Alleged refusal to supply – when are measures against parallel trade abusive?

30.10.2013

A recent High Court decision clarifies the circumstances in which the Court will compel pharmaceutical companies to supply third parties. Cases of this sort are likely to become more frequent when government proposals for ‘fast track’ injunctive relief in competition cases are enacted.
Chemistree Homecare Ltd v Abbvie Ltd [2013] EWHC 264 (Ch)
Chemistree Homecare Limited (“Chemistree”), the Claimant, runs a pharmacy business and provides a homecare service to NHS hospitals (involving a healthcare professional administering a drug to the patient at home). One such drug is HIV drug Kaletra, supplied by Abbvie Ltd (“Abbvie”). Unknown to Abbvie, Chemistree had begun acting as a wholesaler, placing large orders for the drug and exporting to other EU states. Abbvie became suspicious and requested evidence for the scale of the orders (which Chemistree declined to provide), refusing to meet any orders beyond what was required for the UK homecare service.
Chemistree sought an interim mandatory injunction to compel Abbvie to supply specified quantities of the Kaletra. Chemistree alleged Abbvie had abused a dominant position by refusing to supply the quantities demanded contrary to Article 102 TFEU.
Judgment
The Court found that there was no serious case to be tried in relation to Dominance. It reached this decision on the basis of unchallenged evidence from Abbvie that Kaletra was one of eight substitutable alternative agents.
The GSK Greece case establishes the principle that a dominant undertaking’s refusal to supply “ordinary orders” to a wholesale business can potentially constitute an abuse. However, the Court noted that Abbvie did not operate a wholesale supply model: unlike GSK, Abbvie reserved the supply business to itself and only delegated homecare services to third parties. Chemistree’s wholesale orders could not be considered “ordinary orders” and there was no relevant refusal to supply.
Comment
This robust decision will be welcomed by innovators. The decision provides insight into the way the courts will approach interim injunction applications in the Pharma context. It will also provide guidance on the interpretation of the Court of Justice’s ruling in GSK Greece, which in turn will aid the development of pan-European stock management programmes.
It is worth noting that the UK Government has announced proposals to reform private competition law litigation which may increase the frequency of this sort of litigation. The Government proposes to give the Competition Appeal Tribunal (CAT) the power to hear stand-alone competition actions and to award injunctions. A new ‘fast-track regime’ for simpler cases involving injunctive relief with rules imposing costs caps will also be established. These reforms are intended to improve access to justice by smaller and medium sized entities and it would seem likely that cases such as this one will feature heavily in this new forum if the proposals are enacted.
For full article, see here.