IP-2024-000024 - [2024] EWHC 951 (IPEC)

Price Depression

The Claimant argued that if an injunction was refused, there would likely be a substantial and irreversible price depression for the Claimant’s ClearPetra products. The argument was predicated on the assumptions that if there is no injunction, it is inevitable that (i) third parties will enter the market; and (ii) there will be a resulting price war.

I have already addressed the evidence on third parties above. That evidence does not support an assumption that multiple third parties are bound to enter the UK market.

As to the argument that there will be a resulting price war, that was said to be supported by the following:

Against that, Mr George Reynolds gave evidence that the Defendant has fixed the NHS price of the Seplou Sheath at £125 to match the price of the Flexi ClearPetra Sheath. It had entered the market in November 2023 at a unit price of £160, but Mr Reynolds explained that this was later revised down in line with the market price for UASs as set by the Claimant. He said that the Defendant’s practice regarding pricing is to follow the market price established by the Claimant and its distributor. As noted above, the Claimant’s price for the Flexi ClearPetra Sheath is £125 and it intends to reduce the price of the ClearPetra Sheath so that it is similar or the same.

Mr Reynolds also explained that the price of products supplied to private hospitals was on a case-by-case basis, but that in general the price paid by private hospitals for the Seplou Sheath matches the NHS price. He illustrated this with one example of a private hospital who had made an inquiry for the Seplou Sheath in November 2023 at an initial price of £160. The products were shipped on 8 March 2024 at a reduced price of £125. Only about 5% of the Defendant’s sales are to private hospitals.

The overall thrust of Mr Reynold’s evidence was that if the Claimant did not reduce its price, the Defendant would not do so either. As a result, he said that there was no risk of price depression. This was backed up by an offer of an undertaking that the Defendant would not drop its price for the Seplou Sheath below £125 provided that the Claimant did not drop its price for the ClearPetra and Flexi ClearPetra Sheaths below £125. The Claimant pointed out that an undertaking in this form was potentially anti-competitive and unlawful, with the result that the Defendant’s counsel modified the offer at the hearing to one whereby the Defendant undertakes not to drop its price below that of the Claimant (without fixing it at any particular price).

Stepping back and assessing this evidence in the round, I do not think that there is sufficient evidence for me to conclude that a price war is likely, let alone inevitable. I accept that there has been a reduction in the price of the flexible ureteroscope, but it is difficult to assess the relevance of that example to this case without knowing more information about the nature of that market and the circumstances in which parties started selling that product. For example, I do not even know whether patent protection was in issue. As a result, the example simply illustrates that multiple players in a market can lead to price competition and price reduction.

I also accept that the Defendant has already reduced the price of the Seplou Sheath twice (see the table at paragraph 40 above), so in theory could do so again. However, I have no reason to go behind the evidence of Mr Reynolds to the effect that the Defendant has no intention of reducing its price below that of the Claimant. That evidence is borne out by the Defendant’s conduct to date. If the Defendant intended to undercut the Claimant, then surely it would have done so from the outset to gain the maximum foothold on the market as quickly as possible. However, that has not been the case at all. Moreover, it is not in the Defendant’s interest to cause a price war, particularly when it is the only other supplier of suction UASs on the UK market.

As to whether there will be a price reduction caused by third party entrants, there was no evidence to support this beyond assertion by Ms Shi that this would likely be the case. It is difficult to place much weight on that evidence in circumstances where Ingles Medical is the only third party that has been identified as a potential entrant with the Innovex UAS but there is no evidence as to the price it would charge if it started selling. Moreover, it may choose not to sell at all, depending on the outcome of the correspondence with the Claimant. I simply do not know what Ingles Medical will do and the evidence does not allow me to make a reasonable prediction either way.

In the circumstances, I reject the Claimant’s submission that a price war is likely or inevitable on the facts of this case. For the reasons I have given, this is not a case of imminent market entry by multiple third parties, and the evidence indicates that the Defendant will maintain the current market price.