Glaxo Secures Partial Victory In Parallel Trading Dispute

by Ulrika Lomas, for LawAndTax-News.com, Brussels

02 October 2006

It emerged last week that the European Court of First Instance has partially ruled in favour of pharmaceutical giant GlaxoSmithKline in its dispute with the European Commission over 'parallel trading'.

The dispute centres on practices employed by wholesalers in countries where drugs are cheaper who sometimes resell drugs to nations in which they would cost more, thereby undercutting the pharmaceutical firms in those markets.

In response, drug companies such as Glaxo often increase their prices for the medicines in question, an action which the European Commission has stated violates European antitrust regulations.

However, delivering its verdict last Wednesday, the CFI agreed that Glaxo's General Sales Conditions (GSC) were anti-competitive, but argued that the EC had not not sufficiently examined the question of whether they might give rise to an economic advantage by contributing to the financing of pharmaceutical innovation.

In light of this omission, the CFI ordered the EC to look again at GSK's request for an antitrust exemption with regard to its drug prices due to the specific nature of the pharmaceutical sector.

The Court stated that:

"It is therefore incumbent on the Commission to reconsider that request, in so far as it remains before it."

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