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EU opens new front in AstraZeneca legal fight that may lead to fines

WorldMay 11, 2021 12:14PM ET
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2/2 © Reuters. FILE PHOTO: Empty vials of Oxford/AstraZeneca's COVID-19 vaccine are seen at a vaccination centre in Antwerp, Belgium March 18, 2021. REUTERS/Yves Herman/File Photo 2/2

By Francesco Guarascio

BRUSSELS (Reuters) -The European Union launched a new lawsuit against AstraZeneca (NASDAQ:AZN) on Tuesday that could lead to financial sanctions for the company which the EU alleges has breached a supply contract for COVID-19 vaccines.

The lawsuit is the EU's second against AstraZeneca after the bloc took action at the end of April over delayed vaccine supplies.

AstraZeneca has said the EU's first legal action is without merit, saying that it complied with the contract. The company's lawyer said on Tuesday the new lawsuit was not needed given that there was already one underway.

EU lawyer Rafael Jafferali, speaking in a Belgian court at Tuesday's hearing, asked that AstraZeneca delivers a total of 120 million vaccine doses by the end of June in Brussels' first formal request on the exact volume it is seeking to receive by mid-year.

The Anglo-Swedish drugmaker had originally committed to deliver 300 million vaccine doses from December to the end of June, but has delayed shipments, having delivered only 50 million, which under the contract were due in January.

As a partial and immediate compensation for the delays, the EU's lawyer told the court that the company should deliver 120 million doses by the end of June - 90 million in the second quarter, in addition to the 30 million shots shipped by the end of March.

AstraZeneca's aim is to ship 100 million shots by mid-year, which the company's lawyer Hakim Boularbah confirmed at the hearing on Tuesday.

Boularbah said AstraZeneca was not obliged to deliver the entire volume of doses set in the contract because it only committed to doing its "best reasonable efforts" to achieve it.

He declined to comment when asked by Reuters if the company could accept the EU's demand to deliver 120 million doses by the end of June. The company has cited production problems and export restrictions as reasons for its delayed supplies to the EU.

The EU lawyer told the court that the EU hoped the remainder of the contracted 300 million doses could be delivered by AstraZeneca by September, although he did not submit a formal request on this.

AstraZeneca was not immediately available for comment.

FINE LOOMING?

Officials familiar with the case said the second lawsuit is mostly procedural, pertaining to the merits of the issue, but would also allow financial penalties to be imposed on the company.

A request for a provisional compensation of 1 euro was put forward by the EU while damages were assessed. A demand for real compensation for what the EU has alleged is a breach of contract by AstraZeneca would be decided at a later stage.

One official said the fine could be "significant" but declined to quantify the financial claim, which would need to be approved by the judge.

A spokesman for the European Commission told a news conference later on Tuesday that the ultimate objective of the lawsuits was to get doses and not to punish AstraZeneca or seek a fine. But he also said financial penalties could be imposed on the company.

The EU lawyer also asked AstraZeneca to share confidential documents, a request which AstraZeneca opposes.

The EU had previously urged AstraZeneca to present evidence of how it spent the 224 million euros ($272 million) the EU paid in September to buy vaccine ingredients.

AstraZeneca's lawyer complained in the court hearing that the EU's executive had launched a second case given that one had already been opened.

The judge decided in favour of allowing the second case to proceed and set Sept. 24 as the date for the next hearing.

Another hearing has been set for May 26 on the first legal case in which the EU is seeking an immediate acceleration of deliveries.

A verdict on the first case is expected before the end of June, whereas the second case on the merits of the matter will last at least until next year.

($1 = 0.8220 euros)

EU opens new front in AstraZeneca legal fight that may lead to fines
 

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Gene Kret May 11, 2021 7:27AM ET
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