Article 5
This Decision is addressed to: GlaxoSmithkline PLC, Glaxo Wellcome House, Berkeley Avenue, Greenford, Middlesex UB6 0NN, United Kingdom. Done in Brussels, 8 May 2001. For the Commission Mario Monti Member of the Commission (1) OJ 13, 21.2.1962, p. 204/62. (2) OJ L 148, 15.6.1999, p. 5. (3) OJ L 354, 30.12.1998, p. 18. (4) In the text of this decision, references to "Article 81 of the Treaty" refer to the EC Treaty. This Article was formerly known as Article 85. (5) Article 2 of the statutes of Aseprofar (free translation into English). (6) Commission decision in Case IV/M.1846 - Glaxo Wellcome Smithkline (OJ C 170, 20.6.2000, p. 6). (7) For a full list: see Annex to the original notification, Document No 1ter [82, 91 to 101]. Note: page numbers in brackets [] refer to a page in Commission file IV/36.957. Reference to the complaints files are indicated with case number and page number. (8) Response by GW of 6 May 1998 to information request of 15 April 1998, Annex 4 [678 to 687]. (9) Response by GW of 6 May 1998, p. 8 and Annex 5 [642/689 to 706]. (10) Supplementary notification by GW of 28 July 1998, annex 12 [910, 911]. (11) Parts of this text have been edited to ensure that confidential information/business secrets are not disclosed. Those parts are indicated by square brackets. (12) Ibid., see p. 6 [838]. (13) Ibid. see p. 7 [839]. (14) Response by Glaxo of 6 May 1998, p/ 15 [649]. (15) Response by Spain Pharma of 6 November 1998 to information request of 14 October 1998, p.3 (Case 37.121, p. 931). (16) Response by Aseprofar of 13 November 1998 to information request of 14 October 1998 (Case 36.997, pp. 1209 et seq.). (17) Response by GW of 14 December 1998 to information request of 30 October 1998, Annex 15 [1779-1784]. (18) Response by GW of 9 February 1999 to information request of 22 January 1999, pp. 1 and 2 [1063 to 1064]. (19) Faxes from Aseprofar to the Commission of 26 February 1999, 5 March 1999, 29 March 1999, 14 April 1999 (Case 36.997, pp. 1338 to 1550 and pp. 1723 to 1790). (20) London Economics study, p. 16 [1020]. (21) GW slide presentation at the oral hearing of 8 and 9 December 1999 [4241]. (22) The table features in the London Economics study, p. 18 [102]. (23) London Economics study, executive summary, p. v [1003]. (24) Notification, p. 42 [42]. (25) Reply to the SO, Annex 7, p. 3 [3765]. (26) For further details on all price increases obtained by GW SA, see reply to the SO, Annex 9 [3795/6]. For Lamictal, the old package form (56 tablets) was replaced by the new package form (30 tablets): see GW response of 14 December 1998 [1698]. (27) Supplementary notification by GW of 28 July 1998, Annex 12 [910, 911]. (28) See reply the SO, Annex 4 [3674 to 3680]. (29) Reply to the SO, Annex 4, p. 5 [3679] and response of 14 December 1998 [1709]. (30) Information taken from a working document featuring as Annex 6 to EFPIA's comments on Case IV/36957 of 22. November 1999. (31) London Economics study, p. 19 [1023]. GW's presentation in the oral hearing mentions 4 % to 5 % [4274]. (32) London Economics study, p. 41 [1045]. (33) Information taken from a working document featuring as Annex 6 to EFPIA's comments on Case IV/36957 of 22 November 1999. (34) See recital 34 and die London School of Economics study, p. 18 [1022]. (35) London Economics study, p. 18 [1022]. All the other percentages in this paragraph are also taken from the London Economics study. (36) SCA report "Konkurrens vid försäljnig av läkemedel", pp. 15 and 16. (37) BGBI. 1999, Part 1, No 59, p. 2637. (38) Webpage Gesundheitsministerium, Dialog Gesundheit, 69 Questions. (39) This is particularly important for patented products which, according to German law, are freely priced (and not subject to the reimbursement cap according to which the health insurance schemes only pay a fixed price, whereas any excess price is borne by the patient "Festbeträge"). (40) "Parallel importing strategies" (SCRIP reports, 20 April 1998), PJB publications Ltd, p. 32. (41) Frontier Economics study, p. 32 [3728]. (42) Original notification [10, 72 and 73] and supplementary notification by GW of 28 July 1998, p. 8 [840]. (43) See Annexes 3 and 4 to the notification of 28 July 1998 [885 to 888] and GW plc's response of 14 December 1998 to questions 2 and 3 of the Commission's formal request for information of 30 October 1998 [1612 to 1621]. (44) Annex 3 to supplementary notification of 28 July 1998 [886]. (45) Ibid. annex 4 [888]. (46) Ibid. annex 10 [907]. (47) Supplementary notification of 28 July 1998, p. 38 [870]. (48) Request for information of 22 January 1999 [967]. (49) These products are Flixotide Inhaler 125 mg × 120 doses, Imigran Injection 2 × 0,5 ml, Serevent accuhaler 50 mg × 60 doses. (50) These products are Flixotide 50 mcg Inhaler (120 doses), Flixotide 250 mcg Inhaler (120 doses), Flixotide 100 mcg Accuhaler × 60 doses, Flixotide 500 mcg Accuhaler × 60 doses. (51) In its supplementary notification of 28 July 1998 (p. 10) [842], GW had estimated that "parallel imports from Spain account for about 20 % of sales of parallel imports into the UK". A comparison of figures in Tables 4 and 10 annexed to this notification suggests that they accounted for around 40 % in the period 1996 to 1998 (see recital 68 of this Decision). (52) Case 37.380, Response by EAEPC of 12 May 1999 to the Commission's information request of 8 March 1999 [48]. (53) See section 16, pp. 19 to 26 [851 to 858] (negative clearance) and section 17, pp. 27 to 43 [859 to 875] (exemption). (54) See respectively pp. 22 to 35 [3529 to 3542] and pp. 35 to 45 [3542 to 3552]. (55) Commission Decision 76/159/EEC in Case IV/847 - SABA (OJ L 28, 3.2.1976, p. 19), upheld by the Court of Justice in Case 26/76 Metrov Commission("Metro 1") [1977] ECR 1875. (56) Commission Decision 80/789/EEC in Case IV/26.528 - The Distillers Co. Ltd - Victuallers (OJ L 233, 4.9.1980, p. 43, recitals 15, 16 and 17). (57) Commission Decision 85/616/EEC (OJ L 376, 31.12.1985, p. 15, recitals 35 and 36). (58) The [...] % is calculated on the basis of domestic sales only. Sales stemming from parallel imports are excluded. For 1998, total UK sales amounted to GBP [...] million (see Annex 3 to GW notification of 28 July 1998). Had all these sales been domestic, [...] % would have meant a discount of GBP [...] million. However, parallel imports accounted for GBP [...] million (ibid.) thereby leaving only GBP [...] million domestic sales. GW was entitled to a discount of [...] % of that amount. This corresponded to GBP [...] million. The difference is GBP [...) million (GBP [...] million minus GBP [...] million). Since out of the total value of parallel imports (GBP [...] million), imports from Spain represented GBP [...] million (see Annex 10 to GW notification of 28 July 1998 [907] and recital above), GBP [...] million lost discount is directly attributable to these imports. (59) Joined Cases C-267 and C-268/95, [1996] ECR I-6285. (60) Case 16/74 [1974] ECR 1183. (61) Reply to the SO, p. 21 [3528]. (62) London Economics study pp. 32 and 44, footnote 31 [1036, 1048] pointing out that the R & D ratio is relatively constant over the years. For 1997, GBP 1,148 billion out of 7,980 billion (14,5 %) was spent and for 1998 GBP 1,163 billion spend out of 7,983 billion (14,5 %) (source: Annual Reports). (63) Slide presentation by Glaxo in the oral hearing of 8 and 9 December 1999 [4175]. (64) See p 37, footnote 39, of supplementary notification by GW of 28 July 1998 [869]. (65) Professor Corchon study I, pp. 1 to 11 [Case 36.997, 3144 to 3154]. (66) Submission by the EAEPC of 22 December 1999, p. 7 [Case 37.380, 111]. (67) Commission Decision 97/469/EC in Case IV/M.737 - Ciba-Geigy/Sandoz (OJ L 201, 29.7.1997, p. 1, recital 22. (68) See also Commission notice on the definition of relevant market for the purposes of Community competition law (OJ C 372, 9.12.1997, p. 5, recital 36 on intended use. (69) Supplementary notification, p. 10 [842]. (70) See Council Regulation (EEC) No 2309/93 of 22 July 1993 laying down Community procedures for the authorisation and supervision of medicinal products for human and veterinary use and establishing a European Agency for the Evaluation of Medicinal Products (OJ L 214, 24.8.1993, p. 1). Regulation as amended by Regulation (EC) No 649/98 (OJ L 88, 24.3.1998, p. 7). (71) Executive summary of the LSE study, introduction p. 1 and also at v [1007, 1003]. (72) Commission Decision 87/409/EEC in Case IV/31.741 - Sandoz (OJ L 222, 10.8.1987, p. 28). (73) Case 277/87 Sandozv Commission[1990] ECR I-45. (74) Commission Decision 78/163/EEC in Case IV/28.282 - The Distillers Company Limited - Conditions of sales and price terms, OJ L 50, 22.2.1978, p. 16, point 2. (75) Commission Decision 82/203/EEC in Case IV/30.188 - Moët et Chandon (London) Ltd, (OJ L 94, 8.4.1982, p. 7, paragraph 11. (76) Commission Decision 91/335/EEC in Case IV/32.186 - Gosme/Martell -DMP (OJ L 185, 11.7.1991, p. 23, in particular paragraphs 19 and 32. (77) Commission Decision 72/403/EEC in Cases IV/26.894, 26.876 and 26.892 - Pittsburgh Corning Europe - Formica Belgium - Hertel (OJ L 272, 5.12.1972, p. 35). (78) Reply to the SO, Annex 9, Letter GW-Ministry of Health of 1 April 1997 [3799/37800]. (79) Reply to the SO, Annex 9, Letter GW-Ministry of Health of 1 April 1997 [3799/37800]. (80) Annual Report GW 1997, p. 12 and 17 where GW also states that Zantac has come under increasing pressure from generic competition. See also response of 14 February 2000, p. 13 [4519]. (81) For Serevent Acc. GW charged ESP 72,5/unit instead of the authorised 75,53. For Inh. 25 × 120, ESP 34,54/unit has been charged, compared to an authorised price of ESP 36,05. For Inh. 25 × 60, only ESP 37,5/unit of the authorised 38,86 charged. See reply to the SO, Annex 9, present PTW [3795]. (82) See response of 14 December 1998, Annex 5 [1693 to 1703] where GW's indications show differences between the commercial and authorised price for the following products: Becloforte 250 mg Inh. (commercial price: 2215,60; authorisation price: 2296,00); Beconase (commercial price: 430,10; autorisation price 442,00), Becotide (commercial price: 406,30; autorisation price: 417,60). (83) Joined Cases 96-102, 104, 105, 108, 110/82 [1983] ECR 3369, paragraphs 24, 25 and 27. (84) Case T-62/98 [2000] ECR II-2707, paragraphs 89 and 178. (85) See e.g Case T-62/98, Volkswagenv Commission, paragraph 178. (86) Joined Cases C-267/95 and C-268/95,Merck & Co.Inc. V Primecrown Limited, paragraph 47; see also Case C-436/93 Bristol Myers Squibbv Paranova A/S, [1996] ECR I-3457, paragraph 46. (87) Case 16/74, Centrafarm BV and De Peijperv Winthrop BV [1974] ECR 1183, paragraph 15, 16 and 17. (88) Case 187/80, [1981] ECR 2063, paragraph 13. (89) Case 56 and 58/64 of, Consten and Grundig-Verkaufs-GmbH[1966] ECR 299, at p. 340. (90) Case 40/70, Sirena Srl vEda Srl and others[1971] ECR 69, paragraph 5. See also Case 96/75 EMI Records Limitedv CBS Schallplatten Gmbh[1976] ECR 913, paragraph 5. (91) See Joined Cases 209-215, 218/78 Heintz van Landewyk Sarlv Commission[1980] ECR 3125, at paragraph 153 where the Court acknowledges that the Belgian taxation system might have a definite influence on competition, but nevertheless refused to accept restrictions of competitions based on that reason. (92) See Commission report on car prices within the European Union on 1 May 2000, COP/F2/0500 which shows for example a price difference between a Honda sold in Denmark and in France of 87 % (pp. 52 and 53) after tax. (93) In its notice concerning Regulation (EEC) No 123/85 on the application of Article 85(3) to certain categories of motor vehicle distribution and servicing agreements (OJ C 17, 18.1.1985, p. 4), the Commission specifies that it can withdraw the benefit of the block exemption for selective distribution networks if the price differences exceed 12 % and if there are indications that these differences are chiefly due to obligations subscribed to by the approved dealers. It has, however, never supported any attempt to block parallel trade. The notice remained applicable after the adoption of Regulation (EC) No 1475/95, see press release IP(95) 648; also in its Decision 2001/146/EC in Case IV/36.653 - Opel (OJ L 59, 28.2.2001, p. 1), the Commission prohibits measures to block parallel trade despite the price differentials resulting from different tax burdens. (94) Commission Decision 98/273/EC in Case IV/35.733 - Volkswagen (OJ L 124, 25.4.1998, s. 60, paragraph 187). The Decision was upheld by the Court of First Instance in Case T-62/98, Volkswagen AGV Commission[2000] ECR II-2707. (95) OJ L 145, 29.6.1995, p. 25. (96) See Article 3(3) of Royal Decree 271/90 (see recital 38). (97) Reply to the SO, Annex 4 on the PPRS, p. 2 [3676]. (98) Frontier Economics study II, p. 10 [4557]. (99) Case 26/76, Metro SB Großmärktev. Commission. (100) Commission Decision 85/616/EEC. (101) Supplementary notification of 28 July 1998, p. 41 [873]. (102) VolkswagenAG v Commission, op. cit.; Case T-77/92, Parker PenV Commission, [1994] ECR-II, p. 549, paragraph 39. (103) Volkswagen AGv Commission, op. cit.; Case 42/84, Remia BV and othersV Commissions[1985] ECR 2545, paragraph 22. (104) Response by GW of 14 February 2000, p. 1 [4507]. (105) Case T-66/89, Publishers Association v Commission, [1992] ECR II-1995, paragraph 69. (106) Case T-17/93, Matra hachette SA v Commission, [1994] ECR II-595, paragraph 104. (107) Frontier Economics study I, p. 15 [3711]. (108) Case T-17/93 Matra SA Hachette v Commission, paragraph 85. (109) Frontier Economics study II, p. 7 [4554]. (110) Ibid. (111) GW's annual report 1999, p. 92. (112) Professor Corchon Study I, p. 6 [Case 36.997, 3149]. (113) Supplementary notification by GW of 28 july 1998, p. 37, footnote 40 [869]. (114) Frontier Economics study II, p. 7 [4554]. (115) See annual reports of those years (in particular p. 27 of the 1997 report)). (116) See reply to the SO, p. 21 [3528]. (117) Response of 14 February 2000, p. 5 [4511]. (118) Response of 14 February 2000, pp. 3 to 8 and Annexes [4509 to 14, 4520 et seq.]. (119) Response of 14 February 2000, p. 5 [4511]. (120) Commission Decision in Case IV/1378 - Hoechst/Rhône Poulenc (OJ C 254, 7.9.2000, p. 5, paragraph 45). (121) COM(98) 588 final, chapter 1. (122) Frontier Economics study I, Annex 6 to the reply to the SO, p. 64 and 65 [3760/1]. (123) Reply to the SO, p. 16 and Frontier Economics study I, Annex 6 to the reply to the SO, p. 17 et seq [3523, 3713 et seq]. (124) Op. cit. recital 222. (125) COM(95) 503 final. (126) Total R & D expenditure amounted to GBP 1,13 billion in 1996, GBP 1,16 billion in 1997 and GBP 1,148 billion in 1998. (127) Notification, p. 75 [76]. (128) Reply to the SO, Annex 5 "Drug exports could prevent many diabetics from obtaining insulin" La Razon 15.10.1999 [3686/7]. (129) Rebuttal of GW on EAEPC' comments of 23 February 2000, p. 5 [4582]. (130) Ley 15/1990, Article 79 as well as Oficio of the Ministry of Health and Consumers dated 6 April 1998. (131) London Economics study, p. 42 [1046]. (132) Reply to the SO, Annex 11 [3809]. (133) Supplementary notification by GW of 28 July 1998, Annex 9 [905]. (134) Response of 14 December 1998, Annex 10 [1762 to 1772]. (135) One for four years (Ventolin Respirator), another for two years (Imigran Injection), two for one year (Imigran tab and Ventolin Nebules) and the remaining for at least half a year. Response by GW of 14 December 1998, ibid. (136) Supplementary notification, p. 42 (874). (137) Case 37.380, submission "Parallel trade of pharmaceuticals", p. 6 (193). (138) Letter of 23 February 2000, p. 4 (4581). (139) Matra SA Hachette v Commission, op. cit.