Competition: European Court of Justice hands down a preliminary ruling stating that a pharmaceuticals company is abusing its dominant position if it refuses to meet ordinary orders by wholesalers in order to prevent parallel exports
- Greece
- 09/19/2008
- Roschier, Attorneys Ltd. - Finland
In a preliminary ruling the European Court of Justice (“ECJ”) held that a company in a dominant position on the relevant market for medicinal products is abusing its dominant position if it refuses to meet ordinary orders of wholesalers in order to stop parallel exports. In the relevant case GlaxoSmithKline AEVE (“GSK AEVE”), a Greek subsidiary of GlaxoSmithKline plc (“GSK”), which imports and distributes GSK pharmaceutical products and holds the marketing authorization for certain medicines in Greece, had stopped meeting the orders of Greek wholesalers who buy the medicines in question for distribution in Greece and export to other Member States. The wholesalers brought an action claiming that GSK AEVE’s sales policy breached both Greek and Community competition law, and the Athens Court of Appeal referred its questions on the compatibility of the practices in question with the community rules to the ECJ. The ECJ held that by refusing to meet the orders, GSK AEVE aims to limit parallel exports to the markets of other Member States in which the medicines in question are sold for higher prices. The ECJ noted that parallel exports of pharmaceuticals products from a lower-price Member State to higher-price Member States can benefit final consumers. The ECJ analyzed the possible effect of State regulation on the prices of medicines and held that the Community competition rules can not be interpreted in such a way that, to defend its own commercial interests, the only choice for a pharmaceuticals company in a dominant position is not to place its products on the market in a lower price Member State. Nevertheless, the ECJ held that a company in a dominant position must be able to take reasonable and proportionate steps to protect its own commercial interests. In order to evaluate whether such steps are reasonable and proportionate, the ECJ held that it is for the national court to decide whether the wholesalers’ orders are ordinary in the light of the previous trading relations between themselves and the pharmaceuticals company and the size of the orders in relation to the requirements of the market in the relevant Member State.
Source: European Court of Justice Press Release 16/9/2008
