News & Insights

Third Circuit Applies “Consumer-or-Competitor” Rule to Deny Antitrust Standing to Foreign Manufacturer of Drug Marketed in U.S. by Licensee

Antitrust Update

The Third Circuit’s January 23, 2013 ruling in Ethypharm S.A. France v. Abbott Laboratories (No. 11-3602) reinforced that court’s requirements for antitrust injury and standing, highlighting a significant hurdle facing any antitrust plaintiff in the Third Circuit who is neither a competitor nor a consumer in the relevant market.

The case involved Antara, an anti-cholesterol drug manufactured by the French firm Ethypharm and sold in the United States by Reliant Pharmaceuticals under a license and distribution agreement. The court ruled that Ethypharm could not bring antitrust claims over Abbott’s commencement and settlement of earlier patent litigation, because Ethypharm had contracted for Reliant to gain FDA approval for Antara and sell the drug in the U.S. and thus did not itself compete in the same market as Abbott. Further, Ethypharm was not a consumer in the relevant market. Therefore, the Court concluded, Ethypharm could not establish antitrust injury or antitrust standing.

The Court explained that Ethypharm did not suffer antitrust injury because it did not, and indeed could not, compete in the U.S., lacking FDA approval to do so. Without any antitrust injury, Ethypharm also could not have antitrust standing. The Court pointedly observed, “Ethypharm wants to have it both ways: it wants to pass on to a licensee the expense and risk of qualifying to compete in the United States pharmaceutical market but, when the arrangement fails to achieve success, Ethypharm seeks to avail itself of the United States laws protecting fair competition. The rules of antitrust standing do not permit that tactic.”

If there is an exception in the Third Circuit to the “consumer-or-competitor” antitrust standing rule, it would seem to be limited under Ethypharm (and earlier decisions) to “cases in which both plaintiffs and defendants are in the business of selling goods or services in the same relevant market, though they may not directly compete against each other.”

The limitation of antitrust standing to consumers and competitors is controversial. According to a recent petition for certiorari from another recent Third Circuit decision, this limitation is recognized only by the Third, Fifth, and Eighth Circuits, whereas other circuits follow less restrictive approaches. The Supreme Court denied certiorari, allowing the split to continue. SigmaPharm, Inc. v. Mutual Pharm. Co., 454 F. App’x 64 (3d Cir. 2011), cert. denied, 133 S. Ct. 110 (2012).

If you have any questions regarding this update, please contact the Sidley lawyer with whom you usually work or any of the Practice Area Coordinators listed below.

Practice Area Coordinators:

To receive Sidley updates via email, please click here.

Sidley Austin provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship.

Attorney Advertising - For purposes of compliance with New York State Bar rules, our headquarters are Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, 212.839.5300; One South Dearborn, Chicago, IL 60603, 312.853.7000; and 1501 K Street, N.W., Washington, D.C. 20005, 202.736.8000.