The European Commission has accused Israeli drugmaker Teva and its US subsidiary Cephalon of breaching antitrust rules. Regulators classed an agreement between the companies to delay marketing of a cheaper version of Cephalon’s blockbuster sleep disorder drug, modafinil, as anti-competitive behavior.

Following an investigation, the European Commission said its preliminary findings showed that Cephalon paid Teva not to market the cheaper version of its drug under a ‘pay-for-delay’ deal.

Pennsylvania-based Cephalon, which became part of Teva in October 2011, owned the patents for modafinil but when they expired in the European Economic Area (EEA), Teva launched its cheaper generic version in the UK for a short period of time.

Following a patent infringement lawsuit brought by Cephalon, the companies reached an agreement whereby Teva agreed not to sell its generic modafinil products in the EEA until October 2012. In exchange, the Israeli firmreceived a “substantial transfer of value” from Cephalon through a series of cash payments and various other agreements.

The Commission’s initial view is that the transferred value served as a significant pay-for-delay inducement for Teva not to compete with Cephalon’s modafinil worldwide, which “may have caused substantial harm to EU patients and health service budgets.”

EU Competition Commissioner Margrethe Vestager commented: “Market entry and competition by generic drugs is an essential element to improve the affordability of healthcare. It’s now up to the companies to respond to our concerns.”

Teva could be fined up to 10% of its global revenue if it is found guilty. The firm was fined $1.2 billion by US regulators over the same issue in 2015.