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

In a case recently argued before the European Court of Justice 4 , a pharmaceutical
industry refused to supply products in order to prevent parallel trade on the part of
the wholesalers 5 . Unfortunately for the present discussion, the Court concluded it
had no jurisdiction in the case and therefore did not rule on the merits. The questions
posed by the referring authority remain therefore open.
This paper reviews the case law of the Court concerning refusal to deal, as well as
the specific conditions of competition applicable in the highly regulated
pharmaceutical market. It subsequently examines the opinion of the Advocate
General Jacobs in the Syfait case, exploring possible alternative solutions to the
question.
2. Refusal to Supply as an Abuse of a Dominant Position
The Court of Justice first outlined an obligation of undertakings that are in a
dominant position in the sense of Article 82 to meet in full the orders of their
customers in the case ICI and Commercial Solvents 6 .
The case originated from a refusal of a dominant producer to supply one of its
customers with a raw material for the manufacture of ethambutol, the producer
having decided to develop its own specialities based on that substance and therefore
to enter in competition with its former customers. The refusal to supply had
therefore the aim to facilitate its own access to the market for the derivatives.
The Court ruled that ‘an undertaking which has a dominant position in the market
of raw materials and which, with the object of reserving such raw material for
manufacturing its own derivates, refuses to supply a customer, which is itself a
manufacturer of these derivatives, and therefore risks eliminating all competition on
the part of this customer, is abusing its dominant position’.
The above principle was confirmed and developed some years later, in United
Brands 7 , a case concerning the refusal of the Chiquita banana producer to supply a
customer that had participated in an advertising campaign for one of Chiquita’s
competitors.
The Court declared that ‘an undertaking in a dominant position for the purpose of
marketing a product – which cashes in on the reputation of a brand name known to
and valued by the consumers – cannot stop supplying a long standing customer who
4 Judgment of 31 May 2005, case C-53/03, Syfait and Others v. GSK.
5 The case generated considerable expectations, as in a previous judgment on 6 January 2004,
case C-2/01, Bayer, [2004] ECR I-23, the Court had considered export bans intended to
prevent parallel trade not to constitute an agreement under Article 81. See BROWN, Bayer v.
Commission: the ECJ Agrees, [2004] ECLR 386.
6 Judgment of 6 March 1974, joined cases 6/73 and 7/73 [1974] ECR 223. A wide selection of
EC antitrust cases can be found in Italian in MANZINI, Antitrust applicato – Raccolta
sistematica della giurisprudenza comunitaria, Torino, Giappichelli 2004.
7 Judgement of 14 February 1978, Case 27/76 [1978] ECR 207.
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