EU General Court Dismisses Parallel Trade Group's Dual-Pricing Complaint Against GSK

On September 26, 2018, the EU General Court1 (the Court) upheld the European Commission's refusal to reinvestigate GlaxoSmithKline SA's (GSK) Spanish "dual-pricing" distribution arrangements, 20 years after the alleged conduct to which the complaint related.

This long-running case had culminated in the EU Court of Justice's 2009 verdict faulting the Commission's original case for not properly evaluating potential efficiencies from limiting parallel trade. On remittal, the Commission concluded in 2014 that the case was no longer a priority and declined to reinvestigate.

Notably, in its September 2018 decision, the Court confirmed that the Commission was right to drop the case, notwithstanding allegations by parallel traders that "dual-pricing" schemes — which purportedly discourage cross-border trade — proliferated in the aftermath of GSK's practices. Such allegations normally would have been expected to attract Commission interest.

The Court found the Commission lawfully deprioritized the case, because GSK's conduct had long since ceased; national authorities or courts might address allegations of unlawful conduct at a local level; and there was no evidence other dual-pricing schemes were linked to GSK's conduct — rather, 2006 changes to Spanish pharmaceutical pricing legislation likely contributed to the proliferation.

In parallel, the Spanish authorities have rejected similar complaints at a national level and approved pharmaceutical companies' pricing arrangements. The parallel traders association is considering an appeal in the case before the European Court of Justice and also has been an active complainant before the Spanish authorities.

Pharmaceutical companies can take comfort that these types of pricing programs have been approved by national authorities, and the Commission has deprioritized further inquiry. But while complainants remain active, pricing programs will continue to require careful legal review.

Background of the Case

In March 1998, GSK notified the Commission of its new general sales conditions to authorized wholesalers in Spain. The agreement included a "dual-pricing" mechanism, which involved GSK charging parallel traders more than those who sold on the domestic market in Spain. In 1999, the European Association of Euro-Pharmaceutical Companies (EAEPC) lodged a complaint with the Commission concerning GSK's dual-pricing policy, requesting that the Commission refuse to grant GSK the negative clearance or exemption it...