Judgments nº T-168/01 of Court of First Instance of the European Communities, September 27, 2006 (case GlaxoSmithKline Services v Commission)

• President: Competition
• Resolution Date: September 27, 2006
• Issuing Organization: Court of First Instance of the European Communities
• Decision Number: T-168/01

In Case T-168/01,

GlaxoSmithKline Services Unlimited, formerly Glaxo Wellcome plc, established in Brentford, Middlesex (United Kingdom), represented by S.†MartÌnez Lage, lawyer, I. Forrester QC, F.†Depoortere, A.†Schultz, T.†Louko and I.†Vandenborre, lawyers,

applicant,

v

Commission of the European Communities, represented initially by P.†Oliver, then by ….†Gippini Fournier, acting as Agents,

defendant,

supported by

European Association of Euro Pharmaceutical Companies (EAEPC), established in Brussels (Belgium), represented initially by U.†Zinsmeister and M. Lienemeyer, then by A.†Martin-Ehlers, and finally by M.†Hartmann-R¸ppel, lawyers,

by

Bundesverband der Arzneimittell-Importeure eV, established in M¸lheim an der Ruhr (Germany), represented initially by†M.†Epping and W.†Rehmann, then by†W.†Rehmann, lawyers,

by

Spain Pharma, SA, established in Madrid (Spain), represented by†P.†MuÒoz Carpena, B.†Ort˙zar Somoza and R.†GutiÈrrez S·nchez, lawyers,

and by

AsociaciÛn de exportadores espaÒoles de productos farmacÈuticos (Aseprofar), established in Madrid (Spain), represented initially by†M.†Araujo Boyd and R.†Sanz, then by†M.†Araujo Boyd and J.L.†Buendia Sierra, lawyers,

interveners,

APPLICATION for annulment of Commission Decision 2001/791/EC of 8 May 2001 relating to a proceeding pursuant to Article 81 of the EC Treaty (Cases IV/36.957/F3 Glaxo Wellcome (notification), IV/36.997/F3 Aseprofar and Fedifar (complaint), IV/37.121/F3 Spain Pharma (complaint), IV/37.138/F3 BAI (complaint) and IV/37.380/F3 EAEPC (complaint)) (OJ 2001 L†302, p.†1),

†

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fourth Chamber, Extended Composition),

composed of H.†Legal, President, P.†Lindh, I.†Wiszniewska-Bia-ecka, V.†Vadapalas and E.†Moavero Milanesi, Judges,

Registrar: C.†Kristensen, Administrator,

having regard to the written procedure and further to the hearing on 7 June 2006,

delivers the following

Judgment

†Legal and factual framework

†Community law

1††††††††Article 3(1)(g)†EC provides that the activities of the Community are to include a system ensuring that competition in the internal market is not distorted.

2††††††††Article 81(1)†EC provides, in particular, that all agreements between undertakings which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market are to be prohibited as incompatible with the common market.

3††††††††Article 81(3)†EC provides that the provisions of Article 81(1)†EC may be declared inapplicable, inter alia, in the case of any agreement between undertakings which contributes to improving the distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives, or afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

4††††††††On 21 December 1988, the Council, acting on the basis of Article 100a of the EC Treaty (now, after amendment, Article 95†EC), adopted Directive 89/105/EEC relating to the transparency of measures regulating the prices of medicines for human use and their inclusion in the scope of national health insurance systems (OJ†1989 L†40, p.†8). The objective of that directive is to obtain an overall view of pricing arrangements and of direct and indirect controls on the prices of medicines which the Member States have adopted in order to control public health expenditure on such products, and to eliminate disparities in such measures, which may hinder or distort intra-Community trade in medicines and thereby directly affect the functioning of the common market in medicines. To that end, it establishes, as a first step, a series of requirements intended to ensure that all concerned can verify that the national measures do not constitute quantitative restrictions on imports or exports or measures having equivalent effect thereto. However, those requirements are not to affect either the policies of those Member States, or national policies on price setting and on the determination of social security schemes, except as far as it is necessary to attain transparency. The period within which Member States were to comply with that directive expired on 31 December 1989.

†Spanish law

5††††††††On 20 December 1990 the Kingdom of Spain adopted Ley 25/1990 del Medicamento (Law 25/1990 on medicines, BOE No†306 of 22 December 1990, p.†2643; -Law 25/1990-). That law was amended, in particular, by Ley 66/1997 of 30 December 1997 (BOE No†313 of 31 December 1997, p.†38517) and, during the administrative procedure which led to the adoption of the decision contested in the present case, by Ley 55/1999 of 30 December 1999 (BOE No†312 of 30 December 1997, p.†46095).

6††††††††On 23 February 1990, the Kingdom of Spain adopted Real Decreto 271/1990 de reorganizaciÛn de la intervenciÛn de los precios de las especialidades farmacÈuticas de uso humano (Royal Decree 271/1990 on the reorganisation of intervention in the prices of pharmaceutical products for human use) (BOE No†53 of 2 March 1990, p.†6086; -Decree 271/1990-). That decree was intended, in particular, to allow the Kingdom of Spain to comply with Directive 89/105/EEC.

7††††††††The provisions of Title VIII of Law 25/1990 and Decree 271/1990 establish, in particular, a system of intervention on the part of the Spanish Ministry of Health and Consumption and the ComisiÛn Interministerial de Precios de los Medicamentos (Interministerial Commission on the prices of medicines) attached to it (together -the Spanish authorities-), on the maximum wholesale price of medicines reimbursed by the Spanish sickness insurance scheme.

†Background to the dispute

8††††††††The applicant, GlaxoSmithKline Services Unlimited (-GSK-), formerly Glaxo Wellcome plc, is a company incorporated under the laws of England and Wales and having its registered office in Brentford (United Kingdom). The GlaxoSmithKline group, to which it belongs, is one of the world-s main producers of pharmaceutical products. The group was formed following a concentration between Glaxo Wellcome plc and Smithkline Beecham plc, a transaction which the Commission, by a decision of 8 May 2000 (Case N†IV/M.1846 - Glaxo Wellcome/Smithkline Beecham), declared that it did not oppose.

9††††††††Glaxo Wellcome, SA (-GW-), a company incorporated under Spanish law and established in Madrid (Spain), is one of the Spanish subsidiaries of the GlaxoSmithKline group. Its main activity, directly and via its subsidiaries, is the development, manufacture and marketing of medicines in Spain.

10††††††By letter of 6 March 1998, GW notified to the Commission a document entitled -General Sales Conditions of pharmaceutical specialities belonging to [GW] and its subsidiaries to authorised wholesalers- (-the General Sales Conditions-) with a view to obtaining negative clearance or an exemption pursuant to Council Regulation No†17 of 6 February 1962, First Regulation implementing Articles [81] and [82] of the Treaty (OJ, English Special Edition 1959-62, p.†87). By letter of 28 July 1998, GSK sent a supplementary notification to the Commission.

11††††††The General Sales Conditions apply to 82 medicines intended for sale to wholesalers established in Spain with whom GW has commercial relations in Spain outside any distribution network. Those wholesalers may intend to resell the medicines to Spanish hospitals or to Spanish pharmacies, which dispense them to patients on presentation of a medical prescription. They may also intend to resell them in other Member States, through parallel trade, in which they engage on account of price differentials. The 82 medicines to which the General Sales Conditions apply include eight medicines which, according to GSK, are prime candidates for parallel trade, principally between Spain and the United Kingdom. Those medicines are:

-††††††††an anti-allergy, Beconase;

-††††††††five anti-asthma products, Becloforte, Becotide, Flixotide, Serevent and VentolÌn;

-††††††††an anti-epileptic, Lamictal;

-††††††††an anti-migraine, Imigran.

12††††††For all 82 medicines concerned, Clause 4 of the General Sales Conditions provides for two different prices, -the Clause 4 A price- and -the Clause 4 B price-. Clause 4 is worded as follows:

-(A) Pursuant to the provisions of subsections 1 (first paragraph) and 2 of Article 100 of [Law 25/1990], the price of pharmaceutical products of [GW] and its subsidiary companies shall, in no event, exceed the maximum industrial price, established by the Spanish health authorities when the two factors which allow for the application of the said legal rules are present, namely:

-††††††††that the aforementioned pharmaceutical products are financed by the funds of the Spanish Social Security or by Spanish public funds,

-††††††††that the acquired pharmaceutical products are subsequently marketed at a national level i.e. through pharmacies or Spanish hospitals.

(B) In the absence of one of these two factors (i.e. in all cases where Spanish law gives full freedom to the laboratories to set the prices of their pharmaceutical products themselves), [GW] and its subsidiaries will fix the price of their pharmaceutical products according to real, objective and non-discriminatory economic criteria and completely irrespective of the destination of the product determined by the purchasing warehouse. In particular, [GW] and its subsidiary companies will apply to their pharmaceutical products the price which, on the basis of their internal economic surveys, had been initially proposed to the Spanish health authorities and objectively updated taking account of the increase in the cost of living in accordance with the provisions of subsections 1 (first paragraph) and 2 of Article 100 of [Law 25/1990] and...