Advocate General opinion in Syfait parallel trade case

Opinion of Advocate General Jacobs on a request for a preliminary ruling from the Greek Competition Commission in a case involving allegations that the pharmaceutical manufacturer GSK had abused a dominant position by restricting supplies of medicines to Greek wholesalers, so as to disrupt parallel trade.

The Advocate General suggested that such conduct may not be an abuse in this particular case. He rejected any reliance on intent evidence:

71. In the present case, although an intent to partition the market is assumed, and even apparently admitted, the partitioning of the market is not the primary intent, but rather an inevitable consequence, given the characteristics of the market, of the attempt by GSK to protect what it sees as its legitimate commercial interests, by refusing to meet in full the orders which it receives. The issue of intent should therefore not deflect attention from the essential question whether such a refusal is in all the circumstances justified.

He then argued that the restrictions on parallel trade might be seen as the consequence of the imposition of low prices and public service obligations by the Greek government, rather than an act of abuse by GSK:

100. In the light of all of the factors considered above, I consider that a restriction of supply by a dominant pharmaceutical undertaking in order to limit parallel trade is capable of justification as a reasonable and proportionate measure in defence of that undertaking's commercial interests. Such a restriction does not protect price disparities which are of the undertaking's own making, nor does it directly impede trade, which is rather blocked by public service obligations imposed by the Member States. To require the undertaking to supply all export orders placed with it would in many cases impose a disproportionate burden given the moral and legal obligations on it to maintain supplies in all Member States. Given the specific economic characteristics of the pharmaceutical industry, a requirement to supply would not necessarily promote either free movement or competition, and might harm the incentive for pharmaceutical undertakings to innovate. Moreover, it cannot be assumed that parallel trade would in fact benefit either the ultimate consumers of pharmaceutical products or the Member States, as primary purchasers of such products.

Update: The court declined to follow the Advocate General's advice, holding instead that the Greek Competition Commission was not a judicial body and the request for a preliminary ruling was therefore inadmissible. The matter was resolved largely in GSK's favour by the Greek Competition Commission and by a Greek court at first instance, but the parallel traders have appealed. A Greek appeal court has referred the matter back to the ECJ (many parallel cases; sample reference).

For further information or advice please contact Franck Latrémolière.

Filed under Article 82, ECJ/CFI, Healthcare, Pharmaceuticals.

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