Swedish State Monopoly On Over The Counter Drugs Slammed By ECJ

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

02 June 2005

The European Court of Justice (ECJ) on Tuesday found that the Swedish state-owned pharmacy chain, Apoteket was in violation of EU law when it attempted to prevent rival firms from selling drugs in the country.

Apoteket, which holds a monopoly on the retail sale of over the counter drugs, attempted in 2001 to prevent Bringwell International AB (also active in Denmark, Finland and Norway) from selling Nicorette anti-smoking products in Sweden. The firm additionally brought criminal charges against the then general manager of Bringwell, Krister Hanner.

In its ruling, the ECJ announced that:

"Community law, although not requiring total abolition of State monopolies, requires them to be adjusted in such a way as to ensure that no discrimination exists between nationals of Member States. As far as sales monopolies are concerned, the Court has already held that monopolies arranged in such a way that trade in goods from other Member States is placed at a disadvantage as compared with trade in domestic goods are not allowed."

"The Court observed in that connection that the agreement concluded between the Swedish State and Apoteket does not provide either for a purchasing plan or for a system of calls for tenders providing an opportunity for the producers of products that are not selected to ascertain the reasons for the selection and to contest selection decisions before an independent supervisory authority."

"On the contrary, under that agreement, Apoteket appears to be entirely free to select a product range of its choice. Thus, that agreement does not ensure that all discrimination is ruled out and the Swedish Government has not claimed that any other measure exists which might compensate for that lack of safeguards."

"For those reasons, the Court held that Apoteket's system of selecting medicinal preparations is liable to place at a disadvantage medicinal preparations from other Member States and that the sales monopoly is not therefore arranged in such a way as to rule out any discrimination against such medicinal preparations. It is therefore, in principle, contrary to Community law."

"The Court added that the grant of exclusive rights contrary to Community law may be justified in the case of an exclusive right granted to an undertaking entrusted with providing services of general economic interest in circumstances where the task undertaken in the general interest can only be carried out through the grant of such a right and provided that the development of trade is not affected to such an extent as would be contrary to the interests of the Community."

"However, in the absence of a selection system which excludes all discrimination against medicinal preparations from other Member States, the sales monopoly in question cannot be justified. The Court therefore held that the Swedish State monopoly on retail sales of medicinal preparations is contrary to Community law."

The case has now been referred back to the Swedish courts.

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