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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Chemistree Homecare Ltd v Abbvie Ltd [2013] EWHC 264 (Ch) (11 February 2013) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2013/264.html Cite as: [2013] EWHC 264 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Rolls Building
		11th February 2013

MR. JUSTICE ROTH:

INTRODUCTION

1. This is an application for an interim injunction concerning supplies of a patented medicinal product marketed under the brand name Kaletra. Kaletra is a protease inhibitor used as one of the elements in combination therapy of antiretroviral (ARV) drugs used in the treatment of patients with HIV-1, the most common form of HIV. It comprises a mixture of lopinavir and ritonavir.
2. The defendant is part of the Abbvie group of companies. Kaletra is manufactured by another company in the group based, I think, in Holland. The defendant is an English company and supplies and distributes Kaletra in the United Kingdom.
3. The claimant carries on a pharmacy business, and in that capacity, and as its name suggests, it supplies homecare services to NHS hospitals. Homecare is a service provided only for certain types of illness or treatment. It involves the pharmacy not only dispensing the drug and delivering it to the patient's home but the administration of the drug to the patient, often by a nurse or health care professional. It is used primarily for drugs that are administered by perenteral infusion. It is obviously of value to patients with limited or no mobility but can provide other efficiencies for the health service providers. ARV drugs given to HIV patients are therefore among those for which homecare provision is particularly appropriate. The witness statement served by Mr. Hundal on behalf of the claimant states that the claimant is the largest independent homecare pharmacy service provider in the United Kingdom.
4. The claimant also carries on business as a wholesaler, holding a licence for that purpose under the Medicines Act 1968. Mr. Hundal states that he was appointed the claimant's "responsible person" for the purpose of that licence in 2009, so it is evident that the claimant has been a registered wholesaler since at least then and perhaps some time before. Whether the defendant was or should have been aware of this is one of the matters raised in these proceedings.

THE FACTS

5. In 2005 the claimant was awarded a contract to provide pan-London HIV pharmacy home delivery services. This involved dealing with the hospitals caring for HIV patients in the Greater London area. As a result, the claimant approached the defendant and opened an account with it for the supply of Kaletra and also another drug, expressly for the purpose of fulfilling its obligations under that contract. It appears to be a three-year contract since Mr. Hundal says that it was renewed in 2008 and again in 2011.
6. Throughout that period the defendant supplied the claimant's orders for Kaletra and it is not suggested that there was any problem. Kaletra comes in various presentations, both tablet and liquid. Use of Kaletra steadily increased and by late 2011 the claimant was being supplied with about 330-380 packs or boxes per month. In early 2012 the total rose in some months to over 400 packs. The defendant noticed from the monthly rebate reports that were submitted by the claimant in order for the defendant to process the rebated price under the arrangements with London NHS Trusts that not all supplies were stated to relate to homecare services under the pan-London hospital contract.
7. On 28^th May 2012, Karen Wharfe, the defendant's national account manager, emailed Kishor Vyas at the claimant and asked him to provide details of the contracts that it had to supply homecare services and to which what the claimant had described on the report as "non-Pan-London supplies" related. On 14^th June, Ms. Wharfe sent a chaser email seeking a response. There has not been exhibited the full email exchanges on this topic over June 2012, but it seems that in response to the order then received for further supplies the defendant asked for information on the prescriber and the hospitals where each prescription was issued but not, of course, the names of the patients. That led to the suggestion from the claimant that to supply this information was unlawful. Ms. Wharfe responded, also on 14^th June, saying:

"Dear Hitesh,

"I am surprised that you consider our request for information on the prescriber to be unlawful. It is neither a breach of the Data Protection Act nor a breach of the TFEU. Please note that we are not refusing to supply with product, simply making the supply conditional on the provision of certain limited information. We are not asking for patient details, which might indeed be considered confidential, but of details of the prescriber and the hospital where the prescription was issued in order. We need this information to verify the validity of the prescription. I look forward to receiving that information in due course."

8. The next day, Mr. Budhdeo, a director of the claimant, wrote to Ms. Wharfe as follows:

"Thank you for your email requesting confidential commercially sensitive information. Can I kindly ask why you require this information? Can I also ask if you intend to stop supply in the absence of this information?"

9. On 18^th June, Mr. Dalsaniya of the claimant wrote a long email to Mr. Wharfe. This alleged that requesting these details was unlawful under the regulatory regime for medicines and infringed both the Data Protection Act and UK and EU competition law. There matters seem to have rested and the orders for delivery in July and August were fulfilled.
10. However, on 7^th August, Ms. Wharfe reverted to an earlier query, writing to Mr. Budhdeo as follows:

"We note from your recent reports that you would appear to be providing our product Kaletra to third parties other than the pan-London trusts. We would like to remind you that the Intecare Homecare Limited account (we understand this is Chemistree's previous company name) was only opened on the basis of Intecare's agreement to provide homecare services to the pan-London trusts. Could you please provide us with details of any agreements to provide homecare services to any other trusts?"

Mr. Budhdeo responded:

"Dear Ms. Wharfe,

"I am sorry, but that is not my understanding at all. Should you wish to meet to discuss this, please let me know."

That invitation was not followed up, and the deliveries were made of 530 packs of Kaletra in September and 522 packs in October.

11. For November 2012 the claimant ordered about 1,249 packs. That was over twice the quantity previously supplied. Moreover, that order required 660 bottles of the tablet formulation, as compared to the tablets in blister packs, whereas over the previous seven months the claimant had ordered only six such bottles. That order was delivered, but it resulted in the defendant having an acute shortage of Kaletra in this presentation in the United Kingdom, which was resolved only by diverting to England a delivery from its Dutch manufacturing affiliate that had been destined for Ireland and thus reduced supplies there. Every drug supplier, of course, seeks to plan its stock levels and ensure continuity of supply.
12. The order evidently raised concerns of the defendant as to what was going on since on 17^th December Mr. Kalra, the business development homecare manager at the claimant, sent a detailed email to Ms. Wharfe which I should quote:

"I understand you have been trying to get through to various members of staff for queries involving the quantity and allocation of the items we have ordered. Firstly, I apologise for no-one getting in touch with you. I have looked at all the orders placed and, yes, the quantities have increased. There are several reasons for this that I hope will shine some light on the matter. The department has had an increased number of prescriptions over the last two weeks due to the majority of hospital clinics closing for the holidays by the end of this week and nearly 80% of these deliveries will need to take place before Christmas, and hence this has caused an increased burden on the stock requirements. As a pharmacy provider, we are also required to keep a stock allocation for emergency prescriptions that we may have to dispense over the holiday season and hence a 10%-15% contingency is kept on the shelf for this reason. A pharmacy service will be running through the holiday season, and hence the orders are to cater for the allocation of deliveries up to the end of the first week of January."

13. On 18^th December, Mr. Crispin Ellis, the commercial manager of the defendant's commercial operations group, wrote to Mr. Vyas at the claimant as follows:

"As set out in my earlier email, we have taken the time to review the position in relation to our HIV medicine stock position and supply."

He then refers to the position regarding the other drug, Norvir, and continues:

"With respect to Kaletra, you will be aware that we recently experienced a critical stock position with one of our products, the first time in my experience this has happened and something we take very seriously at Abbvie. In the circumstances, we have taken the opportunity to review the sales history of these medicines for all of our homecare providers, including Chemistree. This is to ensure that we meet our supply obligations for UK patients. As such, can you please complete some information for us in the attached file … information is required on two worksheets, as highlighted in yellow. In all cases please provide your response in terms of number of packs:

"(1) Worksheet current stockholding – please indicate your current stock on hand at close of business 18^th December 2012.

"(2) Worksheet sales by trust – please indicate the month to date sales/deliveries from Chemistree to the hospital trusts, unfulfilled orders for these hospital trusts and any projection you may have for further orders from these trusts in December.

"Please can you send this information to me by 12 noon on 19^th December if we are to meet the delivery timelines you may desire. In the meantime, if you have urgent patient need, please provide evidence of this and we will ensure immediate supply."

14. Over the next few days there were increasingly heated exchanges between the parties, with the defendant expressing concern over the further orders that it received regarding not only Kaletra but also Norvir. The total quantity of Kaletra ordered for delivery in December was 1,368 packs, although that comprised several orders received in stages. In response to an email expressing concern that these orders were not being met and the urgent patient need, Mr. Ellis wrote on 19^th December:

"You have mentioned you require stock for urgent UK patient need but that you cannot evidence this because 'In accordance with the Medicines Act and data protection, such patient information I will not be able to provide to you'. We are not suggesting that you send us patient information in breach of the Data Protection Act 1998. To the contrary, we are requesting copies of all anonymised prescriptions that you have. This is in order for us to verify and understand your stock requirements in order to meet UK patient need.

The alternative and more speedy resolution to help with supply would be for you to complete the spreadsheet that I have provided and I will attach again for you to complete."

15. In the afternoon of 20^th December Mr. Vyas sent an email to Mr. Ellis, copied to the claimant's solicitors:

"We have been ordering on a weekly basis for our stock requirements and that practice has been consistently followed by us. Due to holiday season and as most of the hospitals are pushing prescriptions pre-Christmas period, we are asked to fulfil increasing numbers of emergency orders apart from our weekly orders. I am attaching details of Kaletra supplied to us for 2012. We have ordered consistently based on requirements placed on us. [December] 12 orders are in line with those requirements. In [November] 12, our procurement team had spoken to your customer services team and had explained them back orders we had to clear before this year end and additional requirements that were placed on us. For [December] 12, as we are approaching holiday season, we have raised orders before 16^th [December] to ensure stocks that we get from Abbott would meet requirements of our normal orders, back orders, emergencies and stocks on shelf. This will take us through till 6^th January 13 and, hence, we are talking about three weeks worth of requirements. We have placed one additional order on 14^th as we were expecting higher demand for stocks due to patients going on holidays. We do not anticipate demand remaining at such levels in January 13. In relation to the forecast data for December, it is very difficult for CHL to accurately estimate the quantities and, hence, in accordance to the NHS supply guidelines it is essential that we provide an approx 10-15% contingency of stock kept on the shelf for emergencies, especially during the holiday season. This also accommodates bad weather and includes all items within the disaster recovery policy that all medical service providers need to have in place. With regard to the pending orders up to 16^th December, due to the delays in receiving stock, this has caused an ultimate backlog and, hence, further problems for our patients. This is a huge concern for us and equally it should be for Abbott …"

16. Mr. Ellis responded the same day as follows:

"I state at the outset that we are not refusing supply or failing to supply to you. We do share the concerns that you have for patients, and it is because of the critical stock position we have had recently that we are asking for the information attached again to ensure we meet our supply obligations for UK patients. I understand the issues that you may have with regards individualised forecasting given the urgency. Therefore, I have amended the spreadsheet to make the process quicker for you in this instance. Please provide the information required in the current stockholding worksheet for the products and then, please, provide the information in columns L and M on the worksheet 'Sales by trust'. It should be very easy to then calculate the requirements you will have for UK patients based on your incremental 10-15% contingency stock assumption. The alternative is for you to supply all anonymised prescriptions that you have outstanding in order for us to verify and understand your stock requirements."

The enclosures to that email were two tables, one simply asking for the claimant's stockholding and the different presentations of Kaletra as at 18^th December and the other a spreadsheet asking for the sales split by different hospitals covered by the pan-London HIV homecare contract, as explained in the email that I have read.

17. The claimant did not fill in those sheets and, indeed, has still not done so but responded by threatening to apply for an injunction on Friday 21^st December. Mr. Ellis, for his part, reiterated that the request for what he described as basic information since the orders placed in November and December were "well above the orders placed for previous months and well above the orders for, say, last year". In fact, no injunction application was made on 21^st December. On Sunday 23^rd December, another director of the claimant, Mr. Ambi Singh, sent a long email to Mr. Ellis which set out a summary of the claimant's requirement for Kaletra for the period to 7^th January. That summary gave a breakdown as between three categories:

UK Prescriptions	112
EU Prescriptions	363
Wholesale Orders	300

Further, the claimant delivered to the defendant the next day copies of the UK and EU prescriptions there referred to with the names blanked out. Thus, of the outstanding demand for Kaletra set out by Mr. Singh, under 15% in quantity was to cover UK prescriptions comprising the homecare delivery service. I note that the EU prescriptions all come from Lithuania. This email for the first time disclosed that the claimant was operating as wholesalers of Kaletra. Over 38% of the quantity set out in the email represented demand for such wholesale supply.

18. That caused the defendant considerable concern, set out in the response from Mr. Ellis the following morning:

"Having reviewed the attachments to your email, we note that this is the first time you have confirmed to us that you are acting as a wholesaler and you have received EU Prescriptions for Kaletra. Your account is opened on the basis that Chemistree Homecare Limited (previously known as Intecare Direct Limited) is a homecare provider who is supplying UK Trusts against tenders. We have consistently asked to see such information of your contracts with the NHS and you have provided us with details of your contract with NHS London. We have been supplying you with Kaletra based on this information and your obligations to London trusts.

"As this is the first time you have made us aware of your status as a wholesaler we need to clarify the position with respect to our supply chain. We do not supply any wholesalers with Kaletra in mainland UK as Kaletra is a hospital only product. This approach is applied consistently. We use the term 'hospital only' to describe a medicine for which the original prescription would have been initiated by a hospital rather than a GP or a pharmacist. We supply homecare providers who are under a contract of supply with an NHS trust. It is not part of our supply chain to provide wholesalers in mainland UK or EU patients as our supply chain already has excellent coverage. Our priority is always to ensure that supply for UK patients is maintained and to ensure that our products reach those UK patients who have been prescribed those medicines. With respect to the EU prescriptions, we already have an existing supply chain in place and are not currently planning on extending it. In the circumstances, we will review the redacted prescriptions relating to UK prescriptions. We note that the current attachment addressing UK patients does not include the date of prescription whereas the EU log does. We will require this information."

19. I have set out extracts of the exchanges between the parties thus far in some detail but what follows can be taken shortly. The defendant reiterated its position, refusing to provide Kaletra other than for UK homecare provision, and the claimant insisted that this was unlawful. The total ordered for December was 1,368 packs, of which the defendant supplied only 540 packs. By 27^th December the defendant had received an order for 800 packs for January, to which it responded that this seemed to be above the level required for the claimant's UK homecare contracts.

THE PROCEEDINGS

20. On 4^th January 2013, the claimant issued a claim form and an application for interim relief. The application seeks an injunction requiring deliveries of 570 packs of Kaletra per month until trial. The matter came before Hilliard J. in the applications list on 14^th January when the parties sensibly agreed a short-term order for the supply of 120 packs, or boxes, per week until the application could be fully heard.
21. The evidence on this application comprises the witness statement of Mr. Hundal, to which I have referred, and a witness statement in reply from Mr. Ellis dated 9^th January, supplemented by two very short witness statements from him correcting small points in his main witness statement. No further evidence was filed by the claimant. The claimant did, however, serve its particulars of claim on 24^th January. That is a short pleading that makes clear that this case is brought solely on the grounds of alleged abuse of a dominant position under UK and EU competition law.

ABUSE OF A DOMINANT POSITION

22. To establish its claim, the claimant must, of course, show first that the defendant is in a dominant position and, secondly, that it was abusing that position. It is not a breach of competition law for an undertaking that is not in a dominant position unilaterally to refuse to supply a customer, however long standing that customer may be.
23. Since this is an application for interim relief, the test the claimant has to fulfil is, first, to show that there is a serious question to be tried on those two issues or, in the alternative formulation articulated by Lord Diplock in his speech in American Cyanamid, that the claimant has a "real prospect of success"; and, secondly, that the grant, as opposed to the refusal, of an interim injunction carries the least risk of injustice as between the parties. I take the latter formulation from the judgment of the Privy Council, delivered by Lord Hoffmann, in National Commercial Bank Jamaica v Olint Corporation [2009] UKPC 16. As Lord Hoffmann there explained, the test is no different in principle when the claimant, as here, is seeking a mandatory injunction, and I do not think that, having regard to the potential harm to the defendant from the grant of an injunction, the fact that it would be a mandatory rather than prohibitory injunction is of any significance in the present case.

Dominance

24. It is trite to observe that the first step in consideration of dominance is to define the relevant market. As set out in the particulars of claim, the claimant alleges that the defendant is in a dominant position in the market for Kaletra in the United Kingdom. As regards the geographical market, it is generally the case that the market for prescription medicines is national. Mr. Peretz, for the defendant, very properly does not suggest that the claimant cannot show a real prospect of success in that regard, but he strongly challenges the proposition that Kaletra alone constitutes the relevant product market. Mr. Colton, for the claimant, very properly accepts that if the product market is wider than Kaletra alone the claimant cannot show a serious question to be tried or real prospect of success on the issue of dominance.
25. The principles to be applied in defining the relevant market are uncontroversial and are conveniently set out in the European Commission's Notice on the definition of the relevant market for the purposes of community competition law, O.J. 1997 C372/5. In the present case, the primary question is that of demand substitution, that is, the range of products that are viewed as substitutes by the customer of the product at issue. It is not suggested that supply substitution is relevant in the present case.
26. As to demand substitution, the Commission Notice says this at paras. 17-18:

"17. The question to be answered is whether the parties' customers would switch to readily available substitutes or to suppliers located elsewhere in response to a hypothetical small (in the range 5% to 10%) but permanent relative price increase in the products and areas being considered. If substitution were enough to make the price increase unprofitable because of the resulting loss of sales, additional substitutes and areas are included in the relevant market. This would be done until the set of products and geographical areas is such that small, permanent increases in relative prices would be profitable …

"18. A practical example of this test can be provided by its application to a merger or, for instance, soft-drink bottlers. An issue to examine in such a case would be to decide whether different flavours of soft drinks belong to the same market. In practice, the question to address would be whether consumers of flavour A would switch to other flavours when confronted with a permanent price increase of 5% to 10% for flavour A. If a sufficient number of consumers would switch to, say, flavour B, to such an extent that the price increase for flavour A would not be profitable owing to the resulting loss of sales, then the market would comprise at least flavours A and B. The process would have to be extended in addition to other available flavours until a set of products is identified for which a price rise would not induce a sufficient substitution in demand."

27. It is, of course, very possible for a single patented drug to be dominant in a market and it is conceptually possible for such a drug to constitute a distinct market of its own, although that is rare (see, for example, the discussion by the Competition Appeal Tribunal, chaired by Sir Christopher Bellamy QC, in Genzyme Limited v The Office of Fair Trading [2004] CAT 4 at paras.197-221). Everything depends on the facts.
28. Here, the evidence relied on is set out in para.48 of Mr. Hundal's witness statement. He gives three reasons why he says Kaletra is not interchangeable or substitutable with other medication, but on clarification of the third point in the course of argument it is not really relied on. Mr. Hundal's first point is that there is no generic equivalent. However, that is true of all patented medicines while they are under patent and does not mean that each such medicine constitutes a distinct product market. It is the second ground which, therefore, became the focus of argument:

"Once patients have been prescribed and stabilised on Kaletra, prescribing consultants are generally reluctant to change their treatment regime. Prescribing consultants are routinely monitoring the bloods of HIV affected patients. Blood levels are always monitored before a further prescription is issued to ensure viral load and CD4 counts, which need to be within the recommended ranges. Deviation could trigger changes in drug, dosage or both. Once patients are thought mainly stabilised, there is often very little change in treatment regime. By their very nature, the service the claimant provides is most suited to patients on stable regimes who the hospital trust reasonably expects to stay on such a regime for a long period of time, and hence they will supply four to six months worth of medication as a single instalment."

29. In response, the defendant exhibited to Mr. Ellis's witness statement two material documents. The first is the British HIV Association Guidelines for the treatment of HIV-1 positive adults with antiretroviral therapy 2012. In the recommendations contained in those Guidelines, section 5 is entitled "What to start" and Section 6 is entitled "Supporting patients on therapy". Paragraph 5.1 concerns therapy naïve patients and recommends that they start AR therapy on a combination of two drugs of a particular type, referred to as the "backbone", plus a third agent. That third agent is described as one of the following: a ritonavir-boosted protease inhibitor (PI/r), a non-nucleoside reverse-transcriptase inhibitor (NNRTI) or an integrase inhibitor (INI).
30. There follows a tabulated list of preferred and alternative third agents. The list contains four preferred third agents, two of which are ritonavir boosted PIs, or PI/rs, and four alternatives, of which, again, two are PI/rs. One of those two PI/rs is Kaletra. There follows para.5.4 which states, by way of explanation of the table:

"We recommend therapy-naïve patients start combination ART containing one of the following as the third agent: atazanavir/ritonavir, darunavir/ritonavir, efavirenz, or raltegravir.

"We suggest in therapy-naïve patients lopinavir/ritonavir [which I interpose is Kaletra] and fosamprenavir/ritonavir are acceptable alternative PIs, and nevirapine and rilpivirine are acceptable alternative NNRTIs."

31. In Section 6, at para. 6.3.2, the recommendation states, under the heading "Switching antiretrovirals in combination antiretroviral therapy":

"We recommend in patients on suppressive ART regimens, consideration is given to differences in side effect profile, drug-drug interactions and drug resistance patterns before switching any ARV component.

"We recommend in patients with previous NRTI resistance mutations, against switching PI/r to either a NNRTI or an INI as the third agent."

32. The second document exhibited by Mr. Ellis is a series of slides produced in April 2011 by the London HIV Consortium, which is described as a grouping that brings together commissioners, doctors from all HIV clinics in London, HIV pharmacists and patient representatives. The title of that slide presentation is "Improving the cost of antiretrovirals (ARVs) in London, Summary of ARV prescribing messages for London". The slide headed "Agreed prescribing messages for London (continued)" says the following:

"For second line and subsequent therapy [and I interpose that 'second line', I was told, is a reference to the third agent], where it is clinically appropriate to do so

"Atazanavir should be used

"Consider switching to atazanavir for patients on protease inhibitors when clinically appropriate.

"Reserve use of the more expensive drugs (raltegravir) to agreed clinical indications."

Then one of the subsequent slides entitled "Second line therapy (Protease inhibitors)" says as follows:

"Use of least expensive PI (atazanavir) where it is clinically appropriate

"Atazanavir NOT clinically appropriate in the following scenario

"Not supported by PI resistance profile

"Clear clinical contraindication – drug-drug interactions e.g. PPI

"History of renal stones."

33. Faced with that evidence, to which no evidence in response was served by the claimant, Mr. Colton realistically accepted that it cannot be said that Kaletra faces no substitutability as regards those patients starting therapy or, as they have been referred to, therapy naïve patients. On the unchallenged evidence it is one of eight alternative third agents that are substitutable. Mr. Colton, however, submitted that the position is very different for stable patients, that is, those already on therapy.
34. I consider that there are two difficulties about this submission. First, although the evidence shows that it is inappropriate to switch a patient on PI/r to another kind of third agent and that care has to be taken before switching any drug, the recommendations of the London Consortium indicate that within the category of PI/r consideration is, and indeed should, be given to switching, with atazanavir/ritonavir the preferred alternative on the ground of cost. Although that may be said to be inconsistent with what Mr. Hundal says at para.48(b) of his witness statement that I have quoted, the court, of course, must be careful not to make any conclusive findings on an interim application. Since Mr. Hundal does not provide any source of the information and is not himself an HIV specialist clinician, if there were any serious challenge to the material exhibited by Mr. Ellis, I would have expected further evidence from the claimant in the period of some four weeks since the defendant's evidence was served. Mr. Colton, in those circumstances, very properly does not seek to question what is set out in the London HIV Consortium presentation, but he points to their statement that switching should only take place when it is clinically appropriate and argues that there will be some patients for whom Kaletra remains the appropriate third agent.
35. I have no doubt that this submission is correct. There will be some patients for whom Kaletra is a 'must-have' medicine and for whom, therefore, a 10%, or perhaps even significantly higher, increase in price will not lead to any switch to another medicine. But there is not even the beginnings of an indication as to what share of total purchases of Kaletra in the United Kingdom come into this category nor is there any evidence as to what share of total purchases of Kaletra in the United Kingdom are accounted for by new patients, or therapy naïve patients, as compared to stable patients. Without at least some information along those lines, it seems to me that it is impossible to argue that a small but significant increase in the price of Kaletra will not cause a sufficient degree of switching to one of the other PI/rs such that this increase will not be profitable for the defendant. Mr. Colton submitted that the defendant is better placed to provide such information than the claimant. That may be so, but the burden is on the claimant to establish some evidential foundation for its case on dominance. It cannot, in my judgment, be entitled to interim relief on a merely speculative basis in the hope that some evidence giving it a serious question to be tried or real prospect of success will emerge on eventual disclosure.
36. Moreover, the claimant does know how much of its own purchases of Kaletra are used for UK homecare services as compared to its wholesale business or in meeting foreign prescriptions. Depending on what that information showed, it might provide some basis for saying that homecare treatment, and thus, on Mr. Hundal's evidence, acquisition for stable patients accounts for a very large share of the claimant's own acquisitions. But the claimant has not provided even that information.
37. Mr. Colton also pointed out that for those patients who were dependent upon Kaletra and for whom no suitable alternative exists this was truly life saving therapy. However, there is no question of those patients in the United Kingdom being denied supplies of their medicine. The defendant has emphasised throughout that it would supply the claimant with its requirements for its UK homecare business on submission of some evidence showing that this is what the orders were intended to meet. It is not suggested for the purpose of the present application that the defendant could not supply such appropriate documentation, suitably anonymised and, if necessary, with assurances as to confidentiality (cp Intecare Direct v Pfizer [2010] EWHC 600 (Ch)). Accordingly, while I consider that there is a real prospect that ritonavir based PIs used in ART may constitute a distinct product market, I find that on the evidence before the court there is no real prospect of the particular ritonavir based PI that is Kaletra constituting a relevant product market by itself.
38. Therefore, since the claimant has failed to show a serious question to be tried on the issue of dominance, this application falls to be dismissed. However, since I heard extensive argument on the question of abuse I shall proceed to address that second stage.

Abuse

39. It is well established that refusal to supply by a dominant undertaking may, but will not necessarily, constitute an abuse of that dominant position. Here, it is not a case of an absolute refusal to supply but of a refusal to supply for wholesale or without evidence that demand is for the purpose of homecare provision in the United Kingdom. But such qualified or conditional refusal may also be abusive. The general principle is summarised in the judgment of the Court of Justice of the European Union (the ECJ), on which Mr. Colton relied, Joined Cases C468/06 to C478/06, Sot. Lelos v GlaxoSmithKline [2008] 5 CMLR 20, at para.34 of the judgment:

"34 The established case-law of the Court shows that the refusal by an undertaking occupying a dominant position on the market of a given product to meet the orders of an existing customer constitutes abuse of that dominant position under [Article 102] where, without any objective justification, that conduct is liable to eliminate a trading party as a competitor."

At para.49, the court referred to its holding in the seminal case of United Brands that a dominant undertaking cannot discontinue supplies to a long-standing customer who abides by regular commercial practice if the orders placed by that customer are in no way out of the ordinary.

40. However, Article 102 TFEU (previously Article 82 EC) has never been held to oblige a supplier to adopt a particular manner of distribution of its own products. In Lelos, which proceeded on the basis that the Greek court had found GlaxoSmithKlein (GSK) to be dominant in respect of an epilepsy drug, the allegation of abuse against GSK was that in supplying wholesalers in Greece it restricted the volume of supplies to those wholesalers on the basis of their likely supply to the domestic Greek market in order to limit parallel exports by those wholesalers to other Member States. Thus, in Greece it was the practice and policy of GSK to distribute the drug through wholesalers. As the Advocate General noted in his opinion, at para.111:

"GSK was free to design its own distribution system in Europe. It decided on a strategy which incorporated the Greek wholesalers because it considered it more economically efficient and advantageous. It could have opted instead for a vertically integrated system for the distribution of its medicines, as it did in November 2000. Even though it was at liberty to restructure its distribution networks, as long as it respected normal commercial practice, in the present case GSK is being criticised for punishing the wholesalers for having taken better advantage of market conditions and preventing them from carrying out their export business."

41. The position of the defendant in the present case as regards Kaletra is very different. The policy and practice of the defendant is not to supply wholesalers in Britain at all. Mr. Ellis states in his witness statement at para.7.3:

"Abbvie does not supply Kaletra to any wholesalers in Great Britain. Abbvie already has excellent supply chain coverage and does not currently plan to extend its operations to the wholesale level. We do supply homecare providers who have a contract of supply with an NHS trust and have been supplying the claimant in its capacity as a homecare provider. Any supply to community pharmacists is on an exceptional basis only, where the relevant hospital trust has explicitly asked that we do so in order to meet patient need, for example, where there is no hospital pharmacy service or homecare service available to patients."

There is a supplemental explanation regarding the arrangements that exist for Northern Ireland, but that is not relevant for present purposes.

42. The case for the claimant, therefore, came down to saying that in fact the defendant has been supplying for wholesale, since the claimant has been acting as a wholesaler for many months and the defendant had not previously discontinued supply. Although Mr. Ellis says that until Mr. Singh's email of 23^rd December that I referred to the defendant was unaware of this, Mr. Colton submitted that the defendant should have realised it or could have pursued its enquiries more vigorously at an earlier stage.
43. I reject the basis of that argument. If an undertaking supplies a customer on the basis that the supply is for retail sale and has a policy of not supplying wholesalers, the fact that, unknown to the supplier, its customer is reselling some of those products on the wholesale market does not mean that the customer's orders for the purpose of wholesale constitute "ordinary orders" within the principles to which I have referred or mean that the undertaking cannot adhere to its policy and practice of not supplying wholesalers once it finds out what has been going on. Mr. Colton submitted that this is only the case where the customer has been deceitful, but I see no basis in principle or on authority why it should be so limited. Moreover, in the present case I have quoted at some length from the series of emails sent by the claimant when the defendant started to query the reason for the sharp increase in its level of orders, which show that the claimant repeatedly put forward as the explanation only exceptional circumstances relating to the domestic hospital homecare services in the run-up to the Christmas period, with not a word about wholesale or overseas demand.
44. Mr. Peretz characterised the conduct of the defendant as being disingenuous. I consider that is an apposite description. I should add that, in any event, I would not regard conduct of that nature as "regular commercial practice" in the sense used by the ECJ in articulating the principle that I have set out. The fact that some or perhaps all of the claimant's wholesale requirements were for parallel export trade cannot convert what would otherwise not be an abuse into abusive conduct. The Lelos case concerned the situation where the dominant supplier positively supplied wholesalers and where the only and admitted reason for seeking to restrict suppliers was to prevent parallel exports (see the judgment at para.36).
45. Accordingly, there is, on the facts of this case, in my judgment, no real prospect that the claimant could succeed in showing that if the defendant indeed was in a dominant position its conduct was abusive.
46. Therefore, it is strictly unnecessary to consider the further question of parallel exports or the fact that the claimant was being denied supplies of Kaletra which were intended for supply overseas. That was the issue that was directly addressed by the Grand Chamber of the ECJ in Lelos. The court stated at paras.76-77 of its judgment:

"76 However, a producer of pharmaceutical products must be in a position to protect its own commercial interests if it is confronted with orders that are out of the ordinary in terms of quantity. Such could be the case, in a given Member State, if certain wholesalers order from that producer medicines in quantities which are out of all proportion to those previously sold by the same wholesalers to meet the needs of the market in that Member State.

"77 In view of the foregoing, the answer to the questions referred should be that Article [102 TFEU] must be interpreted as meaning that an undertaking occupying a dominant position on the relevant market for medicinal products which, in order to put a stop to parallel exports carried out by certain wholesalers from one Member State to other Member States, refuses to meet ordinary orders from those wholesalers is abusing its dominant position. It is for the national court to ascertain whether the orders are ordinary in the light of both the size of those orders in relation to the requirements of the market in the first Member State and the previous business relations between that undertaking and the wholesalers concerned."

47. That suggests that even for a supplier that actively supplies wholesalers it may not be an abuse to refuse suppliers which are out of proportion to those quantities previously sold to those wholesalers to meet domestic requirements. Therefore, in the particular context of pharmaceutical medicines it may indeed be legitimate to restrict supplies in such a way that parallel exports would be restricted: see in that regard, Whish, Competition Law (7^th Edition, 2012) at p.712.

RISK OF INJUSTICE

48. In view of my conclusions on the substance of the claim, it is unnecessary to say much on this topic. I would simply observe that as regards the claimant's domestic homecare business there is no effective refusal to supply at all and so no loss. As regards its wholesale business, there is no doubt a loss, but that, on the evidence, is purely financial and can be compensated in damages. The same applies to what Mr. Hundal describes as the claimant's mail order dispensing services used to deliver medication against prescriptions sent from hospitals and clinics around the EU (para.41 of his witness statement).
49. There remains the question of the claimant's alleged overseas homecare business on which Mr. Colton sought to place emphasis. However, the evidence of this was sparse in the extreme. All that Mr. Hundal says about that in a witness statement running to 67 paragraphs is one sentence, contained in para.10: "The claimant has in excess of 5,000 patients on treatment for HIV services across the UK and is actively developing similar services across the European Union". Whether such a service is up and running anywhere in the EU is unclear, but, in any event, as Mr. Ellis points out, the defendant has affiliated companies distributing Kaletra in other EU member states, including Lithuania. If the defendant has arrangements to supply homecare services for HIV patients in, say, Germany or Lithuania, there is no reason whatever to suppose that it will not be able to obtain the required supplies of Kaletra from the relevant company in the Abbvie group serving that country. It may be that for regulatory or other reasons the product there is more expensive, but that again is a purely financial loss.
50. I recognise that the defendant, for its part, has not shown that it would suffer serious harm if an injunction were granted, but the starting point in the consideration of this factor is the position of the claimant seeking an order from the court: see Lord Diplock's by now classic statement in American Cyanamid at p.408 B-D.

CONCLUSION

51. For all these reasons, this application for interim relief is dismissed.

Yes, Mr. Peretz?

MR. PERETZ: My Lord, I am grateful. There is an application for costs and, in particular, costs on an indemnity basis. I am very much in your Lordship's hands as to how to deal with that. It may be a matter that can be deal with by written submissions.

MR. JUSTICE ROTH: No, you can deal with it now.

MR. PERETZ: I can deal with it now.

MR. JUSTICE ROTH: Let us deal with it now. You seek your costs, but why should they be on an indemnity basis?

MR. PERETZ: On two bases, my Lord. The first, which I do not need to elaborate given your Lordship's judgment, is the hopelessness of the case that was put forward. Your Lordship is either going to be with me on that or not.

MR. JUSTICE ROTH: The case for interim relief has failed, but there has got to be something that is wholly unreasonable that takes it out of the norm of a case that fails.

MR. PERETZ: I cannot put it any higher than this, my Lord. We would say that on the basis of the evidence that was put before the court the case was hopeless.

The second basis, my Lord, is the claimant's conduct, particularly around the Christmas period and coming into the middle of January, in threatening injunctive proceedings. I am afraid the relevant documents are not actually in the bundle, but on 24^th December draft proceedings were issued, my Lord.

MR. JUSTICE ROTH: When you say "draft proceedings were issued" ----

MR. PERETZ: Draft proceedings.

MR. JUSTICE ROTH: -- they cannot be "issued".

MR. PERETZ: No, nothing was actually issued. Perhaps to refresh your Lordship's memory ----

MR. JUSTICE ROTH: Proceedings are either issued or they are not.

MR. PERETZ: We were served a set of draft proceedings.

MR. JUSTICE ROTH: You were sent copies, were you?

MR. PERETZ: Sent copies, yes.

MR. JUSTICE ROTH: I see.

MR. PERETZ: At that stage we were told that it was planned to issue proceedings that day (i.e. on Christmas Eve) and later on Christmas Eve it was said that, actually, that was now impossible - the court office was not open - and proceedings would be served on 27^th December, the day after Boxing Day.

MR. JUSTICE ROTH: Can you just show me that?

MR. PERETZ: Yes.

MR. JUSTICE ROTH: Is it in 14, bundle 1, or 24?

MR. PERETZ: It is tab 15.

MR. JUSTICE ROTH: 15.

MR. PERETZ: Yes. If you turn to p.14, my Lord. This is the reference to serving - this is on the 24^th - a copy application notice, copy draft order, copy statement of costs and copy witness statement. We do not actually have those documents in the file.

MR. JUSTICE ROTH: I see. "We are in the process of issuing today". In fact, it was - yes, I see - then issued. That goes at 1.30 and then what happens next? When are you told that it is not issued?

MR. PERETZ: Actually, I have been working upon -- if your Lordship will remember, there is an easier email at tab 24.

MR. JUSTICE ROTH: Yes, at tab 24. Shall we pick it up there?

MR. PERETZ: Yes.

MR. JUSTICE ROTH: Are these all there?

MR. PERETZ: I think they are all there. Yes, perhaps just pick it up at p.25 of that clip. This is the email that your Lordship read out extracts of.

MR. JUSTICE ROTH: Yes, I am looking for the same email we have just looked at. It is not in there, is it?

MR. PERETZ: Perhaps it is not in there. (After a pause): I am told that what is in tab 24 is client to client and the correspondence between solicitors is at tab 15, so, in fact, not everything is in ----

MR. JUSTICE ROTH: I have not looked at tab 15 at all, in fact.

MR. PERETZ: Yes, indeed. But if I can pick up ----

MR. JUSTICE ROTH: I was looking at -- I see. The next one is at p.18, is it? "Court has not issued the" ----

MR. PERETZ: Yes, at tab 15.

MR. JUSTICE ROTH: "This will have to take place on 27^th December". So at 1.30 you are told it is being issued. At 2.30 you are being told it is not.

MR. PERETZ: That is right. If your Lordship goes back to p.14, although the copy witness statement is not actually in the bundle and was, in fact, unsigned, it is a lengthy witness statement and it refers to a number of breaches of the law, abuse of dominant position actually figuring only very briefly in passing. The main emphasis of Mr. Hundal's original witness statement was on breaches of regulatory law. He alleges, among other things, breaches of the NHS Act, National Health Service Act 2006. He alleges breaches of the 2011 Directive relating to patients' rights in relation to interstate health care. He alleges a breach of Article 152 of the Treaty on the Functioning of the European Union, which contains a statement that the EU shall … health matters. So it was essentially based on regulatory provisions.

I say that simply because that witness statement obviously necessitated Abbvie taking a certain amount of advice from those instructing me as to its position under regulatory law, which, of course, involved different expert solicitors in that field, not necessarily the same solicitors who are expert on competition law, thereby, of course, increasing costs. Your Lordship will, of course, know none of that was proceeded with, so that when the proceedings were eventually issued on 4^th January there was complete silence on all those points. As your Lordship has observed, the only case made was for abuse of dominant position.

My Lord, the claimant's conduct at that time, in threatening proceedings over the Christmas period which were, in the event, not proceeded with until 4^th January -- it was said that it was all going to be highly urgent.

MR. JUSTICE ROTH: When was that clarified? The letter I have now seen is -- first, the hearing on the 27^th and there is the later one saying, at 2.30 -- when did it become clear that there was not going to be anything on the 27^th? (After a pause): There was a long comment on the 28^th to that witness statement.

MR. PERETZ: Sorry?

MR. JUSTICE ROTH: There is a long comment by the defendant's solicitors on 28^th December, a long response, to the draft witness statement and then I see nothing.

MR. PERETZ: Yes, on 28^th December, there is a letter … a series of comments on that, with questions about it. Your Lordship will see from there the sort of range of issues that were being covered.

MR. JUSTICE ROTH: Yes, then nothing.

MR. PERETZ: Yes, indeed, nothing then happened. The reason there is nothing in the correspondence is nothing then happened until 4^th January when proceedings were issued.

MR. JUSTICE ROTH: Just a minute, that is an attachment, is it? Yes, it is the attachment.

MR. PERETZ: Yes, p.31 is an attachment which raises a number of questions about what was said in Mr. Hundal's draft witness statement of that day. Then at p.33 you will see Axiom Stone said -- that is the issue of proceedings to which your Lordship has referred. That is 4^th January. So there is no reply to Cameron McKenna's letter of the 28^th. Then on 4^th January proceedings are issued. So what one has over the Christmas period is a wide-ranging threat of bringing proceedings on a basis that, in the end, it is not proceeded with and something quite different is then done and threats of the form, "You keep your legal team on standby", which necessitated people being in and available and having briefed themselves to deal with this over the Christmas period. Then, in fact, no reply to Cameron McKenna's letter of the 28^th and proceedings issued on a somewhat different basis on 4^th January.

What is then done in relation to this interim injunction is that the matter was then listed by the claimant, by the claimant's solicitors, in the interim applications court in front of, as it turned out, Mr. Justice Hilliard.

MR. JUSTICE ROTH: Yes, I saw that.

MR. PERETZ: You saw that. That listing was made without any reference to us at all.

MR. JUSTICE ROTH: It did secure the consent order. Had it been offered before it was before the judge?

MR. PERETZ: It had not been offered before, no.

MR. JUSTICE ROTH: So I do not think you can complain about that.

MR. PERETZ: In our submission, it is plainly inappropriate to list an application for injunction in a competition case like this where there are going to be issues about dominant position and abuse.

MR. JUSTICE ROTH: Did you write to say that?

MR. PERETZ: What we did was we served our evidence in response on the Thursday, 10^th January, and the claimant then immediately got back to us indicating that it thought the listing in front of Mr. Justice Hilliard would be -- it would be somewhat difficult to argue the case given the limited time of the hearing.

MR. JUSTICE ROTH: Did you write a letter saying, "This is inappropriate for a two-hour appointment, two-hour time limit, including judgment and pre-reading, and it should be an application fixed by order or -- and you will undertake to supply X boxes in the meantime until it can be heard"?

MR. PERETZ: I have got the letter of 10^th January, which is the letter that we served then. I am told it is not actually in the bundle ----

MR. JUSTICE ROTH: You can hand it up.

MR. PERETZ: -- but I can hand it up.

MR. JUSTICE ROTH: This is between solicitors, presumably.

MR. PERETZ: It is a solicitors' letter, yes.

MR. JUSTICE ROTH: (After a pause): Yes.

MR. PERETZ: My Lord, that sets the position. We wrote to them on 10^th January.

MR. JUSTICE ROTH: Yes. It came on the -- when was it that it was ----

MR. PERETZ: The 14^th.

MR. JUSTICE ROTH: It was in the list on the 14^th.

MR. PERETZ: It was on the list on the 14^th. This was on a Thursday. The 14^th was a Monday. My Lord, we were, of course, being told over the Christmas period that the matter was one of extreme urgency. I can take your Lordship back to the emails, but that was, your Lordship will recollect, the tenor of it. If the matter had been a matter of extreme urgency, it would doubtless have been possible for the claimant to have secured a rather more appropriate listing, even at short notice, in the Chancery Division, but that was not done; it simply entered its application into the interim applications list. So it was manifestly inappropriate for a case of this nature and inevitably involved extra costs because lawyers had to prepare for that hearing as a substantive hearing, which is what it could have been.

MR. JUSTICE ROTH: When was it agreed that it could not be heard that day? Was it on the morning? You attended, did you, with Mr. Colton?

MR. PERETZ: I attended with Mr. Colton, yes. Your Lordship will see in the 10^th January letter that we agreed to a request to relist for a more suitable duration, so by that stage it was agreed that the matter would be relisted. So that was the parties' common position in front of Mr. Justice ----

MR. JUSTICE ROTH: So by the 10^th it had been agreed that it would not be a substantive hearing.

MR. PERETZ: There was then a certain amount of toing and froing about what should happen, what sort of interim interim order should be made, and it was agreed ----

MR. JUSTICE ROTH: So that was round about the 10^th, was it?

MR. PERETZ: Yes, and by the time my learned friend and I were up before Mr. Justice Hilliard we had agreed the interim interim position, but plainly lawyers had to prepare for that on the basis that there might be ----

MR. JUSTICE ROTH: Yes, but it was not expected to be a substantive hearing then on the 14^th.

MR. PERETZ: Agreement was reached, on my recollection, at the door of the court.

MR. JUSTICE ROTH: But you had agreed that it needed a relisting.

MR. PERETZ: We had agreed it needed a relisting, yes.

MR. JUSTICE ROTH: Yes, so it could not be -- there might be argument -- how much in the meantime.

MR. PERETZ: Indeed, yes, my Lord. So those are the bases on which I make my application, my Lord, that the claimant's conduct, first, in issuing the proceedings were, in our submission, hopeless, certainly on the basis of evidence that they put forward.

If your Lordship needs a reminder about the relevant test for an indemnity costs order, in my authorities bundle, at tab 8 -- I hope this has found its way in. This is actually an earlier case involving ----

MR. JUSTICE ROTH: Peter Leaver, is it?

MR. PERETZ: Peter Lever, yes, an earlier case involving the same claimant. The basis on which indemnity costs were successfully obtained by Roche in front of Peter Leaver -- this was quite different. This was a case which the claimant brought against Roche and then failed to proceed with, so it was discontinued.

MR. JUSTICE ROTH: Yes, it was rather different.

MR. PERETZ: Yes, indeed, it was a different basis. But at para.21 of the judgment Peter Leaver QC sets out the test there, quoting from a judgment of Mr. Justice Coulson.

MR. JUSTICE ROTH: Yes, he did not give the date of that. There are quite a lot of judgments ----

MR. PERETZ: There are quite a lot. My learned friend will tell me if there is any controversy about this, but it sets out the relevant principles. "Unreasonable", I accept is, in terms of bringing proceedings, a high test; it is not merely "wrong" or "misguided" in hindsight. But it does not need to be a case where there is a lack of moral probity or moral condemnation. It has got to be out of the norm in a way which justifies the order for indemnity costs. Then, at the bottom of the page, reference to pursuit of a hopeless claim or a claim that the party pursuing it should have realised was hopeless. I do not argue it because your Lordship will have your Lordship's own view, but that is what we say is the position here.

Then in relation to the conduct over the Christmas period and beyond, that, we say, did have the effect of increasing costs … essentially demanded that lawyers be on standby, which, of course, means that lawyers had to be briefed and up to speed with the issues and the facts and also involved taking advice on a whole set of regulatory issues ----

MR. JUSTICE ROTH: I understand.

MR. PERETZ: -- that had turned out to be a complete distraction.

MR. JUSTICE ROTH: Yes. Can I ask, are you asking for a summary assessment?

MR. PERETZ: Yes. There is a costs ----

MR. JUSTICE ROTH: Is that up to date?

MR. PERETZ: It is at tab 28.

MR. JUSTICE ROTH: Yes. It does not include today, I think.

MR. PERETZ: It does not include today, no. It was prepared for the hearing last Wednesday, so it will not include today.

MR. JUSTICE ROTH: (After a pause): What is "attendance on others"?

MR. PERETZ: Sorry, my Lord, at line -- on page?

MR. JUSTICE ROTH: The second page of the schedule, or statement. There are well over 20 hours spent attending people who are not the claimant or the defendant.

MR. PERETZ: (After a pause): Yes, it is going to court and correspondence with the court, I am told.

MR. JUSTICE ROTH: Correspondence with the court, taking 4½ hours of partners' time?

MR. PERETZ: Yes, also copied to the other side. It was not just with the court.

MR. JUSTICE ROTH: The other side's correspondence is dealing with the claimant, is it not?

MR. PERETZ: Yes, that is some of it, but ----

MR. JUSTICE ROTH: How did partners spend 4½ hours corresponding with the court? I do not understand that, plus a grade B solicitor spending 12½ hours on -- it makes no sense whatever, Mr. Peretz.

MR. PERETZ: (After a pause): I am told the letters that are related to it are not in the bundle, my Lord.

MR. JUSTICE ROTH: They might not be in the bundle, but how on earth can one spend that long corresponding with the court? It is inconceivable.

MR. PERETZ: I am told that it is "attendance on others" because the addressee is the court; it is effectively correspondence with the other side.

MR. JUSTICE ROTH: But then what is "attendance on the claimant"?

MR. PERETZ: That is other correspondence with the claimant's solicitors. I am afraid, my Lord, I am sure how that is broken down into "attendance on claimant" and "attendance on others".

MR. JUSTICE ROTH: Yes, and, of course, the rates are very substantially in excess of the guideline rate for City firms. I appreciate that is the 2010 guideline, but the Master of the Rolls quite deliberately did not increase it, very consciously did not increase it. They are about 50% above for the partners and for the senior associates, I think. I take account of the fact that a lot of work had to be done around Christmas ----

MR. PERETZ: Indeed, and at short notice.

MR. JUSTICE ROTH: -- on different things and at very short notice. That goes to the assessment.

MR. PERETZ: Indeed.

MR. JUSTICE ROTH: Yes, thank you. Mr. Colton, on costs, taking it in stages, first of all, do you accept that, leaving aside the basis of the amount, that in principle your client has to pay the costs?

MR. COLTON: I cannot … my Lord.

MR. JUSTICE ROTH: Yes, that must be right, must it not? What do you say about indemnity?

MR. COLTON: On indemnity, three points to make, my Lord: the first is that, when this was put in my learned friend's skeleton, the basis upon which he said this was an unreasonable application was because he said it bore a startling resemblance to the Intecare case. Of course, as my Lord commented in the course of submissions, it does not bear any such startling resemblance. So the case, and this is the second point as well, has shifted, the ground on which he says it was unreasonable, by now saying it was hopeless. With respect, that is a classic example of hindsight.

MR. JUSTICE ROTH: You need not address me on that. I do not think that is a sufficient ground here to say it is so unreasonable. But could you deal with the second point, which is the fact that there were these threats, not threats but solicitors' letters and so on, just before Christmas and then serving an application with a witness statement raising a whole lot of areas which have not been pursued?

MR. COLTON: I do not accept that description of what happened. Perhaps I should explain what did occur. It was the intention of the claimant to issue on 24^th December. I will start further back. It was the intention to ensure that the court could hear it on 27^th December and it was … that the defendant should be given as much notice of that as was possible. So, even though the application had not yet been issued, a draft was sent on 24^th December. It was intended to issue on that date because it was not realised initially that the court office was closed on 24^th December.

Over Christmas Day and Boxing Day it became apparent to the claimant that it should perhaps be refining the basis upon which the application was going to be put. My Lord has seen criticisms raised on 28^th December by Cameron McKenna of the various arguments that were going to be made in the original application. Those sorts of points were taken on board. I am not certain that they were taken board by then. But it was decided not to proceed with the application by the morning of the 27^th.

There is reference in the 10^th January letter, which my Lord has seen, to counsel's clerks liaising. I am afraid I am trying to remember. I know that I had a discussion with my clerk as to who was going to let the other side know that it was not going to be effective. I am afraid my instructing solicitor was not involved at the time and I cannot say whether my clerk let the other side know or whether it was done by solicitors. I simply cannot tell the court that. If my Lord has that letter ----

MR. JUSTICE ROTH: But, going back to the fact that the -- you say it was reconsidered or reassessed, but you sent the application and I do not know if it was a draft witness statement or a signed witness statement - as you were intending to issue, I imagine it was a signed witness statement - on the 24^th, alleging the basis for relief, which was then not pursued about a week or so later, and you sent it so that the defendant would get notice of it and have a chance to work on it in readiness for ----

MR. COLTON: I, of course, accept that there may be liability for costs incurred as a result of that, but the description of "threat" suggests that it was somehow made in bad faith, that we sent this draft application so as to somehow achieve something, "Unless you do X, we will issue this application". That was not what was going on at all; what was going on was we felt it proper, even though we were unable to issue the application, to give as much notice as we could of it. As it happened, we then reconsidered the position, decided not to issue the application. You will see that there were then criticisms of the application and they were taken on board. Indeed, there were then further orders which … and that was why it was that the application was not in fact issued until 4^th January.

Although, as it were, mistakes may have been made, there is a big difference between the solicitors making a mistake or the clerks making a mistake or a change of heart about whether or not it was right to go for the application at that time and some suggestion that we were making a threat in bad faith, which is, I think, implicit in the use of the term "threat". It was not a threat; it was simply an attempt to give proper notice or the most notice that we could of the application which we intended to make. As my Lord will recall, I showed my Lord that we ended up writing to the NHS coordinator in early January because there was urgency and we did indeed run short on supplies.

As for the listing of the application after it was issued, the position is that we sought to issue and we sought to get an early listing. We were told when we sought to list it, I think, in the previous week, the week beginning 7^th January, that it was not going to be possible to get a vacation judge to hear it and we should therefore, we were told, take our chances, issue it in the interim applications court. At that stage, of course, we … how long the issues would be or did we know how busy the interim applications court would be, and so we were told, "It may be possible to hear it or it may not".

As it was, on 10^th January when we received the evidence, we saw then that dominance in issue. At that stage it becomes apparent that it will not be possible for it to be heard, reading, hearing and judgment, within the two-hour period. My Lord, if my Lord looks at the letter of 10^th January, what has happened is that we have written to the court as soon as it has become apparent to us that it cannot go ahead and we have copied in the other side. They then respond to us and, although they do not actually in this letter say how long they think it should be listed for nor do they suggest they have ever previously criticised its listing in the interim applications court, something, of course, of which they have known since 4^th January, they then nonetheless take some swipes at the fact that it was listed there. Again, it may be that an alternative course could have been taken by my instructing solicitors when seeking to list this application, but, again, we would submit this is not conduct of the sort which takes one into indemnity costs.

Again, my Lord, I do not dispute that there may be increased costs recoverable here as a result of an application which was issued and then pursued or as a result of the listing, but those are costs which, if they are recoverable, can be recoverable on the standard basis. They are simply costs of the application. That is a rather different point to suggesting that this takes it so far outside the norm as to justify indemnity costs. It was a difficult period in the sense that it was Christmas and it was New Year and the court office was closed and it was vacation and therefore it was difficult to establish how best to proceed to ensure both proper notice to the other side and an adequate listing. But, in my submission, those points do not justify an indemnity order.

MR. JUSTICE ROTH: Yes, thank you. Mr. Peretz, do you have the witness statement that was served or sent on the 24^th?

MR. PERETZ: On the 24^th, no. As I said, my Lord, a copy is not, I am afraid, in the bundle.

MR. JUSTICE ROTH: I know it is not in the bundle, but have you got a copy with you? Do your solicitors have it on their file?

MR. PERETZ: I am told we do not.

MR. JUSTICE ROTH: It was sent to them on 24^th December, not the exhibits just the witness statement.

MR. PERETZ: (After a pause): No, I am told we do not have it in court. But my learned friend has not disputed that it focused on, essentially, regulatory matters.

MR. COLTON: I am sorry, my Lord, I thought I made it clear when I stood up, I do not accept that. I am afraid I simply do not recall the details of what it said, but I do not recall it as being fundamentally different to the application which we made … take on board, of course, the criticisms that were made of it, but I do not recall it as being fundamentally different.

MR. PERETZ: My Lord, the regulatory issues it dealt with appears, really, from Cameron McKenna's response to it on the 28^th, on p.29 ----

MR. JUSTICE ROTH: Yes, I am looking at it.

MR. PERETZ: -- and, in particular, the list of bullet points on p.31.

MR. JUSTICE ROTH: Yes, that is what I am looking at. (After a pause): Yes, thank you. Is there anything else you want to say?

MR. PERETZ: The only other point I want to make: I was somewhat surprised by my learned friend's disavowal, or statement, that his client's conduct in the period immediately before Christmas could not be described as a threat. My Lord, if I can take you to tab 24, emails between clients. At p.29, for example, the email from Mr. Singh on 24^th December - it is half past 10 in the morning on Christmas Eve - at the top of the page, waiting to push the button on issuing proceedings. Then on pp.34-35, at 12.42 on Christmas Eve, it is a lengthy email, concluding, last paragraph, "one last time, in an effort to avoid costly litigation … not to waste the court's precious resources, especially during the festive break", so it is clearly contemplated that something will happen very, very quickly, "provide us with interim supplies". So my learned friend may say they were justified threats, although your Lordship's judgment would suggest that they were not, but they were certainly threats. My Lord, I do not have anything further to add to that.

MR. JUSTICE ROTH: The defendant, having succeeded in defeating this application for interim relief, asked for its costs, which the claimant properly accepts it is liable to pay. The defendant, however, asks that the order for costs should be that they be assessed on the indemnity basis, and that is resisted. The court, of course, has a very broad discretion on matters concerning costs. The governing principle is set out in CPR rule 44.3 and the terms of that rule should be treated as -- insofar as material is incorporated in my reasoning, but I will refer in particular to rule 44.3(4):

"(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –

"(a) the conduct of all the parties …"

In subrule (5):

"(5) The conduct of the parties includes –

"(a) conduct before, as well as during, the proceedings …

"(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

"(c) the manner in which a party has pursued … his case or a particular allegation or issue …"

The question specifically of indemnity costs has received judicial consideration now in a number of cases. In a notorious BCCI case in a supplementary judgment on costs, Three Rivers District Council v Bank of England [2006] EWHC 816 (Comm), Tomlinson J. (as he then was) set out a series of principles to be applied when considering the question of indemnity costs. In Balmoral Group v Borealis (UK) Limited [2006] EWHC 2531 (Comm) Christopher Clarke J., having adopted Tomlinson J.'s summary, added this:

"The discretion is a wide one to be determined in the light of all the circumstances of the case. To award costs against an unsuccessful party on an indemnity scale is a departure from the norm. There must, therefore, be something – whether it be the conduct of the claimant or the circumstances of the case – which takes the case outside the norm. It is not necessary that the claimant should be guilty of dishonesty or moral blame. Unreasonableness in the conduct of the proceedings and the raising of particular allegations, or in the manner of raising them may suffice. So may the pursuit of a speculative claim involving a high risk of failure or the making of allegations of dishonesty that turn out to be misconceived, or the conduct of an extensive publicity campaign designed to drive the other party to settlement. The making of a grossly exaggerated claim may also be a ground for indemnity costs."

In NatWest Bank PLC v Rabobank Nederland [2008] 3 Costs LR 396 Sir Anthony Colman, sitting as a Deputy High Court Judge, added this comment at para.30:

"It is important not to lose sight of the essential requirement of unreasonable or inappropriate conduct overall."

Mr. Peretz puts his application for indemnity costs on two grounds, first he says the hopelessness of the case on the basis of the conclusions and reasoning in the judgment that I have just delivered. I do not consider that that is a ground for indemnity costs in this case. The competition claims are notoriously complex. The claimant was advised by solicitors and counsel throughout. It has lost the argument, but I do not see anything in the fact that the argument was advanced that is so unreasonable that it is one of the exceptional cases where the fact that the argument has failed would justify an order for costs on other than the usual standard basis.

The second ground concerns the claimant's conduct, in particular, before the issue of proceedings around the Christmas period. I have quoted from some of the emails of the claimant itself the extent in the run-up to Christmas and there was the further fact that on 24^th December the claimant's solicitors in fact served on the defendant's solicitors a copy application notice and witness statement and said that they were in the process of issuing that notice that day with the intent of obtaining a hearing on 27^th December. It was not in fact issued that day because, of course, on Christmas Eve in the afternoon the court office is closed, but then they pursued that matter further on 27^th December. The witness statement then served is not now before the court, but Mr. Peretz told me that it raised a whole range of allegations going beyond that of abuse of a dominant position, which is the sole basis on which the claim was advanced in the application that was, in the end, issued on 4^th January. In that regard he has taken me to the letter from the defendant's solicitors to the claimant's solicitors dated 28^th December criticising the witness statement in some detail. Although Mr. Colton, because he did not have a copy of the witness statement to hand and could not now recall it, was not in a position to accept this, it is clear from the bullet points there set out that the witness statement alleged contravention of a regulatory directive, Directive 2001/83, contravention of the Data Protection Act and relied also on the National Health Service Act 2006. In other words, it raised a whole range of allegations which have not only not been pursued but do not feature at all in the evidently rather different witness statement of Mr. Hundal that was served on 4^th January. Given that this basis of the case was being sent on Christmas Eve, raising not just issues of competition law but regulatory health law, it has clearly caused significant work at short notice at a very difficult period of time to the defendant's solicitors. It was then not pursued because Mr. Colton said there was some rethinking in the period just after Christmas in the way that the case was framed.

I have to say that, considering that matter and making some allowance for the pressure the claimant may have been under at a busy time of year, I do regard the advancing of allegations of that nature, not simply in the correspondence but by way of solicitors' communication stating in terms that proceedings would be issued on that basis for a return date straight after Christmas, when those allegations were evidently, on reflection, considered to be so hopeless that they have not even been raised in the eventual application, as conduct that is far outside the norm and so unreasonable that it does justify the sanction of an indemnity costs order. However, in my view, when the application was issued on 4^th January, those concerns ceased and it proceeded in what one may describe as the usual way. Although some complaint was made about the fact that it was listed and brought on in the applications court, it was not pursued as an effective hearing in the applications court, and by 10^th January at the latest the claimant very properly recognised that that could not be an effective hearing and that it required a special appointment. The fact that then the parties had to turn up before the applications judge, a brief, no doubt, hearing that resulted in a consent order ensuring continuity of supplies to the claimant, is not, to my mind, something for which the claimant should be criticised. Accordingly, I think the appropriate order is that the claimant should pay costs on the indemnity basis up to 4^th January and thereafter on the standard basis.

I have been asked to conduct a summary assessment of costs and I have been provided with a schedule of costs by the defendant's solicitors, although that does not include the costs of today. I have not heard Mr. Colton on the figures in that statement, but I do not need to do so because, in my view, even allowing for the fact that there was work over the Christmas period and that part of the costs will be payable on an indemnity basis as a result of the ruling I have just made, I regard the total, having regard to the fact that much of it will be attributed to work following 4^th January when the defendant had the actual witness statement being proceeded with, as wholly disproportionate for an application that took one day for a substantive hearing and for which the defendant served one witness statement that, apart from the inter partes correspondence, exhibited just a few publically available documents. Accordingly, I will not make a summary assessment in this case. I will direct that the matter goes for detailed assessment, but I will order a payment on account of the amount that may be reasonable.

Mr. Colton, this is your chance. What amount do you think would be fair in this case?

MR. COLTON: It may assist my Lord, I think in tab 27 of the bundle my Lord has our side's costs, which are less than one-third of the costs incurred by the other side.

MR. JUSTICE ROTH: Your side's costs are 18,915 plus 25,311. Is that it?

MR. COLTON: Yes, it is 44,226, my Lord.

MR. JUSTICE ROTH: 44,226. Where is your client based, geographically?

MR. COLTON: If my Lord is concerned about hourly rates, I think we are well below ----

MR. JUSTICE ROTH: No, I just want to know -- as you know, the cost rates are broken down by ----

MR. COLTON: Yes, by solicitors.

MR. JUSTICE ROTH: Yes, whether you are a City -- are you a City firm? That is what I need to know.

MR. COLTON: It is Edgware, yes.

MR. JUSTICE ROTH: Edgware, so you are not a City firm.

MR. COLTON: It is not a City firm.

MR. JUSTICE ROTH: So, just in comparison, one would expect a City firm to be higher.

MR. COLTON: Yes, my Lord. As my Lord has identified, the hourly rate which the defendants are seeking to apply are far in excess. We actually had a costs schedule for 14^th January hearing and we had an updated schedule for today. I calculated it; they did an extra 90 hours' work between those two hearings.

MR. JUSTICE ROTH: Do you have an updated schedule for today?

MR. COLTON: No, I am sorry, I was talking about the defendant's schedule of costs.

MR. JUSTICE ROTH: Yes. Do you have an updated one for today? I was told there is not an updated one.

MR. COLTON: I am sorry, for the second hearing, whatever the date, 6^th February.

MR. JUSTICE ROTH: The substantive hearing, yes, I see.

MR. COLTON: So we had a hearing on 14^th January and then a hearing on 6^th February. In between those two hearings, according to the costs schedules of the defendant, the defendant's solicitors spent 90 hours working on this case. My Lord will recall that between those two hearings the only substantive change to the application was the two-page witness statement, Ellis 3. We have very real concerns as to exactly how these hours are being racked up. My Lord identified already this question about attendances on others. Obviously we do not know what the final assessment will be. We say that we should use ours as the starting rate, acknowledging there will be some enhancement to reflect City rates. Ours is 44. We would expect to seek, by way of payment on account, 60% of that, if we were seeking a payment on account, which is about 26. So, even allowing some enhancement for City rates, we would submit that anything in excess of 30 would be excessive. That would more than my Lord could be sure would be ordered on a detailed assessment.

MR. JUSTICE ROTH: Yes. Mr. Peretz, I think I will order a higher figure than that because of the indemnity order covering part of the period and the fact that your hourly rates would be legitimately higher, even applying the guideline. The figure that I have in mind is 50,000 if you want to say anything about that.

MR. PERETZ: We are happy with that.

MR. JUSTICE ROTH: Yes. It will be 50,000 to be paid on account, payable, Mr. Colton, 14 days?

MR. COLTON: I have no instructions as to whether ----

MR. JUSTICE ROTH: That is the normal period, is it not?

MR. COLTON: Yes.

MR. JUSTICE ROTH: So detailed assessment, indemnity basis up to 4^th January, standard basis thereafter and a detailed basis. The order should record, "The judge considering that the total amount showed in the statement of costs provided by the defendant's solicitors was disproportionate". Therefore, summary assessment refused, detailed assessment, payment on account of £50,000 to be paid within 14 days.

The next step would be service of defence, would it not, Mr. Peretz?

MR. PERETZ: Indeed.

MR. JUSTICE ROTH: It seems to me, Mr. Colton, given the nature of the particulars of claim, that this a case where it would be reasonable for your client to provide at least some of the further information in advance of defence.

MR. COLTON: Yes, we have agreed to do that previously.

MR. JUSTICE ROTH: That has been agreed, has it?

MR. COLTON: Yes, we said it would be done today. I am afraid it is not going to be done today. We wanted to see what my Lord had to say, as it were.

MR. JUSTICE ROTH: No, that is understandable. Do you want me to direct any times or have you agreed times?

MR. PERETZ: My learned friend offered -- my learned friend's solicitors -- I am quoting from a letter they sent, "We agree that the time for the filing and service of my client's defence be extended to expire 14 days following service of the further and better information requested". We had in fact asked for 28 days. In my submission, 28 days might be more realistic. If the further and better particulars provides the very detailed pleading that, your Lordship will recollect, your Lordship has said is necessary in competition cases in SEL-Imperial, it is likely to require a reasonably thoughtful response on our part and 14 days might be a bit ambitious for that.

MR. JUSTICE ROTH: You will have a much clearer idea now.

MR. PERETZ: We have a much clearer idea now, but it is always possible for the case to be developed and for some new point to be made.

MR. JUSTICE ROTH: It may not be necessary, but do you want -- I have raised this. At the moment you have not got an agreed date for provision of the information, have you?

MR. PERETZ: We have got a date that they are offering and it is agreed ----

MR. JUSTICE ROTH: That was offered today, but it has now been put back, which I understand.

MR. PERETZ: This letter is 31^st January, the one I am quoting from.

MR. JUSTICE ROTH: Yes. Mr. Colton, do you have a time when the information, such as you consider, I think it should be, appropriate, will be provided?

MR. COLTON: I do not. It is Monday, is it not? I imagine it will be by the end of this week at the latest.

MR. JUSTICE ROTH: I would think this case ought to get going if it is going to go. I am minded to say that you should provide such answer to the Part 18 request, as appropriate, by 4pm on 18^th February. That is next Monday.

MR. COLTON: I apologise, my Lord, I am aware that I am out of the country.

MR. JUSTICE ROTH: Next week?

MR. COLTON: I return Tuesday evening. So if my Lord was inclined to … until Monday, I would ask for Wednesday, simply to ensure I can actually ----

MR. JUSTICE ROTH: It is the half-term week, which I know takes a lot of people away. If I say "by the 20^th", you can draft it this week and just make any corrections on the Wednesday.

MR. COLTON: Absolutely.

MR. JUSTICE ROTH: 4pm on the 20^th February. Mr. Peretz, if I say 21 days thereafter, I think that will you give enough time. I think you can anticipate, as a result of the argument, a lot of what he might say, if not everything.

MR. PERETZ: Yes, my Lord. I am conscious that the claimant, particularly given the judgment today, may wish to make some new points in support of their case, and we would obviously have to deal with them.

MR. JUSTICE ROTH: That might then have to be by amendment of the ----

MR. PERETZ: Indeed.

MR. JUSTICE ROTH: That will be a different question altogether. This is dealing with things as they stand. I do not think it is appropriate then to make any further direction, is it, at this point?

MR. PERETZ: No, my Lord.

MR. COLTON: My Lord, I would like to address my Lord on permission to appeal the order my Lord made on the application. We say, respectfully, that my Lord was wrong to consider that there was no serious issue to be tried. We say that inadequate weight was given to the fact that the defendant failed to put forward evidence, which they and they alone were in a position to put forward, to answer some of the questions which my Lord identified in the judgment concerning the proportion of the sales which were to therapy naïve patients. We say that there was abuse in refusing to supply and the defendant cannot rely on a general practice which they claim to have in circumstances when the specific case was one where they supplied to us knowing that they did not know what use was being made of the supplies. We say that, on risk of injustice, my Lord has failed to take into consideration the risk of infringing other laws around Europe implementing the 2001 Directive, even in relation to wholesale matters. My Lord said that the risk on wholesale was purely financial and we would seek to challenge that point.

MR. JUSTICE ROTH: Yes, thank you. I refuse permission to appeal the application. It failed for a number of distinct reasons. I think, on the two main grounds on which there is no -- I found no real prospect of success, it was the application of well-established principles to the particular facts of this case.

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