Sot. Lelos kai Sia EE v GSK

There was a fair bit of jubilation amongst IP owners and specifically speaking the big manufacturers about a recent decision of the ECJ, which epitomises once again the age-old wisdom- "You can't fight City Hall".

The gravamen of the decision being that an Undertaking with a dominant position in a relevant market abuses its said dominant position (as per Article 82 EC) if it fails to meet ordinary orders merely to frustrate parallel exports. Which is a sensible enough proposition in itself, however the decision goes on to state the following: a. What constitutes an Ordinary order is a matter for the national courts to decide and; b. The principle would exclude an extra-ordinary order. In short, the ECJ left the definition of an ordinary order open to interpretation and also specifically opened the door to justifying failure to meet extra-ordinary orders.

Just by way of background Article 82 states:

"Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market insofar as it may affect trade between Member States.

Such abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. "

The facts:

This was an application brought by the Greek Competition Commission, which was originally denied on the basis of lack of Jurisdiction by the ECJ, since the Greek Competition Commission was not a Court or Tribunal as defined by Article 234 EC ( Applied in Case C-53/03 Syfait and Others). Based on direct supply contracts between GSK and Greek entities.

The Greek Competition Commission had then ruled that the conduct of GSK in refusing to fulfil orders to frustrate parallel import (by wholesalers) was an infringment of Art.82. GSK then appealed to the Greek Court of Appeal which referred the matter to the ECJ, which then made a merits determination on the second try.

The ECJ's key consideration being that “a producer of pharmaceutical products must be in a position to protect its own commercial interests if it is confronted with orders that are out of the ordinary in terms of quantity. Such could be the case, in a given Member State, if certain wholesalers order from that producer medicines in quantities which are out of proportion to those previously sold by the same wholesalers to meet the needs of the market in that Member State”.

Well as the saying goes let the games begin, there shall be several litigitious raves going on around the courts of Europe, for the soul brothers of the bar to disscect, define the parameters of what is certain to be an interesting concept i.e "ordinary orders"?!? Hey party hard people!

© Edward C. Keazor