French CC rejects complaints

13 April 2006

Romain Ferla

January 2006

On 20 December 2005, the French Competition Council issued a long awaited decision concerning certain practices implemented by the main pharmaceutical products suppliers in France in order to reduce their supplies of medicines to parallel exporters. The Competition Council has decided that the pharmaceutical suppliers have not acted anti-competitively.

From 2000 to 2002, several suppliers of pharmaceutical products on the French market (among them Pfizer, GSK, MSD, Lilly, Sanofi and BMS) decided to either cease supplying parallel exporters of medicines or to impose quotas (i.e. limitations) on their supplies in order to fight against the growing phenomenon of parallel exports/imports of medicines from France to other countries such as Germany or the UK. This phenomenon is mainly fuelled by the substantial differences in price between France, where medicine prices are administratively set at a rather low level, and Germany and the UK, where prices are higher. Several parallel exporters (among them Phama-Lab, Pharmajet and Pharmadex) complained to the French Competition Council as early as 2001 and 2002. They also petitioned for interim measures. The requests for interim measures were all rejected by the Competition Council, as the complainants had not established that irreparable harm to themselves or to the economy as a whole had occurred.

The Competition Council rejected all allegations of anti-competitive practices by the pharmaceutical suppliers. It found no evidence of horizontal restrictive agreements between the suppliers, stating that a mere finding of parallel behaviour (all suppliers implemented similar restrictive measures during roughly the same period) did not suffice to establish horizontal collusion. It also rejected allegations of vertical restrictive agreements between the suppliers and wholesalers providing for a preferential (and hence discriminatory) treatment of wholesalers. Indeed, the Competition Council found that French wholesalers were subject to very important regulatory constraints, whereas parallel exporters bore no constraints of this kind. According to the Competition Council, such a difference in legal and regulatory regimes applicable to the two categories of purchasers could objectively justify differential treatment, thereby excluding the possibility of anti-competitive discrimination.

Finally, the Competition Council also rejected all allegations of abuse of dominance against the pharmaceutical suppliers. As regards the market definition, the complainants alleged that each of the medicines whose supplies were restricted constituted a distinct relevant product market. The pharmaceutical products suppliers, on the other hand, supported the view that from the parallel exporters’ viewpoint, all medicines offering a sufficient price differential (between France and countries of importation) were largely interchangeable. The Competition Council refused to validate either approaches and chose instead to stick to a rather traditional approach considering that relevant products markets in the pharmaceutical sector should be defined along the lines of the third level of the Anatomical Therapeutic Chemical Classification.

In any event and regardless of the relevant market definition, the Competition Council held that where the prices of a product are regulated, it is not abusive for a supposedly dominant operator to refuse to supply such product to another operator which is not active on the same market affected by this price regulation and which only seeks to purchase such product insofar as its price is set by national regulatory authorities at such a low level that it will allow the said operator to resell it abroad with a profit.

Source: Competition Council decision of 20 December 2005, available at: