On 12 May 2020, the Court of Appeal handed down its judgment in an appeal against the CAT’s cost ruling in the successful appeals by Pfizer and Flynn against the CMA’s abuse of dominance decision relating to the anti-epilepsy drug, phenytoin sodium. In its costs ruling, the CAT considered that the relevant starting point was that the unsuccessful party should pay the successful party’s costs. Accordingly, the CAT held that the CMA, having been found to have made errors in its excessive pricing decision, should pay a proportion of Pfizer’s and Flynn’s costs. The Court of Appeal held that the CAT had erred in attaching no weight to the fact that the CMA, as a public authority, was carrying out its function in the public interest, and that there is a public interest in encouraging public bodies to exercise their public function without fear of exposure to undue financial prejudice.
The Court found that the correct starting point should be that no order for costs should be made against a regulator which has brought or defended proceedings in the CAT acting purely in its regulatory capacity. While the CAT may depart from that starting point for good reason, the mere fact that the regulator has been unsuccessful is insufficient. Given the CAT’s finding that the CMA had not acted unreasonably and that neither Pfizer nor Flynn suffered financial hardship, the Court decided not to remit the case back to the CAT, and allowed the appeal making no order as to costs for the CAT proceedings.