Mergers: EU call-in powers and FDI remain high on the agenda
For years, companies in innovative industries have paid close attention to the power of antitrust authorities to “call in” mergers that fall below mandatory filing thresholds, including to catch the acquisition of pre-revenue or low-revenue targets.
When the European Court of Justice (ECJ) confirmed in Illumina/GRAIL in September 2024 that the European Commission (EC) could only call in transactions that a member state (or states) had jurisdiction to review under its national merger control regime, it prompted cautious optimism that EU call-in risk would become a less pressing concern. However, at the time we noted that this should be tempered by (i) the increasing breadth of EU member states’ powers to review transactions that do not require mandatory notification; and (ii) national merger control regimes that are not based solely on turnover thresholds (see our analysis here).
A year on from Illumina/GRAIL, mitigating call-in risk continues to require careful consideration for life sciences transactions, although the focus of the analysis has shifted somewhat, with dealmakers now focusing on member state-level risk before looking at the Europe-wide picture. This often requires an assessment of mandatory notification thresholds in Germany (where there is a deal value test) and call-in risk in Italy (as well as a number of other member states that have the ability to review acquisitions of small or pre-revenue targets). It can be expected that, where transactions are reviewable at national level, member states may confer and, ultimately, agree with the EC to refer up any suitable cases, as occurred with the acquisition of Run:ai Labs Ltd by NVIDIA at the end of 2024.
Foreign direct investment (FDI) filing processes also remain important to deal-making—and particularly deal timing—in the sector. Often, life sciences and healthcare transactions trigger FDI filings in jurisdictions where the timeline for review of even straightforward deals can be substantially longer than the equivalent reviews under merger control regimes. This means that FDI (in Europe and internationally) is increasingly a key hurdle for life sciences and healthcare deals and can drive transaction timings even for deals that receive unconditional clearance.
Antitrust: dominance, disparagement and patent strategies are a key focus given recent decisions
Among many important decisions over the past year (including the ECJ’s ruling in Servier and the settlement decisions entered into by the EC and the U.K. Competition and Markets Authority (CMA) with Vifor), the EC’s EUR462.6 million abuse of dominance fine on Teva stands out due to the wide-ranging implications it may have for the life sciences sector.
We first published key insights on the Teva decision when it was announced in October 2024. Some months later, in April 2025, the EC published the full decision and gave the industry more detail to consider. Three key themes have attracted particular attention.
Dominance: more likely to arise shortly before or after generic (or generic-like) products enter the market if they introduce a degree of new price competition
Following similar approaches in previous cases (including last year’s ECJ ruling in Servier), the EC’s Teva decision found that market definition can evolve over the product lifecycle. The EC emphasized its view that the first step in analyzing market definition for a pharmaceutical product is to establish which treatments are therapeutically substitutable. The second step is to establish which of these therapeutically substitutable treatments actually exerts an effective competitive constraint on the product.
In Teva, the EC found that, shortly before the generic-like entry of a product based on the same active pharmaceutical ingredient, Teva’s Copaxone product faced price competition for the first time. This had consequential effects on Copaxone’s prices, volumes and profits. The (anticipated) entry of this generic-like product, therefore, transformed and narrowed the market in which Copaxone competed to the molecule level, excluding other therapeutic substitutes based on other active pharmaceutical ingredients. This may not have been a novel finding in the same vein as the decision’s findings on disparagement and patent strategies. But, together with the Servier judgement, it serves as another example of a narrow pharmaceutical market definition, with an emphasis on price over non-price competition.
Disparagement: complex analysis in EU’s first infringement decision underscores need for care around claims about competitors
Following the EC’s settlement with Vifor and a number of other EU member state cases, the Teva decision was the first in which the EC found an infringement of the prohibition on abuse of dominance for disseminating misleading and disparaging claims about a competitor product. The claims focused on the competitor product’s safety, efficacy and therapeutic equivalence with Teva’s Copaxone product.
The EC’s decision included lengthy and complex analysis of whether Teva’s claims were (i) objectively misleading; (ii) capable of “producing exclusionary effects” by making it more difficult for competitors to enter or remain on the market; and (iii) not objectively justified. Several internal documents authored or circulated by Teva’s in-house legal team were used as evidence of the company’s disparagement strategy, with the EC reiterating that communications reflecting advice emanating from in-house lawyers are not covered by EU legal professional privilege (nor are any strategic business communications).
The main takeaway for pharmaceutical and healthcare companies who may enjoy a dominant position: any communications strategy that draws a comparison to, or makes statements about, competitor products needs to be designed carefully with input from (external) antitrust experts and supported by objective evidence.
Patent “gaming”: EC Teva decision leaves companies with questions but shows the importance of internal communications to its view on whether a patent strategy is “artificially prolonging” legal uncertainty around patent protection
The EC’s decision describes, in detail, a “divisionals game” by Teva comprised of two “legs”. The first leg comprised the staggered filings of divisional patents on process or dosage before the European Patent Office that largely overlapped in content (with shared essential features and, in the EC’s view, related legal weaknesses). The second leg consisted of the obstruction of effective legal review of challenged patents through the strategic withdrawal of patents before competent appeal courts could adopt a decision about them.
The EC’s decision draws heavily on internal documents that were redacted in the published text. According to the EC, these documents indicated that Teva was aware of inherent weaknesses in its patents and intended, through its patent strategy, to artificially prolong legal uncertainty around its patent protection.
The EC’s detailed analysis in its decision is somewhat helpful, but it highlights several case-specific factors, some of which may have been more decisive than others. The most obvious practical takeaway for companies is that internal documents and correspondence matter to the analysis of whether a strategy “artificially prolongs” legal uncertainty and amounts to an abuse of dominance.
Another emerging topic of antitrust interest: the U.S. MFN executive order
On May 12, 2025, the Trump administration issued an Executive Order announcing that it would issue “most favored nation” pricing targets for pharmaceutical manufacturers to “bring prices for American patients in line with comparably developed nations” We explore the impact of U.S. policy developments on the U.S. regulatory environment here. This is attracting close attention for a number of important reasons. From an antitrust perspective, any development that might affect (and in particular could have the effect of increasing) prices, or supply, in Europe will always require careful consideration to avoid any unintended increase in risk exposure. This will be particularly true for any company that may hold a dominant position in any product. As companies come to design their response to any requirements imposed on them because of this order, antitrust risk will be one factor they will need to keep firmly in mind.
