Parallel trade in the pharmaceutical sector

European Court of Justice (ECJ) has established rules on the supply quotas for pharmaceuticals on the Greek wholesale market (Joined Cases C-468/06, C-469/06, C-470/06, C-471/06, C-472/06, C-473/06, C-474/06, C-475/06, C-476/06, C-477/06, C-478/06 Sot. Lélos kai Sia). The ECJ decided that a dominant company's refusal to supply wholesalers with a view to impeding parallel trade constitutes an abuse of a dominant market position under Article 82 of the EC Treaty unless it is justified by objective reasons.

The Court confirmed that differences in national price regulations are in themselves not a sufficient justification and that control exercised by Member States over the selling prices or the reimbursement of medicines does not entirely remove the prices of those products from the law of supply and demand. The ruling confirms the Commission's antitrust policy, namely that the protection of parallel trade in the pharmaceutical sector is within the scope of EC competition law.

The ECJ gave a preliminary ruling based on national proceedings between the pharmaceutical company GlaxoSmithKline (GSK) and Greek wholesalers exporting pharmaceutical products to countries where prices for medicines are higher.
In 2000, GSK stopped supplies of three medicines (Lamictal, Imigran and Serevent) to Greek wholesalers, who complained to the Hellenic Competition Commission (HCC). GSK subsequently resumed supplying wholesalers in 2001, but only at volumes to meet national demand, i.e. not enough for exporting.

The case was brought before the ECJ on a request from the Greek Competition Commission for a preliminary ruling asking to clarify whether pharmaceutical supply quotas could constitute an abuse of a dominant position under Article 82 of the EC Treaty  and to what extent State interventions that fixe prices for pharmaceuticals must be taken into account to assess the  alleged  infringement. Advocate-General Jacobs stated in his opinion that supply restrictions can be justified to protect commercial interests, even if they intend to impede parallel trade. However, the ECJ refused the case on procedural grounds.

In November 2006 the Athens Appeal Court re-submitted the same questions. In the new ruling,  the European Court of Justice considers, in line with Advocate-General Ruiz-Jarabo Colomer's opinion of 1 April 2008, that where a dominant pharmaceutical company refuses to supply medicines to wholesalers with a view to impede parallel trade, it abuses its dominant position unless it provides objective justifications. In this case, the reasons for the refusal to supply submitted by GSK, in particular, the fact that the State intervenes in fixing prices for pharmaceuticals at national level do not constitute, according to the Court, objective justifications as such. The court considers however, that a producer of pharmaceutical products must be in a position to protect its own commercial interests if it is confronted with orders that are out of the ordinary in terms of quantity. Whether orders are ordinary must be assessed by the national courts in the light of the needs of the national market in question and previous trading relations.