There’s a lot in the judgment and quite some procedural issues arose: Just about everyone appealed and cross-appealed the Court of First Instance’s judgment in Case T-168/01 GlaxoSmithKline Services v. Commission  ECR II-2969 turning the procedure into a bit of a saloon bar brawl.
We’ll just concentrate on one aspect for now: What comprises a restriction of competition by object.
But first a bit of background. The Court of First Instance in its judgment in Case T-168/01 annulled parts of a Commission decision finding that Glaxo Wellcome SA, a subsidiary of GSK, had infringed Article 81§1 EC by agreeing with Spanish wholesalers operating a distinction between prices charged to wholesalers in the case of domestic resale of reimbursable drugs to pharmacies or hospitals and higher prices charged in the case of exports of medicines to any other member State. The Commission also decided that the arrangement did not qualify for an exemption under Article 81§3 EC. For our posts on that judgment see here and here.
The Court of First Instance had upheld the Commission’s finding the arrangements were prohibited by Article 81 §1 EC but annulled the Commission decision because it considered that the Commission had not carried out a proper examination of GSK’s request for an exemption under Article 81 §3 EC.
Now to the issue of whether the agreement had as its object to restrict competition.
In deciding whether the agreement breached Article 81 §1, the Court of First Instance held, in paragraph 121, that while parallel trade must be given a certain protection, it should be given protection in so far as it favors the development of trade, on the one hand, and the strengthening of competition, on the other hand and thus in so far as it gives final consumers the advantages of effective competition in terms of supply or price. Consequently, held the Court of First Instance, while it is accepted that an agreement intended to limit parallel trade must in principle be considered to have as its object the restriction of competition, that applies in so far as the agreement may be presumed to deprive final consumers of those advantages.
Notwithstanding that qualification, the Court of First Instance held that the arrangements were in fact caught by Article 81 §1 EC because they had the effect of restricting competition.
On appeal, the Court of Justice took exception to that statement of the Court of First Instance.
As regards the Court of First Instance’s statement that, while it is accepted that an agreement intended to limit parallel trade must in principle be considered to have as its object the restriction of competition, that applies in so far as it may be presumed to deprive final consumers of the advantages of effective competition in terms of supply or price, the Court of Justice held that neither the wording of Article 81 §1 EC nor the case-law lend support to such a position.
It stated firstly that there is nothing in Article 81 §1 EC to indicate that only those agreements which deprive consumers of certain advantages may have an anti-competitive object. Secondly the Court recalled that, like other antitrust rules in the Treaty, Article 81 EC aims to protect not only the interests of competitors or of consumers, but also the structure of the market and, in so doing, competition as such. Consequently, for a finding that an agreement has an anti-competitive object, it is not necessary that final consumers be deprived of the advantages of effective competition in terms of supply or price (by analogy, Case C-8/08 T-Mobile Netherlands and Others  ECR I0000 paragraphs 38 and 39 - see our post on that case here).
It follows according to the Court of Justice that, by requiring proof that the agreement entails disadvantages for final consumers as a prerequisite for a finding of anti-competitive object and by not finding that that agreement had such an object, the Court of First Instance committed an error of law.
Nevertheless, the Court of Justice did not overturn the judgment of the Court of First Instance. It held that where the grounds of a judgment of the Court of First Instance are contrary to EC law, that judgment need not be set aside if the operative part of the judgment appears to be well founded on other legal grounds (Case C-30/91 P Lestelle v. Commission  ECR I-3755, paragraph 28, and Case C-294/95 P Ojha v. Commission  ECR I-5863, paragraph 52).
That was the case here. In point 2 of the operative part of the judgment under appeal, the Court of First Instance confirmed Article 1 of the contested decision, by which the Commission had found that the agreement infringed Article 81 §1 EC. It was thus unnecessary to set aside point 2 of the operative part of the Court of First Instance’s judgment under appeal.