ECONOMY

Glaxo limits ‘unfair’

GlaxoSmithKline Plc, Europe’s biggest drugmaker, abused its dominant position by restricting Greek wholesalers from re-exporting drugs to more expensive markets, lawyers told the European Union’s top court. Greek wholesalers are suing Glaxo for refusing to supply them with three drugs. The European Court of Justice’s decision will define the rights of drug companies to control the supply of products to so-called parallel traders, lawyers said. Pharmaceutical companies have for decades fought the parallel drug trade, in which wholesalers buy drugs at state-regulated prices in countries such as Greece and sell them to more expensive markets such as the UK. Drug companies say the practice costs them more than -4 billion ($5.9 billion) in lost sales a year. «We’re not talking about a distortion of competition,» Georgios Mastorakos, a lawyer for some of the wholesalers, told the Court of Justice at a hearing today in Luxembourg. «We’re talking about the total elimination of competition.» Assimakis Komninos, a lawyer for Glaxo, told the court that the wholesalers sought «unlimited quantities» of the drugs that were beyond what was needed for the Greek market. «In this case the orders were not simply ordinary, they were preposterous, exorbitant,» said Komninos, a lawyer with White & Case LLP in Brussels. It will be the EU court’s first ruling on the obligations of companies «to supply quantities or more quantities than they may wish to supply,» said Romano Subiotto, a competition lawyer who represented drugmaker Boehringer Ingelheim GmbH in a similar case. The EU court ruled last year that Boehringer, Glaxo and other drugmakers can sanction traders who don’t give them advance notice before reselling their products to other EU nations. Glaxo in 2000 stopped supplying the Greek traders with Lamictal for epilepsy, Imigran for migraines and the Serevent asthma treatment, distributing the drugs instead directly to Greek hospitals and pharmacies. It’s the second time yesterday’s dispute has made it to the EU court. In 2005, the case was rejected because it had come from the Greek competition authority and not from a court. Before the court rejected the case, its advocate general in a non-binding opinion in 2004 said Glaxo’s practice isn’t abusive because drugs prices are regulated by the different national states. Greek ruling The Greek antitrust authority in 2006 decided that Glaxo was allowed to restrict the drugs supply to the wholesalers. In addition to the dispute before the Greek competition authority, the wholesalers started suing Glaxo in Greek courts in 2001. They accused Glaxo of breaching EU antitrust rules that prevent companies from abusing their dominant position in the 27-nation bloc. A Greek appeals court in 2006 referred the case back to the EU court for guidance on how far dominant companies can go in restricting parallel trade. (Bloomberg)