## Facts

- GlaxoSmithKline (GSK) sold prescription medicines in Spain through wholesalers under regulated national pricing for products destined for the Spanish market.
- In 1998, GSK adopted “General Sales Conditions” imposing a dual-pricing mechanism: lower prices for quantities to be sold in Spain and higher prices for quantities exported to other EU Member States.
- The scheme required wholesalers to declare product destination; exports beyond set quantities triggered higher prices.
- GSK acknowledged that a purpose of the arrangement was to limit parallel trade and reduce the impact of parallel exports on its returns.
- In 1999, GSK notified the arrangement to the European Commission seeking either a finding of no infringement or an exemption under Article 81(3) EC.
- In 2001, the Commission found the arrangement restricted competition by object and effect under Article 81(1) EC and denied an Article 81(3) exemption, including for lack of demonstrated consumer benefit.
- The General Court annulled the Commission’s “by object” finding (requiring closer assessment given pharmaceutical price regulation), but upheld a restriction by effect and largely upheld the denial of Article 81(3).
- GSK, the Commission, and associations representing parallel traders appealed, producing joined appeals to the Court of Justice.

## Issues

1. Whether contractual provisions aimed at limiting parallel exports between Member States in the pharmaceutical sector constitute a restriction of competition “by object” under Article 81(1) EC despite national price regulation.
2. How national price and reimbursement regulation affects the Article 81(1) analysis and the availability of an exemption under Article 81(3) EC.
3. Which party bears the burden of proof under Article 81(3) EC and what evidentiary showing is required, including on claimed R&D-related efficiencies and consumer benefit.
4. What level of judicial review applies to the Commission’s economic assessment under Article 81(3) EC, and related appeal admissibility/grounds issues.

## Decision

- The Court of Justice set aside the General Court’s ruling that the dual-pricing clauses were not restrictive “by object.”
- The Court held that agreements whose purpose is to restrict parallel trade and partition national markets are restrictions of competition “by object” under Article 81(1) EC, including in regulated pharmaceutical markets.
- The Court confirmed that the undertaking seeking Article 81(3) relief bears the burden to prove all exemption conditions with substantiated, convincing evidence.
- The Court accepted that innovation and R&D incentive arguments may be relevant under Article 81(3), but concluded GSK had not shown the required efficiencies and consumer “fair share” on the record as assessed.
- The Court partially set aside the General Court’s Article 81(3) analysis and remanded that aspect for further examination consistent with the Court’s standards, while confirming the arrangement fell within Article 81(1).

## Legal Principles

- An agreement is restrictive “by object” when, considering its content, aims, and legal/economic context, it shows a sufficient degree of harm to competition; proof of actual effects is not required.
- Measures aimed at preventing or limiting parallel trade between Member States and partitioning national markets are, by their nature, restrictions “by object” under Article 81(1) EC.
- National regulation of medicine pricing may be relevant to the Article 81(3) efficiency analysis, but it does not remove the “by object” character of private arrangements targeting parallel trade.
- The anti-competitive object of an agreement is assessed objectively; subjective intent is not required.
- Under Article 81(3) EC, the undertaking invoking exemption bears the burden to prove: (1) efficiencies/technical or economic progress, (2) fair share for consumers, (3) indispensability, and (4) no elimination of competition for a substantial part of the products.
- Judicial review of the Commission’s complex economic assessment under Article 81(3) checks factual accuracy, procedural compliance, and absence of manifest error or misuse of powers, while recognizing the Commission’s discretion.

## Conclusion

The Court of Justice held that GSK’s Spanish dual-pricing system targeting parallel exports was a restriction of competition by object under Article 81(1) EC notwithstanding national price regulation, clarified the strict evidentiary burden on firms claiming an Article 81(3) exemption (including consumer-benefit proof), and remanded aspects of the exemption analysis for reconsideration.


GlaxoSmithKline Servs. Unlimited v. Comm’n, Joined Cases C-501/06 P, C-513/06 P, C-515/06 P & C-519/06 P, 2009 E.C.R. I-9291 (C.J. 2009)