Refusal to Supply Issues Come Back to Haunt GlaxoSmithKline and Cause Hellenic Competition Commission to Impose Fines

• 12/07/2018
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On 11 July 2018, the Hellenic Competition Commission, the Greek competition authority (“HCC”), has imposed total fines of EUR 4.1 million on GlaxoSmithKline (“GSK”) on account of refusals to supply that took place in the early part of the last decade (see attached press release). The fines were meted out in procedures that had been dragging on as a result of several court proceedings.
 
GSK incurred a first fine of approximately EUR 2.9 million for an alleged failure to observe interim measures imposed by the Athens Administrative Court of Appeal in 2001.

A second fine of nearly EUR 1.2 million came as a result of allegedly illegitimate refusals to supply Imigran® and Lamictal®. These medicines are indicated for the treatment of acute relief of migraine attacks and epilepsy and bipolar disorder respectively. According to the HCC, GSK first indulged in a total refusal to supply Imigran® and later started to sell that product but still reduced wholesalers’ orders significantly, thus affecting what the HCC labelled as “ordinary” orders. The HCC suggested that GSK was at fault for similar conduct in its dealings involving Lamictal®. For both medicines, GSK was found to have abused a dominant position on the relevant market. By contrast, GSK escaped a fine for its supply policy with regard to its asthma and Chronic Obstructive Pulmonary Disease product Serevent® as it was judged not to be dominant on the relevant markets which encompass that product.

The HCC applied the test developed in 2008 by the Court of Justice of the European Union (“ECJ”) in Lelos v. GlaxoSmithKline.  In that case the ECJ held that a pharmaceutical firm in a dominant position which refuses to meet ordinary orders from wholesalers in order to stop parallel exports commits an abuse of its dominant position. Conversely, it is, according to the ECJ, legitimate for a dominant firm to refuse to honour orders that are out of the ordinary in the light of market requirements and previous business relations between the parties.

Embracing this precept, the HCC investigated GSK’s dealings with its wholesalers and reviewed “the annual size of orders and supplies per wholesaler, the national consumption per year and the pattern of previous business relations between [GSK] and [the] wholesalers during the years prior to the infringement”.