Category: 3. Business

Two separate consultations have been launched on how inflation is adjusted annually for the Renewables Obligation (RO) and the Feed-In Tariff (FiT) schemes by the UK government’s Department for Energy, Security and Net Zero (DESNZ).

The RO has incentivised UK renewable electricity generation since 2002 via a system of tradable ‘Renewables Obligation Certificates’ (ROCs).  Although the RO scheme closed to new projects completely in 2019, generators will continue to receive payments until they come off it in a decade-long transition period starting in 2027.

Three separate but complementary RO schemes cover the UK. The UK government is responsible for RO legislation in England and Wales, while Holyrood and Stormont are responsible for the legislation of their respective schemes, all of which come under the administration of regulator Ofgem.

Meanwhile the FiT scheme ran between 2010 and 2019 to support small scale electricity generation (up to 5 MW), with a view to helping organisations, businesses, communities and individuals via solar PV, onshore wind, hydropower, anaerobic digestion, and microcombined heat and power (less than 2 kW). It provides fixed payments for the electricity they generate and export to the grid, with support continuing to be provided to generators until 2043.

But as part of a UK-wide drive to cut energy bills for consumers, DESNZ is running consultations into how to decrease costs of both schemes – including shifting how inflation increases are calculated by using the consumer prices index (CPI) instead of the retail prices index (RPI).

Ronan Lambe, a renewable energy expert at Pinsent Masons, explained this change could undermine confidence in the schemes from both consumers and energy generators.

“The changes under consultation are likely to be seen by the developer and investor community as a moving of the goalposts by the government,” he said.

“If implemented, the changes would have significant impact on the economics of existing projects, not just a reduction in the value of FiT or ROC revenue. Many projects will have ongoing operating expenses, the cost of which is indexed in accordance with RPI. If project revenues no longer attract RPI indexation, there’s an immediate mismatch between operating expenses and project revenues.

“While reducing electricity bills for industry and domestic consumers is a laudable aim, it shouldn’t come at the cost of reducing confidence in the UK as a destination for key energy investments.”

CPI has been used since 2003 as the official way to measure inflation, tracking the change in costs of goods and services annually, and tracks the prices of items in a representative shopping basket of household items. RPI, however, uses a different formula to calculate inflation rates, and also includes household costs such as council tax or mortgage repayments, which means it usually tracks higher than CPI figures.

A move to using the CPI for the ventures would bring them into line with other schemes, such as the government’s Green Gas Support Scheme.

Martin McGuinness, an energy expert at Pinsent Masons, said any potential switch to the previous agreed terms for either or both schemes could have longer term repercussions.

He added: “Although these consultations are not too much of a surprise following the focus on reducing bills and the terms of the recent Green Gas Support Scheme, it remains to be seen whether generators and their backers will accept this shift without putting markers down, whether in terms of strongly worded consultation responses or even legal challenges.

“Any adverse impact on forecasted revenues could be difficult to forget among the generator and investor communities.”

The RO consultation runs until 28 November, with the FiT one open until 12 December.

Obesity wonder drugs Wegovy and Zepbound are already showing that they can reduce the risk of cardiovascular and chronic kidney disease in addition to helping people lose weight. Now, a US-wide trial will test whether tirzepatide, the active ingredient in Zepbound, may be an effective treatment for people with long Covid.

Part of a class of drugs known as GLP-1s, tirzepatide acts on receptors in the gut and the brain to regulate appetite. As a result, people shed pounds by eating less. But decreased body weight doesn’t fully explain the positive effects on the heart and kidney. Mounting evidence suggests that the drugs have a broad anti-inflammatory effect on the body—a mechanism that’s of interest for treating long Covid.

As many as 20 million people in the US have experienced long Covid, a chronic condition that lasts for at least three months after an initial infection. While more than 200 symptoms of long Covid have been documented, some of the most common include coughing, shortness of breath, brain fog, fatigue, mood changes, trouble sleeping, and body aches.

Scientists still don’t fully understand how and why long Covid occurs, but they’ve found persistent inflammation in many patients. This chronic inflammation may be caused by lingering traces of virus in the body or by misdirected antibodies, known as autoantibodies, that attack a person’s own cells and tissues. The hope is that tirzepatide could tamp down this inflammation to improve patients’ symptoms.

“The rationale for a GLP-1 drug is its powerful body-wide and brain anti-inflammatory properties,” says Eric Topol, a cardiologist and the director of the La Jolla, California-based Scripps Research Translational Institute, which is sponsoring the trial.

Scripps researchers are recruiting 1,000 people across the country who are 18 years of age or older and have medical documentation of long Covid. Unlike most medical studies, which typically require multiple in-person visits, the Scripps trial is fully remote. Participants will be randomized to receive either tirzepatide or a placebo by mail and will take it for a year. They’ll receive a fitness tracker so that researchers can measure their step count, an important indicator of fatigue. Participants will also get a smart scale and will weigh in regularly. Since GLP-1s are used for weight management, study investigators want to make sure participants don’t lose too much weight during the trial.

Julia Moore Vogel, coprincipal investigator of the trial who herself has long Covid, says the remote design of the trial was intentional. “For the long Covid population, it’s so crucial, because if you’re requiring people to come into a clinic, you’re systematically excluding the most severely affected folks who are housebound or bedbound. It was really important to us to make sure that those people are included.”

On 23 October 2025, the Court of Justice of the European Union (CJEU) upheld the Commission’s 2020 decision fining Teva and Cephalon a total of €60.5m for entering into a patent settlement agreement that delayed the market entry of a generic version of the sleep-disorder drug Provigil. The judgment serves to cement the approach to so-called “pay-for-delay” agreements set out in recent high-profile judgments, as well as to highlight the risks that can arise where parties conclude commercial side-agreements as part of a patent settlement.

Background

The case centred on Cephalon’s Provigil product (the active ingredient in which is modafinil), which accounted for 40% of Cephalon’s global turnover. Although the main patents expired in 2005, Cephalon relied on secondary formulation patents to preserve its exclusive right to market the product. 

Teva developed its own process patents and launched a generic modafinil in the UK in mid-2005, prompting infringement proceedings from Cephalon. The dispute was settled that December, and the terms of the settlement later became the focus of the Commission’s investigation. In 2011, Cephalon was acquired by Teva after the transaction was notified to and approved by the Commission.

The Commission’s findings: a transfer of value with a restrictive purpose

According to the Commission, the settlement contained two key restrictive clauses:

• a non-compete clause, pursuant to which Teva agreed not to market generic modafinil in the EEA until 2012; and
• a non-challenge clause, pursuant to which Teva agreed not to contest Cephalon’s modafinil patents.

In return, Cephalon provided Teva with several financial and commercial benefits, including in the form of an up-front payment for avoided litigation costs, and agreements to: (i) purchase modafinil API from Teva at a premium; (ii) grant Teva UK distribution rights for Cephalon’s products; (iii) grant Teva access to Cephalon’s clinical data for a separate product; and (iv) grant Teva a licence to market generic modafinil in the EEA starting in 2012.

The Commission found that these transactions represented a transfer of value with no legitimate business rationale beyond inducing Teva to stay out of the market. This eliminated potential competition, allowing Cephalon to maintain supra-competitive prices after patent expiry. 

The Commission therefore concluded that the settlement arrangements comprised an agreement whose object and effect was to restrict competition, in breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU). In doing so, it applied the principles established in the leading case of Generics (UK), which articulated the following two-limb test for determining whether a patent settlement agreement amounts to a restriction of competition “by object”.

i. First, authorities must assess whether the transfers of value provided for by the agreement have any explanation other than the parties’ shared commercial interest not to compete on the merits. If they do not, a by-object restriction is prima facie established. 

ii. Even where that first limb is met, the agreement will not be a by-object restriction if it has proven pro-competitive effects capable of creating reasonable doubt that it causes a sufficient degree of harm to competition.

The Commission imposed fines of €30m on Teva and €30.5m on Cephalon. 

Appeal before the General Court

Teva and Cephalon appealed. In October 2023, the General Court dismissed the challenge, confirming that the Commission had correctly applied the framework from Generics (UK). 

The General Court found that the side-deals were economically irrational for Cephalon absent Teva’s agreement not to compete, and formed a single contractual framework whose object was to restrict competition. Assessing whether the arrangements would have been concluded on similar terms without the restrictive clauses was, according to the General Court, a legitimate part of the “by-object” analysis. Claimed efficiencies – such as litigation cost savings or supply stability – were deemed to be unsubstantiated.

The CJEU confirms the finding of infringement

Teva and Cephalon submitted two grounds in support of their further appeal, alleging that the General Court had erred when: (i) applying the legal test from Generics (UK) to establish that there was a restriction of competition by object; and (ii) assessing whether there was a restriction of competition by effect. 

In short, the CJEU dismissed Teva and Cephalon’s appeal in full, upholding the General Court’s conclusion that the parties’ settlement agreement was a restriction of competition by object. The CJEU’s findings on each ground of appeal were as follows.

Ground 1: Alleged errors of law in classifying the settlement as a restriction by object 

The appellants claimed that the General Court had misapplied both parts of the test in Generics (UK).

In relation to the first limb of the test, the parties’ arguments and the CJEU’s conclusions were as follows:

By comparing what was concluded in the settlement with what would have been agreed between the parties absent the restrictive non-compete and non-challenge clauses, the General Court had conducted a counterfactual analysis – something that should be done when assessing whether an agreement has restrictive effects, rather than a restrictive object. This amounted to an error of law on the General Court’s part, including because it had failed to establish that each of the commercial transactions in the settlement would not have been agreed absent the restrictive clauses. 

The CJEU noted that, when deciding whether a patent settlement amounts to a by-object restriction, it is necessary to conduct a detailed, overall assessment of the agreement and its context – including the parties’ interests and the incentive effect of any transfers of value. The presence of restrictive clauses, such as non-compete and non-challenge clauses, is not in itself sufficient. 

That being the case, whilst the General Court’s assessment of the incentives flowing from the settlement agreement involved a hypothetical scenario, that didn’t mean it was actually carrying out a counterfactual assessment of anticompetitive effects. Rather, the General Court was seeking to establish that, as a whole, the value-transfers to Teva could be explained only as an inducement for it to stay out of the market, in line with limb one of the Generics (UK) test. Further, there was nothing to prevent counterfactual elements being taken into account when making a finding of infringement by object.

a. The General Court formulated a stricter legal standard than the test in Generics (UK) and reversed the burden of proof, by requiring the appellants to show that they would have entered into the same commercial arrangements, on equally favourable terms, absent the restrictive clauses.

The CJEU concluded that the General Court had made no such error of law in its assessment. Rather, the appellants having argued that each of the side-deals could legitimately be explained, the General Court had examined whether their purpose was in fact to serve as consideration for Teva’s non-compete and non-challenge commitments. This examination led the General Court to conclude that, by establishing that the value-transfers to Teva had no purpose other than to induce it to agree to the restrictive clauses, the Commission had duly discharged the burden of demonstrating that the side-deals had no plausible explanation other than the interest of both parties not to compete on the merits.

b. By considering the conclusion of the commercial transactions in isolation from Cephalon and Teva’s patent dispute, the General Court had applied a test that was effectively impossible for the appellants to meet.

The CJEU concluded this complaint was unfounded. The General Court had not, as the appellants argued, required them to justify the side-deals on a standalone basis, absent the patent settlement. Rather, the General Court had evaluated the relevant commercial transactions against the context of the settlement of the parties’ disputes and found, on the facts, that these transactions increased the overall transfer of value to Teva, in order to induce acceptance of the restrictive clauses. This assessment was in line with the correct legal test. 

In relation to the second limb of the Generics (UK) test, the appellants submitted that the General Court had failed adequately to address their arguments that the settlement’s pro-competitive effects cast reasonable doubt on the degree of harm it caused to competition. In this regard the parties pointed to the Teva/Cephalon merger clearance decision, in which the Commission stated that the settlement agreement between the parties had removed the IP barriers preventing entry and would enable Teva to become Cephalon’s most significant competitor on the modafinil market (once the licence between them took effect in 2012).

The CJEU found that the appellants’ arguments were: (i) inadmissible, as new arguments; and (ii) ineffective, as they blurred the distinction between the analytical framework for merger control and for assessments under Article 101 TFEU. Additionally, the General Court had in effect previously examined and rejected this argument, classifying Teva’s entry to the modafinil market as “delayed, controlled and limited”, as a result of the patent settlement.  

Ground 2: Alleged errors in finding a restriction by effect

Given that a restriction of competition by object was established, the CJEU found it was not necessary to then examine the anticompetitive effects of the concerned agreement. 

Key takeaways

The CJEU’s judgment further consolidates the Generics (UK) framework as the governing standard when assessing reverse-payment patent settlements under EU competition law.

The judgment also reaffirms that, where value-transfers to a potential generic entrant take the form of favourable commercial side-agreements rather than a monetary payment, they will be assessed in their totality with a view to determining whether their value is such that they can only be explained as an inducement for the generic manufacturer to stay out of the market. In this regard, the CJEU again emphasised (as it did in last year’s Perindopril judgment) that value-transfers that exceed what is necessary to compensate the generic manufacturer for litigation expenses and disruption and/or for the supply of goods or services are unlikely to be capable of being justified. 

Therefore, whilst the CJEU affirmed in the judgment that the Generics (UK) test does not preclude the conclusion of commercial side-agreements as part of an overall patent settlement, parties entering into such agreements should take care when assessing and documenting their value and rationale – even where the settlement itself does not provide for a cash payment to the potential entrant.

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