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European Commission imposes €60.5 million fine on Teva and Cephalon

EU Reporter Correspondent

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The European Commission has fined the pharmaceutical companies Teva (€30 million) and Cephalon (€30.5 million) a total of  €60.5 million for a ‘pay for delay’ agreement it maintained for over six years. 

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “It is illegal if pharmaceutical companies agree to buy-off competition and keep cheaper medicines out of the market. Teva's and Cephalon's pay-for-delay agreement harmed patients and national health systems, depriving them of more affordable medicines.”

The European Commission accuses Cephalon of inducing Teva not to enter the market, in exchange for a package of commercial side-deals that were beneficial to Teva and some cash payments. 

Cephalon's drug for sleep disorders, modafinil, was its best-selling product under the brand name “Provigil” and for years accounted for more than 40% of Cephalon's worldwide turnover. The main patents protecting modafinil had expired in Europe by 2005.

The entry of generic drugs into a market usually brings dramatic price drops of up to 90%. When Teva entered the UK market for a short period in 2005, its price was half of Cephalon's Provigil. 

The Commission investigation found that for several years, a ‘pay-for-delay’ agreement eliminated Teva as a competitor allowing Cephalon to continue charging high prices even though its patent had expired.

Today's decision is the fourth pay-for-delay decision that the Commission has adopted. It is significant, because of the form taken by the payments. In previous cases, generic entry was delayed by means of simple cash payments. In this instance, the mechanism was much more sophisticated, relying on a mixture of cash payments and a package of seemingly standard commercial deals. This is a clear signal that the Commission will look beyond the form a payment takes.

Corporate tax rules

Commission launches new learning portal for tax and customs professionals across the EU

EU Reporter Correspondent

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The European Commission has launched a new EU learning portal offering tax and customs professionals across the EU an opportunity to build, upscale or share their knowledge on important topics in the field. Capitalising on the advantages of online learning, it aims to build common expertise and improve the skills of customs and tax professionals working in national administrations and authorities, businesses, academia and researchers in the field of tax and customs, with some specific content for staff of public administrations.

The new portal includes a combination of different learning formats – from self-paced learning and development to interactive exchanges of best practices - and should help to modernize customs and tax competencies in the EU by providing a new way for people working in the field to share experiences and knowledge. It can also help professionals to build common skillsets to address shared challenges, such as fraud, tax avoidance and digitalisation. Tax and customs play a vital role in our societies and in the functioning of the EU's Single Market by ensuring efficient revenue collection, contributing to the prosperity of businesses, supporting the safety and security of citizens, and by facilitating legitimate trade. Customs and tax professionals and their administrations and enterprises must be able to respond to and anticipate change to remain effective in a constantly evolving social, political and economic global context. More details and the new learning portal can be found here.

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Economy

Gentiloni says digital levy to fund NextGenerationEU will be proposed by summer

Catherine Feore

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Today (28 April) the European Parliament debated the future of a digital tax. In a report by Andreas Schwab MEP (EPP, DE) and by Martin Hlaváček MEP (Renew, CZ) the Economic and Monetary Affairs Committee reporters and their colleagues in the Budget Committee called for a fairer outcome and the creation of a new ‘own resource’ to fund the NextGenerationEU and the recovery and resilience fund (RRF).

The MEPs would prefer to have an international agreement negotiated through the OECD Inclusive Framework (IF), but after many delays, MEPs say that a European solution needs to be prepared by the summer even if the IF process has not been resolved. 

Economy Commissioner Paolo Gentiloni agreed with MEPs and said that the US administration did offer a new dynamic in resolving this question, nevertheless the EU would be coming forward with a proposal by the summer that would be compatible with the OECD process and which would respect the EU’s other international commitments, including those under the World Trade Organization. 

Gentiloni said that the two pillars - one based on allocation of taxes based on profits and the other on the need for a minimum corporate tax level - should not be treated separately and should be agreed as a package. 

Both MEPs and the commissioner were aware of the need to create the new ‘own resource’ mandated by heads of government and needed to pay back debt accrued in helping the EU’s COVID-hit economy recover. The deadline for the new resource to become operational is the start of 2023.

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European Central Bank (ECB)

Lagarde reiterates need for timely ratification of own resources decision

Catherine Feore

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European Central Bank (ECB) President Christine Lagarde confirmed that the ECB would maintain its very accommodative monetary policy stance. The Governing Council will continue to conduct net asset purchases under the pandemic emergency purchase programme (PEPP) and expects purchases to be conducted at a significantly higher pace than during the first months of the year.

Lagarde said that the eurozone still had a long way to go before phasing out of monetary easing. She compared the situation to an economy on crutches, that has to cross the bridge of the pandemic, and in the meantime it needs two crutches, one fiscal and one monetary.

On national fiscal policies, Lagarde said an “ambitious and co-ordinated” approach remained crucial as a premature withdrawal of support would delay recovery and amplify long term scarring effects. She said firms and households would need ongoing support. 

At a European level, she said the ECB Governing Council reiterated the need for a timely ratification of the own resources decision, to finalize recovery and resilience plans promptly and the need for the NextGenerationEU programme to become operational without delay. She said that this could contribute a faster, stronger and more uniform recovery and thereby add to the effectiveness of monetary policy in the eurozone.

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