Bird & Bird Achieves Landmark Decision for GlaxoSmithKline

15 April 2004

Leading French competition lawyer sets precedent for pharmaceutical community

International law firm, Bird & Bird has recently won a landmark decision for GlaxoSmithKline against Phoenix Pharma, a wholesale distributor of pharmaceutical products, who submitted a request for interim measures relating to Glaxo’s supply management system before the French Competition Council.

The case came to trial after Phoenix Pharma claimed that GlaxoSmithKline’s supply management system is anti-competitive. This system is operated in order to allow an even distribution of products to wholesalers across Europe. Each allocation is based on each country’s needs as well as each wholesalers’s market share according to their sales of pharmaceutical products - a system which Phoenix Pharma claimed prevents it from fulfilling its legal obligations of supplying chemists, leads to freezing of its market share and puts it at a disadvantage as compared to its main competitors. Requesting interim measures, Phoenix Pharma appealed to the French Competition Council.

In its decision, issued on the 24th of February, the Council dismissed this request and all other claims on the merits against GlaxoSmtihKline and considered that this system did not amount to an anti-competitive agreement, cartel either horizontally between laboratories or vertically with wholesalers as defined by the Bayer Case of the CFI (26 October 2000), recently confirmed by the ECJ (6 January 2004).

Significantly, the Council also found that GlaxoSmtihKline’s supply management system did not either amount to an abuse of its dominant position, as neither Phoenix nor other wholesalers had been opposed any refusal to sell, while the system did not hamper their business development. Ultimately consumer needs are being fulfilled.

The Bird & Bird team was led by Olivier Fréget with assistance by Charlotte de Panafieu. Christophe Henin from law firm Proskauer Rose also represented GlaxoSmtihKline.

For more information, please contact Larry Cattle on + 44 (0) 20 7415 6156.