European Court of Justice confirms that Commission did not sufficiently consider claimed innovation benefits of restricting parallel trade

On 6 October 2009 the European Court of Justice held (GlaxoSmithKline Services v Commission, Joined Cases C‑501/06 P, C-513/06 P, C-515/06 P and C‑519/06 P) that the Court of First Instance (“CFI”) did not err in finding that the Commission did not sufficiently examine the evidence GlaxoSmithKline’s (“GSK”) presented on that its agreements restricting parallel trade would be justified under Article 81(3) EC Treaty as they increase GSK’s investment in research and development.

However, the Court of Justice found that the CFI committed an error of law by requiring proof on harm to final consumers as a prerequisite for finding that a restriction of parallel trade constitutes a restriction of competition “by object”, a concept that entails that no proof of anti-competitive effects is required. However, since the CFI had found the agreement restrictive of competition on the basis of its effects ( “by effect”), the CFI’s judgment nonetheless remained well founded with respect to finding a restriction of competition despite that error. [Juha Vesala]