European General Court Dismisses Medicines Dual Pricing Complaint Thus Allowing GSK To Avoid New Probe
The European General Court (“GC”) dismissed on 26 September 2018 a 1999 complaint filed by EAEPC, the industry association of parallel traders in medicines, that had urged the European Commission (the “Commission”) to resume its investigation of a “dual pricing” scheme operated by GlaxoSmithKline (“GSK”) in Spain. Under the scheme, the prices which GSK charged to wholesalers differed depending on whether the medicines were resold in Spain under regulated prices or were exported abroad free from pricing constraints.
GSK had been the subject of a Commission competition procedure which in 2009 had resulted in a verdict of the Court of Justice of the European Union (“ECJ”) that the dual pricing scheme had as its object the restriction of competition and thus infringed Article 101 (1), Treaty on the Functioning of the European Union (“TFEU”). The ECJ went on to declare that the Commission had not carried out a full examination of the arguments put forward by GSK in favour of an exemption of the scheme pursuant to Article 101 (3), TFEU.
Following the ECJ’s judgment, the Commission started its analysis of the scheme under Article 101 (3), TFEU and in 2012 also opened an investigation of alleged dual pricing practices in Spain by other firms. But in May 2014 the Commission decided to reject the 1999 complaint for lack of a sufficient Union interest in a continued investigation of the alleged competition law infringements. This is because (i) GSK’s conduct under scrutiny had ceased many years ago; (ii) that conduct did not produce enduring effects; and (iii) the case had been handled by national competition authorities and courts as well.
As noted, the EAEPC took steps to have the inquiry against GSK re-opened, but the GC has now confirmed the rejection of the complaint. EAEPC immediately indicated that it would consider filing an appeal to the ECJ.
Before the GC, the EAEPC challenged the Commission’s findings as inconclusive, questioned the absence of sufficient Union interest and characterised the reasoning underlying the decision as flawed.
In response, the GC considered that the EAEPC had failed to adduce evidence disproving the Commission’s findings.
It furthermore noted that the Commission had broad discretion in determining a matter to be in the Union interest. While the case may bear a “special feature” due to a Commission decision that was subject to two European judgments adopted by the ECJ and the GC, the GC noted that the ‘special feature’ evoked by EAEPC does not prevent the Commission from concluding that there is no sufficient Union interest based on the Commission’s three considerations cited earlier.
By the same token, the GC also rejected EAEPC’s position that the Commission failed to examine and state reasons for its conclusion, as the Commission’s decision clearly indicates that the disputed dual pricing scheme had been suspended and that GSK had refrained from implementing it.
Lastly, the GC stressed that the rejection of the complaint was not tantamount to an authorisation of export restrictions in Spain. It supported the Commission’s position that “the fact of not adopting a decision on an infringement cannot in itself be determinative of the self-assessment carried out by the undertakings under Article 101 (3), TFEU”. The GC specified that self-assessment should be based on current market conditions and not on a decision rejecting a complaint for lack of Union interest in a specific historical context.
The ECJ’s judgment is available at this link.