The Spanish Supreme Court has adopted a judgment in December establishing that dual pricing systems in the pharma sector may fall under the prohibition of Article 101(1) TFEU and its equivalent under Spanish Competition Law. However, the judgment also says that they might deserve an exemption under Article 101(3) and its equivalent under Spanish Competition Law. A pharmaceutical company adopted a pricing system back in 2001 where drugs financed by the Spanish National Health System and sold in Spain were priced at the compulsory level fixed by the Spanish Administration (the “intervention price”). When the drug was not financed by the National Health System or sold in Spain, the price established by the pharmaceutical company (the “free price”) was higher than the “intervention price” determined by the Administration. The pharmaceutical company notified this system to the European Commission in 2001 seeking an individual exemption. Some Spanish wholesalers considered that this system obstructed parallel trade between EU countries and filed a complaint with the European Commission which was rejected in 2006 due to lack of EU interest. A complaint was then lodged before the Spanish Competition Authority, which again, was rejected in May 2009 because, according to the Authority, prima facie, the pharmaceutical company’s pricing system was not contrary to Articles 101 TFEU and its equivalent under Spanish Competition Law. The 2009 Spanish Competition Authority’s decision to reject the complaint was challenged by the complainants before the National Court, which ruled in 2011 that, contrary to the Authority’s view, there were indicia of incompatibility with Competition Law and that the Authority should have taken a closer look at the case. The National Court’s judgment was, in turn, challenged before the Supreme Court by the pharmaceutical company and the Spanish Administration. In December 2014, the Supreme Court has dismissed the appeals and confirmed the National Court’s judgment. Both the National Court and the Supreme Court judgments echo the EU Court of Justice’s judgment of 6 October 2009 in the Glaxo Spanish case, as they say that dual pricing systems in the pharma sector might be considered a restriction of competition “by object”. The Supreme Court appreciates that the pharmaceutical company’s pricing system could restrict parallel trade and, therefore, competition. In this regard the Supreme Court notes that article 101 TFEU is not only aimed to protect consumers only, but also market structure and, thus, competition in itself. Therefore, a decision on whether an agreement is or not restrictive can not only rely on the fact that consumers will or not be deprived from the advantages derived from the effective competition in the market. However, the Supreme Court also says that, in case the Authority considers that the conduct falls under the 101(1) TFEU prohibition, it should also decide if the exemption’s conditions under Article 101(3) TFEU are fulfilled. Consequently, the Spanish Competition Authority should now reopen the investigation and determine if the pharmaceutical company’s conduct is anticompetitive and, in the affirmative, if it could be exempted under 101(3) TFEU. This might take, approximately, up to two years. Obviously, its final decision may again be subject to appeals before the Courts. So it seems that the controversial dual pricing saga in the Spanish pharma sector will still go on for a while.
Alberto Escudero is head of Baker McKenzie’s Competition Law Practice in Madrid. Mr. Escudero advises clients on a wide variety of competition law issues. His experience includes merger control, the defence of clients before the competition authorities and courts in competition law proceedings, assessment of the compatibility of cooperation agreements and distribution contracts with competition law, and the implementation of compliance programs.