On 6 January 2004, the European Court of Justice (“ECJ”) upheld the European Court of First Instance (CFI) ruling in the landmark case, the so-called Adalat case, thereby putting an end to the long-debated issue of the degree of concurrence of wills needed to create an anti-competitive agreement under Article 81 of the EC Treaty. The ECJ concluded that no agreement was entered into between Bayer and the relevant wholesalers, as Bayer’s delivery system did not involve an invitation to reach anti-competitive goals.
Factual and legal background of the judgment
Bayer manufactures and markets under the trade name Adalat, a range of medicinal preparations designed to treat cardio-vascular disease. Adalat prices vary from one Member State to another, essentially as a result of national policies, particularly on social security and reimbursement. That price difference induced wholesalers into parallel trade, especially from Spain and France to the United Kingdom, which caused large losses of revenue for Bayer. Bayer thus reacted and decided to cap deliveries to Spanish and French wholesalers, a decision that they challenged before the European Commission.
On 10 January 1996, the Commission condemned Bayer to the payment of a € 3 million fine for infringement of Article 85 (now 81) of the EU Treaty, on the ground that such policy amounted to an anti-competitive agreement aimed at restricting parallel trade within the EU.
On 26 October 2000, upon Bayer’s appeal, the CFI overturned this decision and considered that no agreement had been entered into in the first place. In particular, the CFI upheld (at para. 176) that “the right of a manufacturer faced, as in this case, with an event harmful to his interests, to adopt the solution which seems to him to be the best, is qualified by the Treaty provisions on competition only to the extent that he must comply with the prohibitions referred to in Articles 85 and 86 [now articles 81 and 82]. Accordingly, provided he does so without abusing a dominant position, and there is no concurrence of wills between him and his wholesalers, a manufacturer may adopt the supply policy which he considers necessary, even if, by the very nature of its aim, for example, to hinder parallel imports, the implementation of that policy may entail restrictions on competition and affect trade between Member States”.
The Commission, together with other appellants, lodged an appeal against that judgment. On 22 May 2003, Advocate General Tizzano presented his conclusions before the ECJ, in which he asked the ECJ to uphold the CFI judgment, arguing that Bayer’s behaviour did not fall within the scope of the Article 81 prohibition: see the July 2003 issue of this Bulletin.
This judgment was much awaited by undertakings in the pharmaceutical distribution sector, particularly as a number of pharmaceutical manufacturers reformed their delivery policy pursuant to the CFI ruling. Two main issues were therefore at stake in the judgment expected from the ECJ: a theoretical one – the definition of an anti-competitive agreement within the meaning of Article 81; and a more concrete one - the legality of such a delivery system set up by major pharmaceutical manufacturers.
The judgment adopted by the ECJ on 6 January 2004 definitely sets that no infringement of Article 81 occurred. It however leaves certain questions unanswered.
Appellants’ arguments and judgment of the ECJ
The Burden of Proof
The appellants argued that the CFI wrongly imposed on the Commission the burden of proof as to the existence of an Article 81 infringement. Indeed, from their point of view, when the evidence gathered by the Commission is prima facie sufficient to establish the existence of an agreement, it is for the undertaking concerned to prove that there was no meeting of minds between itself and its distributors.
The ECJ dismissed the appellants’ argument and recalled that the burden of proof only bears on the undertaking when it wants to argue it did not participate in the implementation of the agreement. On the other hand, as a general rule, the Commission must first bring evidence of the agreement, which it had not done in the present case.
Evidence of an agreement within the meaning of Article 81
In substance, the appellants held that evidence as to the existence of an agreement could be inferred from the export ban imposed by Bayer on its wholesalers and from the corresponding systematic monitoring policy on the final destination of the supplied Adalat boxes.
The ECJ considered that should the existence of an agreement in the meaning of Article 81 have been proven in the first place, then the monitoring system as set up by Bayer could have been an element to determine its anti-competitive nature. However, the ECJ considered that, even though the unilateral decision adopted by Bayer could have the same effect as an export ban, it did not mean that any agreement had been reached. Therefore, the fact that Bayer’s intention was to restrict parallel imports does not prove there was an agreement, since its declared intention was only the expression of a unilateral policy of an individual undertaking. The very existence of an agreement can neither be inferred from the effect of a unilateral decision nor from its goal.
The present case therefore brings decisive clarification on the very definition of an anti-competitive agreement within the meaning of Article 81, by imposing an actual concurrence of wills as a prerequisite for such qualification.
Definition of an agreement in the meaning of Article 81
The main issue in the present case was to determine whether a measure adopted or imposed apparently unilaterally by a manufacturer in the context of continuous relations, could amount to an agreement in the meaning of Article 81.
In particular, the ECJ had to determine the ambit of the notion of “concurrence of wills” between at least two parties, which, according to the CFI, triggers the existence of an agreement in the meaning of Article 81.
The ECJ upheld the CFI’s definition, stating that:
“For an agreement within the meaning of Article 85(1) of the Treaty to be capable of being regarded as having been concluded by tacit acceptance, it is necessary that the manifestation of the wish of one of the contracting parties to achieve an anti-competitive goal constitute an invitation to the other party, whether express or implied, to fulfill that goal jointly, and that applies all the more where, as in this case, such an agreement is not at first sight in the interests of the other party, namely the wholesalers”.
Since Bayer could reach its goal without the collaboration of its wholesalers, one cannot infer, from Bayer’s decision, any requirement of a particular line of conduct from the wholesalers. Consequently, there has been no invitation from Bayer to its wholesalers jointly to restrict parallel imports and no infringement of Article 81 occurred.
The Adalat judgment is therefore decisive in so far as it puts an end to the extended notion of “agreement” for purposes of Article 81, which had begun to be an issue in caselaw. Indeed, recent trends tended to include under that definition “apparently unilateral” conduct that could however be linked one way or another to an agreement between the undertakings at stake, thereby qualifying their anti-competitive behavior as an agreement for the purpose of the EC competition rules. On the other hand, the ECJ expressly requires, for Article 81 to apply, that the parties to the alleged agreement actually decide together to restrict or hinder competition, i.e., that they have an initial common goal. The present judgment therefore addresses one of the very core issues of competition law by limiting the extent to which the notion of agreement can be stretched.
A clear judgment…with unanswered questions
The present judgment finally clarifies the meaning and the scope of agreements within the meaning of Article 81 of the Treaty in this context.
However, as the ECJ did not have to appraise the application of Article 82 (abuse of a dominant position) to the facts of the case, one could consider that this rule could still be invoked by wholesalers to challenge analogous delivery systems where the supplier can be shown to be dominant. Indeed, the ECJ emphasized that neither the possible application of other aspects of Article 81, nor Article 82 of the Treaty, nor any other possible definition of the relevant market, were at stake in the proceedings.
In this respect, it should however be underlined that, under current caselaw, the delivery systems that were criticised in the Adalat case cannot be considered as refusals to supply in the traditional meaning of the term. Indeed, Bayer never stopped deliveries of Adalat to wholesalers, nor did it supply some wholesalers more than others. It simply capped maximum deliveries in a non-discriminatory fashion and according to its own interests and production capacities.
Notwithstanding market definition issues in such cases, and without even going into the debate of determining the extent to which competition law can apply to regulated sectors such as the pharmaceutical one, one can therefore wonder whether Article 82 could apply at all to such a situation. Indeed, in the absence of a prima facie refusal to sell, can a court require an undertaking to increase deliveries against its own interests? Could it even go as far as requiring it to produce additional quantities of products?
That question was addressed not by the ECJ, which did not have to examine that issue, but by the CFI, which clearly answered negatively in the first instance, insofar as it stated that a refusal to sell does not per se amount to an abuse of a dominant position.
Judgment of the European Court of Justice of 6th January in Joined Cases C-2/01 P and C-3/01 P, Commission v Bayer.
 Paragraph 88 of the judgment: “The mere fact that the unilateral policy of quotas implemented by Bayer, combined with the national requirement on the wholesalers to offer a full product range, produces the same effects as an export ban does not mean either that the manufacturer imposed such a ban or that there was an agreement prohibited by Article 85(1) of the Treaty”.
 Paragraph 98 of the Judgment
 Paragraph 102 of the Judgment
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