budget provided”: at [71]. Against that background, he considered it clear that the exemption in s 53 had been provided so that Pharmac could structure agreements…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Astrazeneca Ltd v Commerce Commission

Details

AGLC: Astrazeneca Ltd v Commerce Commission [2008] NZCA 479
Case: [2008] NZCA 479
Decision Date: 11 November 2008

CaseChat Overview and Summary

The case of AstraZeneca Ltd v Commerce Commission involves an appeal against a decision of the High Court that upheld the validity of a notice given to AstraZeneca by the Commerce Commission under s 98 of the Commerce Act 1986. AstraZeneca argues that s 53 of the New Zealand Public Health and Disability Act 2000 (NZPHD Act) provides it with a total exemption from the Commerce Act in the circumstances of this case. The Court of Appeal found that it was premature to make a definitive ruling on the scope of s 53 of the NZPHD Act at this stage. The exemption provided by s 53 of the NZPHD Act must be interpreted in line with its purpose, as ascertained from an examination of the statutory context and the legislative history. The purpose of s 53 is to protect Pharmac in its role of concluding pharmaceutical arrangements that are in the public interest and for the public benefit. It does not exist to enable a supplier with market power to engage in anti-competitive behaviour. The exemption is aimed at the attainment of public benefit and extends to pharmaceutical suppliers because this is necessary to ensure that Pharmac is free to enter into collusive purchasing arrangements. However, the scope of the statutory exemption is not so clearly defined for it to be said with certainty that any given factual situation will fall within it. Further, in this case we do not even have an agreed statement of facts and what factual material there is (and the preliminary interpretation of that material by the Commission) is disputed by AstraZeneca. The appeal was dismissed with costs in favour of the respondents.

Orders