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UPDATE 3-EU opens new front in AstraZeneca legal fight that may lead to fines

05/11/2021 03:50
UPDATE 3-EU opens new front in AstraZeneca legal fight that may lead to fines

EU launches 2nd lawsuit against Astra over delayed supplies

EU asks Astra to deliver at least 120 mln doses by mid-year

AZ aims to ship 100 mln doses by end-June, out of contracted 300 mln

Adds details

By Francesco Guarascio

- The European Union launched a new lawsuit against AstraZeneca AZL.N 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. nL1N2MJ0XS nL1N2ML0NE

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.

An EU lawyer, speaking in a Belgian court at Tuesday's hearing, asked that AstraZeneca deliver at least 120 million vaccine doses by the end of June in Brussels' first formal request so far 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 so far, 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 at least 120 million doses by the end of June.

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

The company's lawyer 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 execute 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 that 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.

AstraZeneca lawyer complained in the court hearing on Tuesday 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 September 24 as the date for the next hearing.

Another hearing has been already 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)


FACTBOX-How the EU and AstraZeneca ended up in court, and what nextnL1N2ML0X6

(Reporting by Francesco Guarascio; additional reporting by John Chalmers and Jan Strupczewski; Editing by Jane Merriman)

((Francesco.guarascio@tr.com;))