Syfait II: Restrictions on Parallel Trade Within the European Union

Abstract:

On September 16, 2008, the European Court of Justice (E.C.J.) finally gave judgment in the long-running dispute between wholesalers and pharmaceutical companies as to whether art. 82 of the E.C. Treaty1 is breached when a pharmaceutical company refuses to supply orders for products in excess of the need of the wholesaler. The E.C. Treaty has at its heart a desire to create a free trading community of Member States and its articles provide the frame work to achieve that aim. Article 82 being aimed at the prevention of abuse of a dominant position. It is understandable that if the sole manufacturer of a product refused to supply that product, that manufacturer might fall afoul of art. 82. Yet States often fix the price at which pharmaceutical products may be sold. Therefore, where the action of the manufacturer in restricting supply is aimed at countering State interference that is distorting the marketplace, it can equally be understood why art. 82 might be considered unfair. The pharmaceutical companies argued that their restriction on supply still allowed market needs to be met, and it only restricted parallel imports across national boundaries that otherwise harmed their business. Whereas the wholesalers claimed this practice was an abuse of a dominant position and led to national shortages of products. The E.C.J. decision on this dispute is therefore of relevance to the entire pharmaceutical community.