Refusal to Supply and Abuse of Dominant Position in European ...

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single market requires that trade is not restricted through state measures or competition distortions, without a substantive justification. The case law of the Court of Justice as reviewed above makes clear that no objective justification may be invoked when the purpose and the effect of the conduct is to eliminate competition or to strengthen the dominant position of the undertaking concerned. One cannot deny that in the Syfait case the restriction on the part of GSK was aimed at causing the foreclosure and the partitioning of the national markets 37 , therefore eliminating competition within the markets concerned. In the case law of the Court concerning the free movement of goods, national measures intended to restrict parallel trade are carefully scrutinised and repeatedly condemned 38 . It appears contradictory, therefore, to allow a dominant company to obtain, through its unilateral conduct, the results which would be forbidden as an outcome of state measures or agreements 39 . The above considerations do not intend to ignore the special features of the pharmaceutical market. In particular, the third point raised by Advocate General Jacobs as a justification for restrictions, namely that parallel trade in medicines would not necessarily benefit consumers, is certainly substantive 40 . It is a fact that profits from parallel imports invariably benefit the distributors themselves. At least to some extent, however, parallel trade in pharmaceuticals has the effect of increasing competition in national markets where prices have a higher level, thus generating direct savings for health insurance systems and also for patients 41 . Moreover, there is evidence in the economic analysis that parallel trade in drugs in the EU market has in practice contributed to a reduction in the extent of price discrimination between different national markets 42 . 37 KOENIG, ENGELMANN, Parallel Trade Restrictions, cit. supra note 36. 38 In the pharmaceutical sector see the Judgement of 5 December 1996, Merck and Beecham, joint cases C-267/95 and C-268/95, [1996] ECR I-6285; Judgement of 12 October 1999, C- 379/97, Upjohn [1999] ECR I-6927; Judgments of 23 April 2002, case C-143/00, Boehringer Ingelheim, [2002] ECR I-3759; case C-443/99, Merck, Sharp & Dome [2002] ECR I-3703. 39 A case is now pending before the European Court of First Instance (Case T-168/01) concerning the appeal of Glaxo Wellcome against a Commission decision of 8 May 2001 concerning dual pricing system in Spain. The Commission (OJ 29.9.2001 C275/17) found the terms and conditions of sale of Glaxo to be contrary to Article 81 (1) since they restricted parallel imports. 40 On the contrary, and in spite of the popularity of the argument, there is appearently no evidence of a connection between R&D investments and parallel trade: In the Syfait case, GSK failed to prove that R&D funding was reduced as a result of parallel exports from Greece: see KOENIG, ENGELMANN, Parallel Trade Restrictions, cit. supra note 36, 345. 41 This is particularly true in the States where the healthcare system reimburse the costs of drugs to the level of the actual pharmacy retail prices. The savings for the health system deriving from parallel trade are explained in detail in KOENIG, ENGELMANN, Parallel Trade Restrictions, cit. supra note 36, 346. 424
If one considers the aims of market integration and the Community system as a whole, the conclusion should be that a refusal to supply aimed at preventing parallel trade, even in a highly specific market like those of pharmaceuticals, does indeed constitute an abuse of a dominant position within the meaning of Article 82. 42 GLYNN, Article 82 and Price Discrimination in Patented Pharmaceuticals: the Economics, [2005] ECLR 135: the author argues however that price discrimination in pharmaceuticals should not be regarded as an abuse; see also LORENZ, LUEBBIG, RUSSELL, Price Discrimination, a Tender Story, [2005] ECLR 355. 425
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