Case T‑168/01

GlaxoSmithKline Services Unlimited

v

Commission of the European Communities

(Competition – Wholesale distribution of medicines – Parallel trade – Differentiated prices – Article 81(1) EC – Agreement – Restriction of competition – Object – Relevant market – Effect – Article 81(3) EC – Contribution to the promotion of technical progress – No elimination of competition – Proof – Statement of reasons – Subsidiarity)

Judgment of the Court of First Instance (Fourth Chamber, Extended Composition), 27 September 2006

Summary of the Judgment

1. Acts of the institutions – Statement of reasons – Obligation – Scope – Judicial review

(Art. 253 EC)

2. Actions for annulment – Pleas in law – Lack of or inadequate statement of reasons – Distinction from challenge to merits of the grounds

(Arts 230 EC and 253 EC)

3. Actions for annulment – Commission decision adopted on the basis of Article 81(1) EC – Complex economic assessment – Judicial review – Limits

(Arts 81(1) EC and 230 EC)

4. Actions for annulment – Subject-matter – Decision applying Article 81 EC – Acceptable evidence

(Arts 81 EC and 230 EC)

5. Competition – Community rules – Substantive scope – Conduct imposed by national measures – Not included – Evaluation of actual scope for free competition

(Art. 81(1) EC)

6. Competition – Agreements, decisions and concerted practices – Agreements between undertakings – Concept – Covering only bilateral or multilateral conduct – Existence of a joint intention as to the conduct to be adopted on the market – Sufficient condition

(Art. 81(1) EC)

7. Competition – Agreements, decisions and concerted practices – Agreements between undertakings – Burden of proving the infringement borne by the Commission – Evidence of having distanced itself from the agreement borne by the undertaking relying on its intention to do so

(Art. 81(1) EC)

8. Competition – Community rules – Substantive scope – Sector of medicines reimbursed by the national sickness insurance scheme – Included notwithstanding national intervention in matters of prices

(Art. 81(1) EC)

9. Competition – Agreements, decisions and concerted practices – Adverse effect on competition – Criteria for assessment – Assessment by reference to the economic and legal context – Anti-competitive object rendering proof of anti-competitive effects unnecessary

(Arts 3(1)(g) EC and 81(1) EC)

10. Competition – Agreements, decisions and concerted practices – Adverse effect on competition – Agreements intended to limit parallel trade – Criteria for assessment – Taking into account of effects for final consumers – Presumption of anti-competitive object – Limits – Sector of medicines reimbursed by the sickness insurances scheme – Not included

(Art. 81(1) EC)

11. Competition – Agreements, decisions and concerted practices – Adverse effect on competition – Application of unequal conditions to equivalent services – System of differentiated prices – Assessment – Need to take account of the different regulatory framework depending on the Member States – Circumstance of medicines reimbursed by the national sickness insurance schemes

(Art. 81(1)(d) EC)

12. Community law – Principles – Principle of subsidiarity – Application in the sphere of competition – Requirement of an effect on trade between Member States

(Arts 5, second para., EC and 81(1) EC)

13. Competition – Agreements, decisions and concerted practices – Not allowed – Exemption – Conditions – Burden of proof – Scope – Examination by the Commission

(Art. 81(3) EC)

14. Competition – Agreements, decisions and concerted practices – Not allowed – Exemption – Conditions – Complex economic assessment – Discretion of the Commission – Judicial review – Limits

(Art. 81(3) EC)

15. Competition – Agreements, decisions and concerted practices – Not allowed – Exemption – Conditions – Improvement in the production or distribution of goods or promotion of technical or economic progress – Appreciable objective advantages of such a kind as to offset the disadvantages of the agreement for competition – Examination by the Commission

(Art. 81(3) EC)

16. Actions for annulment – Action against a Commission decision on a request for negative clearance or exemption under Regulation No 17 – Judgment annulling act – Effects

(Art. 233, first para., EC; Council Regulations No 17 and No 1/2003)

1. Article 253 EC states, in particular, that decisions adopted by the Commission are to state the reasons on which they are based.

In order to state the reasons to the requisite legal standard, a decision of the Commission must disclose clearly the reasoning followed by that institution in such a way as to enable the persons concerned to understand the basis for it and the Court to ascertain whether it is well founded. On the other hand, such a decision is not required to go into all the relevant facts and points of law, since the question of compliance with Article 253 EC is assessed by reference to both the wording of the measure and its legal and factual context.

The need to state the reasons for its decisions therefore does not place the Commission under any general obligation to refer to a specific judicial decision in the decisions which it adopts.

(see paras 49-51)

2. The examination of the existence and the scope of the reasons on which a Commission decision is based forms part of the review of essential procedural requirements and of the formal legality of that decision. It must therefore be distinguished from the examination of the merits of the grounds of the decision, which forms part of the review of its substantive legality.

(see para. 54)

3. When it is dealing with an application for annulment of a Commission decision applying Article 81(1) EC, the Community judicature carries out, in accordance with Article 230 EC, a review of the lawfulness of that decision.

In that regard, the Court must undertake a comprehensive review of the examination carried out by the Commission, unless that examination entails a complex economic assessment, in which case review by the Court is confined to ascertaining that there has been no misuse of powers, that the rules on procedure and on the statement of reasons have been complied with, that the facts have been accurately stated and that there has been no manifest error of assessment of those facts.

(see paras 57, 145)

4. Review by the Court dealing with an action for annulment of a decision applying Article 81 EC is carried out solely by reference to the elements of fact and of law existing on the date of adoption of the contested decision, without prejudice to the possibility afforded to the parties, in the exercise of their rights of defence, to supplement them by evidence established after that date but for the specific purpose of contesting or defending that decision.

(see paras 58, 245)

5. Article 81(1) EC applies only to anti-competitive conduct engaged in by undertakings on their own initiative.

Where, in order to decide whether that provision is applicable, it is necessary first to evaluate the possible impact of national regulations, it must be determined whether those regulations leave any scope for competition that might be prevented, restricted or distorted by autonomous conduct on the part of undertakings.

Where it is clear, following that evaluation, that the regulations in question require that undertakings engage in anti-competitive conduct, or eliminate any possibility of competitive activity on their part, Article 81(1) EC does not apply.

Where, on the other hand, it is clear that those regulations do leave scope for competition that might be prevented, restricted or distorted by autonomous conduct on the part of undertakings, Article 81(1) EC does apply.

The possibility of excluding particular anti-competitive conduct from the scope of that provision on the ground that it is required by national regulations has been applied restrictively by the Community Courts.

(see paras 66-70)

6. Article 81(1) EC applies only to bilateral or multilateral conduct on the part of undertakings and such conduct may take the form of agreements, concerted practices or decisions of associations.

In order for there to be an agreement, it is sufficient that at least two undertakings have expressed their joint intention to conduct themselves on the market in a specific way.

While it is therefore essential that the decisions in which the Commission applies Article 81(1) EC show the existence of a joint intention to act on the market in a specific way, those decisions are not required to establish the existence of a joint intention to pursue an anti-competitive aim.

(see paras 75-77)

7. It is for the Commission to prove the infringements which it finds by adducing, in the decisions in which it applies the competition rules, precise and coherent evidence demonstrating convincingly the existence of the facts constituting those infringements.

That evidence may consist of direct evidence, taking the form, for example, of a written document, or, failing that, indirect evidence, for example in the form of conduct.

Where the Commission has adduced evidence of the existence of an agreement, it is for an undertaking which has taken part in that agreement and denies having committed an infringement to adduce evidence that it distanced itself from that agreement, evidence which must demonstrate a clear intention, brought to the notice of the other participating undertakings, to withdraw from that agreement.

(see paras 82-83, 86)

8. The sector of medicines reimbursed by the national sickness insurance scheme continues to be characterised, in a number of Member States, by the existence of regulations which go beyond the mere regulation of an economic activity, in particular in matters of prices. The coexistence of those different national regulations may distort competition. It tends, moreover, to favour a certain partitioning of the national markets on that point.

However, it is only where the sector in which the agreement is applied is subject to regulations which preclude the possibility of competition that might be prevented, distorted or restricted by that agreement that Article 81(1) EC is inapplicable.

In the sector in question, there may be competition between a producer and his distributors, or between parallel traders and national distributors, which specifically takes advantage of the significant differences in price to which the national regulations in question contribute and which, where the medicines are protected by a patent which confers a temporary monopoly on its holder, is, until the expiry of that patent, the only form of price competition envisageable in respect of them.

(see paras 104-107)

9. The competition referred to in Article 3(1)(g) EC and Article 81 EC is taken to mean effective competition, that is to say, the degree of competition necessary to ensure the attainment of the objectives of the Treaty. Its intensity may vary to an extent dictated by the nature of the product concerned and the structure of the relevant market. Furthermore, its parameters may assume unequal importance, as price competition does not constitute the only effective form of competition or that to which absolute priority must in all circumstances be given.

Consequently, the characterisation of a restriction of competition within the meaning of Article 81(1) EC must take account of the actual framework and, therefore, of the legal and economic context in which the agreement to which that restriction is imputed is deployed. Such an obligation is imposed for the purpose of ascertaining both the object and the effect of the agreement.

Thus, when examination of the clauses of an agreement, carried out in their legal and economic context, reveals in itself the existence of an alteration of competition, it may be presumed that that agreement has as its object the prevention, restriction or distortion of competition, so that there is no need to examine its effect.

Where that is not so, on the other hand, it is necessary to examine the effect of the agreement and to prove to the requisite legal standard that it actually or potentially prevents, restricts or distorts competition.

(see paras 109-112)

10. Agreements which ultimately seek to prohibit parallel trade must in principle be regarded as having as their object the prevention of competition, while agreements that clearly intend to treat parallel trade unfavourably must in principle be regarded as having as their object the restriction of competition.

However, the mere fact that an agreement is intended to restrict parallel trade is not sufficient to support the conclusion that there is an infringement of Article 81(1) EC. In effect, the objective assigned to that provision is to prevent undertakings, by restricting competition between themselves or with third parties, from reducing the welfare of the final consumer of the products in question.

Consequently, the application of Article 81(1) EC cannot depend solely on the fact that an agreement is intended to limit parallel trade or to partition the common market, which leads to the conclusion that it affects trade between Member States, but also requires an analysis designed to determine whether it has as its object or effect the prevention, restriction or distortion of competition on the relevant market, to the detriment of the final consumer. That analysis, which may be abridged when the clauses of the agreement reveal in themselves the existence of an alteration of competition must, on the other hand, be supplemented, depending on the requirements of the case, where that is not so.

While it is accepted that parallel trade must be given a certain protection, it is therefore not as such but in so far as it favours the development of trade, on the one hand, and the strengthening of competition, on the other hand, that is to say, in this second respect, in so far as it gives final consumers the advantages of effective competition in terms of supply or price. It is the repercussions which that restriction of parallel trade has or may have on one or other of the parameters of competition, such as the quantity in which a product is supplied or the price at which it is sold, that provides evidence of such a restriction of competition.

Then, while it is accepted that an agreement intended to limit parallel trade must in principle be regarded as having 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.

However, it cannot be presumed that agreements intended to hinder parallel imports of medicines have the effect of depriving final consumers of the advantages linked with those imports. In effect, the prices at which medicines are sold at retail level are subject to control by the Member States, which fix them directly or indirectly at what they deem to be the appropriate level, are determined at structurally different levels in the various Member States, so that it cannot be presumed that parallel trade has an impact on the retail prices charged to the final consumers of medicines reimbursed by the national sickness insurance scheme and thus confers on final consumers an appreciable advantage analogous to that which it would confer if those prices were determined by the free play of supply and demand.

(see paras 115-122, 133-134, 140)

11. Where it is common ground that, in the case of a given product, in this instance medicines reimbursed by the national sickness insurance schemes, each of the Member States constitutes a distinct market, owing to the differences in the national regulations on the prices and the reimbursement of the medicines in question, the fact that different prices are charged depending on the Member State in which the medicines are intended to be resold and reimbursed is not sufficient to characterise discrimination for the purposes of Article 81(1)(d) EC.

(see paras 178-179)

12. In the context of Article 81(1) EC, the principle of subsidiarity is given concrete form by the limitation of the prohibition contained therein to agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States. Thus, where a series of objective factors of law or fact makes it possible to foresee with a sufficient degree of probability that such conduct may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States, that conduct must be regarded as capable of affecting trade between Member States, so that it is appropriate for the Community to take action, by reason of the scale and the effects of its action.

Where that action takes the form of a Commission decision, the Commission is therefore acting in accordance with the principle of subsidiarity where it establishes to the requisite legal standard that trade between Member States is capable of being affected by the agreement between undertakings, the decision by an association of undertakings or the concerted practice the legality of which it is examining.

(see paras 201-202)

13. Any agreement which restricts competition, whether by its effects or by its object, may in principle benefit from an exemption under Article 81(3) EC.

The application of that provision is subject to certain conditions, satisfaction of which is both necessary and sufficient. First, the agreement concerned must contribute to improving the production or distribution of the goods in question, or to promoting technical or economic progress; second, consumers must be allowed a fair share of the resulting benefit; third, it must not impose on the participating undertakings any restrictions which are not indispensable; and, fourth, it must not afford them the possibility of eliminating competition in respect of a substantial part of the products in question.

Consequently, an economic operator who relies on Article 81(3) EC must demonstrate that those conditions are satisfied, by means of convincing arguments and evidence.

The Commission, for its part, must adequately examine those arguments and that evidence, that is to say, it must determine whether they demonstrate that the conditions for the application of Article 81(3) EC are satisfied. In certain cases, those arguments and that evidence may be of such a kind as to require the Commission to provide an explanation or justification, failing which it is permissible to conclude that the burden of proof borne by the person who relies on Article 81(3) EC has been discharged. In such a case the Commission must refute those arguments and that evidence.

(see paras 233-236)

14. The Court dealing with an application for annulment of a decision applying Article 81(3) EC carries out, in so far as it is faced with complex economic assessments, a review confined, as regards the merits, to verifying whether the facts have been accurately stated, whether there has been any manifest error of appraisal and whether the legal consequences deduced from those facts were accurate.

It is for the Court to establish not only whether the evidence relied on is factually accurate, reliable and consistent, but also whether it contains all the information which must be taken into account for the purpose of assessing a complex situation and whether it is capable of substantiating the conclusions drawn from it.

On the other hand, it is not for the Court to substitute its own economic assessment for that of the institution which adopted the decision the legality of which it is requested to review.

The Commission has, in particular, a margin of discretion which is subject to a restricted judicial review, in the operation consisting, once it has been ascertained that one of the criteria on which Article 81(3) EC makes provision for an exemption was satisfied, in weighing up the advantages expected from the implementation of the agreement and the disadvantages which the agreement entails for the final consumer owing to its impact on competition, which takes the form of a balancing exercise carried out in the light of the general interest appraised at Community level.

(see paras 241-244)

15. In order to be capable of being exempted under Article 81(3) EC, an agreement must contribute to improving the production or distribution of goods or to promoting technical or economic progress. That contribution is not identified with all the advantages which the undertakings participating in the agreement derive from it as regards their activities, but with appreciable objective advantages, of such a kind as to offset the resulting disadvantages for competition.

It is therefore for the Commission, in the first place, to examine whether the factual arguments and the evidence submitted to it show, in a convincing manner, that the agreement in question must enable appreciable objective advantages to be obtained, it being understood that these advantages may arise not only on the relevant market but also on other markets and that they are not required to be a direct consequence of the agreement.

That approach may entail a prospective analysis, in which case it is appropriate to ascertain whether, in the light of the factual arguments and the evidence provided, it seems more likely either that the agreement in question must make it possible to obtain appreciable advantages or that it will not.

In the affirmative, it is for the Commission, in the second place, to evaluate whether those appreciable objective advantages are of such a kind as to offset the disadvantages identified for competition in the context of the examination carried out under Article 81(1) EC.

Last, where the Commission is required to determine whether the conditions for the application of Article 81(3) EC are satisfied in a legal and economic context, such as that characteristic of the pharmaceutical sector, where competition is distorted by the presence of national regulations, it must examine with particular attention the arguments and evidence submitted to it by the economic operator relying on Article 81(3) EC.

(see paras 247-250, 276, 280, 298, 301)

16. Pursuant to the first paragraph of Article 233 EC, the Commission is required to take the necessary measures to comply with a judgment annulling a decision determining a request for exemption under Regulation No 17.

To that end, although the notification procedure provided for in Regulation No 17 no longer exists under Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, it falls upon the Commission to rule on the request for exemption by reference to the date of that request, in so far as the request remains before it.

(see paras 319-320)

JUDGMENT OF THE COURT OF FIRST INSTANCE (Fourth Chamber, Extended Composition)

27 September 2006 ( )

(Competition – Wholesale distribution of medicines – Parallel trade – Differentiated prices – Article 81(1) EC – Agreement – Restriction of competition – Object – Relevant market – Effect – Article 81(3) EC – Contribution to the promotion of technical progress – No elimination of competition – Evidence – Statement of reasons – Subsidiarity)

In Case T‑168/01,

GlaxoSmithKline Services Unlimited, formerly Glaxo Wellcome plc, established in Brentford, Middlesex (United Kingdom), represented by S. Martínez Lage, lawyer, I. Forrester QC, F. Depoortere, A. Schultz, T. Louko and I. Vandenborre, lawyers,

applicant,

v

Commission of the European Communities, represented initially by P. Oliver, then by É. Gippini Fournier, acting as Agents,

defendant,

supported by

European Association of Euro Pharmaceutical Companies (EAEPC), established in Brussels (Belgium), represented initially by U. Zinsmeister and M. Lienemeyer, then by A. Martin‑Ehlers, and finally by M. Hartmann‑Rüppel, lawyers,

by

Bundesverband der Arzneimittell-Importeure eV, established in Mülheim an der Ruhr (Germany), represented initially by M. Epping and W. Rehmann, then by W. Rehmann, lawyers,

by

Spain Pharma, SA, established in Madrid (Spain), represented by P. Muñoz Carpena, B. Ortúzar Somoza and R. Gutiérrez Sánchez, lawyers,

and by

Asociación de exportadores españoles de productos farmacéuticos (Aseprofar), established in Madrid (Spain), represented initially by M. Araujo Boyd and R. Sanz, then by M. Araujo Boyd and J.L. Buendia Sierra, lawyers,

interveners,

APPLICATION for annulment of Commission Decision 2001/791/EC of 8 May 2001 relating to a proceeding pursuant to Article 81 of the EC Treaty (Cases IV/36.957/F3 Glaxo Wellcome (notification), IV/36.997/F3 Aseprofar and Fedifar (complaint), IV/37.121/F3 Spain Pharma (complaint), IV/37.138/F3 BAI (complaint) and IV/37.380/F3 EAEPC (complaint)) (OJ 2001 L 302, p. 1),

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fourth Chamber, Extended Composition),

composed of H. Legal, President, P. Lindh, I. Wiszniewska‑Białecka, V. Vadapalas and E. Moavero Milanesi, Judges,

Registrar: C. Kristensen, Administrator,

having regard to the written procedure and further to the hearing on 7 June 2006,

delivers the following

Judgment

Legal and factual framework

Community law

1 Article 3(1)(g) EC provides that the activities of the Community are to include a system ensuring that competition in the internal market is not distorted.

2 Article 81(1) EC provides, in particular, that all agreements between undertakings which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market are to be prohibited as incompatible with the common market.

3 Article 81(3) EC provides that the provisions of Article 81(1) EC may be declared inapplicable, inter alia, in the case of any agreement between undertakings which contributes to improving the distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives, or afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

4 On 21 December 1988, the Council, acting on the basis of Article 100a of the EC Treaty (now, after amendment, Article 95 EC), adopted Directive 89/105/EEC relating to the transparency of measures regulating the prices of medicines for human use and their inclusion in the scope of national health insurance systems (OJ 1989 L 40, p. 8). The objective of that directive is to obtain an overall view of pricing arrangements and of direct and indirect controls on the prices of medicines which the Member States have adopted in order to control public health expenditure on such products, and to eliminate disparities in such measures, which may hinder or distort intra-Community trade in medicines and thereby directly affect the functioning of the common market in medicines. To that end, it establishes, as a first step, a series of requirements intended to ensure that all concerned can verify that the national measures do not constitute quantitative restrictions on imports or exports or measures having equivalent effect thereto. However, those requirements are not to affect either the policies of those Member States, or national policies on price setting and on the determination of social security schemes, except as far as it is necessary to attain transparency. The period within which Member States were to comply with that directive expired on 31 December 1989.

Spanish law

5 On 20 December 1990 the Kingdom of Spain adopted Ley 25/1990 del Medicamento (Law 25/1990 on medicines, BOE No 306 of 22 December 1990, p. 2643; ‘Law 25/1990’). That law was amended, in particular, by Ley 66/1997 of 30 December 1997 (BOE No 313 of 31 December 1997, p. 38517) and, during the administrative procedure which led to the adoption of the decision contested in the present case, by Ley 55/1999 of 30 December 1999 (BOE No 312 of 30 December 1997, p. 46095).

6 On 23 February 1990, the Kingdom of Spain adopted Real Decreto 271/1990 de reorganización de la intervención de los precios de las especialidades farmacéuticas de uso humano (Royal Decree 271/1990 on the reorganisation of intervention in the prices of pharmaceutical products for human use) (BOE No 53 of 2 March 1990, p. 6086; ‘Decree 271/1990’). That decree was intended, in particular, to allow the Kingdom of Spain to comply with Directive 89/105/EEC.

7 The provisions of Title VIII of Law 25/1990 and Decree 271/1990 establish, in particular, a system of intervention on the part of the Spanish Ministry of Health and Consumption and the Comisión Interministerial de Precios de los Medicamentos (Interministerial Commission on the prices of medicines) attached to it (together ‘the Spanish authorities’), on the maximum wholesale price of medicines reimbursed by the Spanish sickness insurance scheme.

Background to the dispute

8 The applicant, GlaxoSmithKline Services Unlimited (‘GSK’), formerly Glaxo Wellcome plc, is a company incorporated under the laws of England and Wales and having its registered office in Brentford (United Kingdom). The GlaxoSmithKline group, to which it belongs, is one of the world’s main producers of pharmaceutical products. The group was formed following a concentration between Glaxo Wellcome plc and Smithkline Beecham plc, a transaction which the Commission, by a decision of 8 May 2000 (Case N IV/M.1846 – Glaxo Wellcome/Smithkline Beecham), declared that it did not oppose.

9 Glaxo Wellcome, SA (‘GW’), a company incorporated under Spanish law and established in Madrid (Spain), is one of the Spanish subsidiaries of the GlaxoSmithKline group. Its main activity, directly and via its subsidiaries, is the development, manufacture and marketing of medicines in Spain.

10 By letter of 6 March 1998, GW notified to the Commission a document entitled ‘General Sales Conditions of pharmaceutical specialities belonging to [GW] and its subsidiaries to authorised wholesalers’ (‘the General Sales Conditions’) with a view to obtaining negative clearance or an exemption pursuant to Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles [81] and [82] of the Treaty (OJ, English Special Edition 1959-62, p. 87). By letter of 28 July 1998, GSK sent a supplementary notification to the Commission.

11 The General Sales Conditions apply to 82 medicines intended for sale to wholesalers established in Spain with whom GW has commercial relations in Spain outside any distribution network. Those wholesalers may intend to resell the medicines to Spanish hospitals or to Spanish pharmacies, which dispense them to patients on presentation of a medical prescription. They may also intend to resell them in other Member States, through parallel trade, in which they engage on account of price differentials. The 82 medicines to which the General Sales Conditions apply include eight medicines which, according to GSK, are prime candidates for parallel trade, principally between Spain and the United Kingdom. Those medicines are:

– an anti-allergy, Beconase;

– five anti-asthma products, Becloforte, Becotide, Flixotide, Serevent and Ventolín;

– an anti-epileptic, Lamictal;

– an anti-migraine, Imigran.

12 For all 82 medicines concerned, Clause 4 of the General Sales Conditions provides for two different prices, ‘the Clause 4 A price’ and ‘the Clause 4 B price’. Clause 4 is worded as follows:

‘(A) Pursuant to the provisions of subsections 1 (first paragraph) and 2 of Article 100 of [Law 25/1990], the price of pharmaceutical products of [GW] and its subsidiary companies shall, in no event, exceed the maximum industrial price, established by the Spanish health authorities when the two factors which allow for the application of the said legal rules are present, namely:

– that the aforementioned pharmaceutical products are financed by the funds of the Spanish Social Security or by Spanish public funds,

– that the acquired pharmaceutical products are subsequently marketed at a national level i.e. through pharmacies or Spanish hospitals.

(B) In the absence of one of these two factors (i.e. in all cases where Spanish law gives full freedom to the laboratories to set the prices of their pharmaceutical products themselves), [GW] and its subsidiaries will fix the price of their pharmaceutical products according to real, objective and non-discriminatory economic criteria and completely irrespective of the destination of the product determined by the purchasing warehouse. In particular, [GW] and its subsidiary companies will apply to their pharmaceutical products the price which, on the basis of their internal economic surveys, had been initially proposed to the Spanish health authorities and objectively updated taking account of the increase in the cost of living in accordance with the provisions of subsections 1 (first paragraph) and 2 of Article 100 of [Law 25/1990] and other prior Spanish legislation concerning setting of prices of medicines.’

13 By letters of 6 March 1998, GW sent the General Sales Conditions to 89 wholesalers established in Spain. Those letters contain, in particular, the following:

‘Important: As proof of acceptance, please return to us a copy of the attached document duly signed. This should be in our possession before 13 March 1998’.

14 Seventy-five wholesalers, with sales accounting for more than 90% of GW’s total sales in Spain in 1998, did as requested.

15 The General Sales Conditions entered into force on 9 March 1998.

16 Their lawfulness was subsequently disputed before the Spanish Competition Authority and the Spanish courts by two Spanish trade associations, Asociación de Exportadores Españoles de Productos Farmacéuticos (Aseprofar) and Asociación de Empresarios de Cooperativas Farmacéuticas, and also by a Spanish wholesaler, Spain Pharma, SA.

17 In addition, a number of complaints that the General Sales Conditions infringed Article 81(1) EC were lodged with the Commission by Aseprofar, supported by another Spanish trade association, Federación Nacional de Asociaciones de Mayoristas Distribuidores de Especialidades Farmacéuticas y Productos Parafarmacéuticos (Fedifar), by Spain Pharma and by two other trade associations, the Bundesverband der Arzneimittel-Importeure eV (‘BAI’) and the European Association of Euro Pharmaceutical Companies (EAEPC).

18 On 8 May 2001, the Commission adopted Decision 2001/791/EC relating to a proceeding pursuant to Article 81 of the EC Treaty (Cases: IV/36.957/F3 Glaxo Wellcome (notification), IV/36.997/F3 Aseprofar and Fedifar (complaint), IV/37.121/F3 Spain Pharma (complaint), IV/37.138/F3 BAI (complaint), IV/37.380/F3 EAEPC (complaint)) (OJ 2001 L 302, p. 1; ‘the Decision’).

19 Article 1 of the Decision provides that GW ‘has infringed Article 81(1) [EC] by entering into an agreement 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 to any other Member State’.

20 Article 2 of the Decision provides that the request for an exemption of the agreement is rejected.

21 Articles 3 and 4 of the Decision order GW to bring the infringement to an end immediately and to inform the Commission of the steps which it has taken in order to do so.

Procedure

22 By application lodged at the Registry of the Court of First Instance on 23 July 2001, GSK brought the present action.

23 By documents lodged at the Court Registry on 8, 12 and 16 November 2001, EAEPC, BAI, Spain Pharma and Aseprofar sought leave to intervene in support of the form of order sought by the Commission, in accordance with the second paragraph of Article 40 of the Statute of the Court of Justice and Article 115(1) of the Rules of Procedure of the Court of First Instance.

24 By documents lodged at the Court Registry on 28 November 2001, 14 December 2001 and 21 March 2002, GSK requested that certain items and secret or confidential information be excluded from the communication of the parties’ submissions to the persons granted leave to intervene in the proceedings, in accordance with Article 116(2) of the Rules of Procedure.

25 By order of 27 November 2002, the President of the First Chamber granted the applications to intervene and reserved the decision on the merits of the requests for confidential treatment.

26 By order of 5 August 2003, the President of the First Chamber of the Court of First Instance granted in part the requests for confidential treatment and, for the remainder, rejected those requests.

27 When the Judge-Rapporteur was assigned to the Fourth Chamber owing to the change in the composition of the Chambers of the Court of First Instance on 1 October 2003, the case was reallocated to that Chamber.

28 By document lodged at the Court Registry on 25 March 2004, GSK requested that certain secret or confidential information be excluded from the communication to the interveners of its observations on the statements in intervention. That request was granted.

29 By letter of 16 April 2004, the Court requested GSK and the Commission to produce certain documents and to answer a written question, on the basis of Articles 49 and 64 of the Rules of Procedure. The parties complied with those measures of organisation of procedure within the prescribed period.

30 By document lodged at the Registry of the Court of First Instance on 7 May 2004, Spain Pharma requested permission, in accordance with Article 35(2) of the Rules of Procedure, to use the Spanish language in the oral procedure. After the parties had been heard, that request was granted.

31 By documents lodged at the Registry of the Court of First Instance on 27 May and 22 June 2004, GSK requested that certain secret or confidential information be excluded from the communication to the interveners of its and the Commission’s answers to the Court’s requests of 16 April 2004. That request was granted.

32 On 7 March 2006, the Court, in accordance with Article 14 of the Rules of Procedure and on a proposal from the Fourth Chamber, decided, after hearing the parties, to refer the case to the Fourth Chamber, Extended Composition.

33 On 15 March 2006, the Court of First Instance (Fourth Chamber), after hearing the report of the Judge-Rapporteur, opened the oral procedure.

34 By letters of 7 and 20 March 2006, the Court requested GSK, the Commission and the interveners to answer a number of written questions and to produce a document, pursuant to Articles 49 and 64 of the Rules of Procedure. The parties complied with those measures of organisation of procedure within the period prescribed for that purpose, with the exception of one question which GSK answered in a document lodged at the Court Registry on 6 June 2006. In the absence of any objections by the parties, who were invited to comment on that point at the hearing, that document was placed on the file.

35 By a document lodged at the Court Registry on 28 April 2006, GSK requested that certain secret or confidential information be excluded from the communication to the interveners of its answers to the Court’s requests of 7 and 20 March 2006. That request was granted.

36 By a document lodged at the Court Registry on 16 May 2000, Aseprofar requested leave to use Spanish during the oral procedure, in accordance with Article 35(2) of the Rules of Procedure. After hearing the parties, the Court granted that request.

37 The parties submitted oral argument and their answers to the questions put by the Court at the hearing on 7 June 2006.

Forms of order sought by the parties

38 GSK claims that the Court should:

– annul the Decision;

– order the Commission to pay the costs.

39 The Commission contends that the Court should:

– dismiss the application;

– order GSK to pay the costs.

40 Aseprofar submits that the Court should:

– dismiss the application;

– order GSK to pay the costs, including those incurred by Aseprofar.

41 BAI submits that the Court should:

– dismiss the application;

– order GSK to pay the costs, including those incurred by BAI.

42 EAEPC submits that the Court should:

– dismiss the application;

– order GSK to pay the costs, including those incurred by EAEPC.

43 Spain Pharma submits that the Court should:

– dismiss the application;

– order GSK to pay the costs, including those incurred by Spain Pharma.

Law

44 In support of the form of order which it seeks, GSK relies in substance on six pleas, which may be arranged according to whether they seek annulment in whole or, in the alternative, annulment in part of the Decision.

45 In support of its principal claim, whereby it seeks annulment of Article 1 of the Decision, which finds an infringement of Article 81(1) EC, GSK puts forward three pleas in law, alleging, respectively:

– failure to state sufficient reasons;

– infringement of Article 81(1) EC;

– misuse of powers, breach of the principle of subsidiarity and infringement of Article 43 EC.

46 In support of its alternative claim, whereby it seeks annulment of Article 2 of the Decision, which rejects its claim for an exemption under Article 81(3) EC, GSK relies on three pleas in law, alleging, respectively:

– failure to state sufficient reasons;

– infringement of Article 81(3) EC;

– breach of the principle of proportionality.

I – The pleas seeking annulment of Article 1 of the Decision

A – The plea alleging inadequate reasoning

1. Arguments of the parties

47 GSK claims, in substance, that the fact that the Decision makes no reference to the judgment of the Court of First Instance of 26 October 2000 in Case T-41/96 Bayer v Commission [2000] ECR II-3383 means that it is vitiated by inadequate reasoning.

48 The Commission, supported by the interveners, contends that this plea is unfounded.

2. Findings of the Court

49 Article 253 EC states, in particular, that decisions adopted by the Commission are to state the reasons on which they are based.

50 In order to state the reasons to the requisite legal standard, a decision of the Commission must disclose clearly the reasoning followed by that institution in such a way as to enable the persons concerned to understand the basis for it and the Court to ascertain whether it is well founded. On the other hand, such a decision is not required to go into all the relevant facts and points of law, since the question of compliance with Article 253 EC is assessed by reference to both the wording of the measure and its legal and factual context (Case 2/56 Geitling v High Authority [1957] ECR 2, at 16, and Case T-171/02 Regione Autonoma della Sardegna v Commission [2005] ECR II-2123, paragraph 73).

51 The need to state the reasons for its decisions therefore does not place the Commission under any general obligation to refer to a specific judicial decision in the decisions which it adopts.

52 In the present case, GSK merely asserts that the Decision is vitiated by inadequate reasoning in that it does not refer to a judicial decision.

53 Accordingly, the plea alleging that the reasoning on which the Decision is based is inadequate in that it does not refer to the judgment in Bayer v Commission, paragraph 47 above, must be rejected.

54 In so far as GSK intends in reality, by this plea, to challenge the content of the Decision, it must be observed that the examination of the existence and the scope of the reasons on which a Commission decision is based forms part of the review of essential procedural requirements and of the formal legality of that decision. It must therefore be distinguished from the examination of the merits of the grounds of the decision, which forms part of the review of its substantive legality (Case C‑367/95 P Commission v Sytraval and Brink’s France [1998] ECR I-1719, paragraph 67, and Case T-93/02 Confédération nationale du Crédit Mutuel v Commission [2005] ECR II‑143, paragraph 67). To that extent, the plea is indissociable from the plea alleging infringement of Article 81(1) EC, which will be examined below.

B – The plea alleging infringement of Article 81(1) EC

1. Preliminary considerations

55 The application of Article 81(1) EC depends on a series of distinct conditions being satisfied (Case 56/65 Société technique minière [1966] ECR 235, at pp. 248 and 249, and Bayer v Commission, paragraph 47 above, paragraph 174), which must be proved by the person relying on that provision (Joined Cases C‑204/00 P, C‑205/00 P, C‑211/00 P, C‑213/00 P, C‑217/00 P and C‑219/00 P Aalborg Portland and Others v Commission [2004] ECR I‑123, paragraph 78). It is thus necessary to establish, first, that there is an agreement between undertakings, a concerted practice or a decision of an association of undertakings; second, that that agreement, concerted practice or decision has as its object or effect the restriction of competition to an appreciable extent; and, third, that trade between Member States must be capable of being affected, the purpose of that last requirement being solely to determine the application of Community law (Société technique minière, p. 249; Joined Cases C‑89/85, C‑104/85, C‑114/85, C‑116/85, C‑117/85 and C‑125/85 to C‑129/85 Ahlström Osakeyhtiö and Others v Commission [1993] ECR I‑1307, paragraph 176; and Bayer v Commission, paragraph 47 above, paragraph 174).

56 In the present case, since GSK maintains that the Commission applied Article 81(1) to conduct not constituting an agreement within the meaning of that provision, that is to say, a restrictive agreement, it must be borne in mind that the question of the existence of an agreement between undertakings and the question of the restrictive nature of such agreement are distinct and must be examined separately (see, to that effect, Société technique minière, paragraph 55 above, pp. 248 and 249).

57 In that regard, the Court hearing an application for annulment of a decision applying Article 81(1) EC must undertake a comprehensive review of the examination carried out by the Commission (Case 42/84 Remia and Others v Commission [1985] ECR 2545, paragraph 34, and Bayer v Commission, paragraph 47 above, paragraph 62), unless that examination entails a complex economic assessment, in which case review by the Court is confined to ascertaining that there has been no misuse of powers, that the rules on procedure and on the statement of reasons have been complied with, that the facts have been accurately stated and that there has been no manifest error of assessment of those facts (Remia and Others v Commission, paragraph 34, and Aalborg Portland and Others v Commission, paragraph 55 above, paragraph 279).

58 Furthermore, that review is carried out solely by reference to the elements of fact and of law existing on the date of adoption of the contested decision (Joined Cases 15/76 and 16/76 France v Commission [1979] ECR 321, paragraph 7, and Case T-395/94 Atlantic Container Line and Others v Commission [2002] ECR II-875, paragraph 252), without prejudice to the possibility afforded to the parties, in the exercise of their rights of defence, of supplementing them by evidence established after that date, but for the specific purpose of contesting or defending that decision (Case T-87/05 EDP v Commission [2005] ECR II-0000, paragraph 158; see also, to that effect, Case 75/84 Metro v Commission [1986] ECR 3021 (‘Metro II’), paragraphs 75 and 78, and Atlantic Container Lines and Others v Commission, cited above, paragraph 254).

59 In the present case, it follows that the elements of fact that did not exist on the date of adoption of the Decision, in particular the figures relating to the period 2001/2005, and the evidence which did not exist at that date and which was not established for the specific purpose of contesting or defending the Decision in so far as it concludes that there was an infringement, in particular the studies generally covering the effects of parallel trade in medicines in the Community, other than those produced during the administrative procedure, must be excluded from the discussion at the outset.

2. The existence of an agreement between undertakings

a) Content of the Decision

60 The Commission found, at recital 109 to the Decision, that the General Sales Conditions constituted an agreement between GW and all the wholesalers who had subscribed to them.

b) Arguments of the parties

61 GSK claims that the General Sales Conditions do not constitute an agreement.

62 It maintains that GW and the Spanish wholesalers who signed the General Sales Conditions did not manifest an independent will, in so far as the wholesale price of the medicines reimbursed by the Spanish sickness insurance scheme is imposed on them by the applicable Spanish regulations.

63 Furthermore, they did not manifest a concurrent will to restrict competition, but merely a concurrent will to sell and purchase medicines according to the terms set out in the General Sales Conditions.

64 The Commission, supported by the interveners, disputes the merits of those arguments.

c) Findings of the Court

65 GSK’s arguments lead the Court to examine, in the first place, whether GW and the Spanish wholesalers did manifest an independent will by reference to the Spanish regulations on the wholesale price of medicines reimbursed by the Spanish sickness insurance scheme and therefore whether the conduct with which the Commission was faced was indeed conduct on the part of undertakings and not conduct on the part of the State. Its arguments also lead the Court to examine, in the second place, should it prove necessary to do so, whether GW and those wholesalers manifested a concurrent will, and therefore whether the Commission was indeed faced with bilateral conduct and not with unilateral conduct.

Independence of wills

66 Article 81(1) EC applies only to anti-competitive conduct engaged in by undertakings on their own initiative (Case 267/86 Van Eycke [1988] ECR 4769, paragraph 16; Joined Cases C‑359/95 P and C‑379/95 P Commission and France v Ladbroke Racing [1997] ECR I‑6265, paragraph 33; and Case C-198/01 CIF [2003] ECR I-8055, paragraph 45).

67 Where, in order to decide whether that provision is applicable, it is necessary first to evaluate the possible impact of national regulations, it must be determined whether those regulations leave any scope for competition that might be prevented, restricted or distorted by autonomous conduct on the part of undertakings (Commission and France v Ladbroke Racing, paragraph 66 above, paragraphs 32 and 35, and CIF, paragraph 66 above, paragraph 66).

68 Where it is clear, following that evaluation, that the regulations in question require that undertakings engage in anti-competitive conduct, or eliminate any possibility of competitive activity on their part, Article 81(1) EC does not apply (Commission and France v Ladbroke Racing, paragraph 66 above, paragraph 33, and CIF, paragraph 66 above, paragraph 67).

69 Where, on the other hand, it is clear that those regulations do leave scope for competition that might be prevented, restricted or distorted by autonomous conduct on the part of undertakings, Article 81(1) EC does apply (Commission and France v Ladbroke Racing, paragraph 66 above, paragraph 34, and CIF, paragraph 66 above, paragraph 56).

70 The possibility of excluding particular anti-competitive conduct from the scope of that provision on the ground that it is required by national regulations has been applied restrictively by the Community Courts (CIF, paragraph 66 above, paragraph 67, and Case T-513/93 Consiglio Nazionale degli Spedizionieri Doganali v Commission [2000] ECR II‑1807, paragraph 60).

71 It is therefore necessary to determine whether, as GSK maintains, the Spanish regulations require GW to apply, in the contracts which it concludes with Spanish wholesalers, prices which differ according to whether or not the medicines which it sells to them will be reimbursed by the Spanish sickness insurance scheme.

72 It is quite clear that the Spanish regulations, which result from the provisions of Title VIII of Law 25/1990 in conjunction with those of Decree 271/1990, do not in any way determine the wholesale prices of medicines which are not reimbursable by the Spanish sickness insurance scheme. GSK has acknowledged, moreover, both in its written submissions and at the hearing, that that assertion, which followed by implication but necessarily from the fact that Law 25/1990, in the version applicable when the General Sales Conditions entered into force, was silent as regards those products, was expressly confirmed by the subsequent amendments to that law, as stated at recitals 37 and 139 to the Decision.

73 Thus, even on the assumption that GSK’s argument, according to which the wholesale prices of medicines which are reimbursable by the scheme are fixed wholly independently by the Spanish authorities and are binding on GW and the Spanish wholesalers, is correct, contrary to the interveners’ contention, the fact remains that the conduct consisting in establishing, by contract, a system of differentiated prices prohibiting the Spanish wholesalers dealing with GW from purchasing at that price (the Clause 4A price) medicines which they will resell in other Member States, and obliging them to purchase those products at a higher price (the Clause 4B price), is not imposed by the Spanish regulations. When questioned on that point at the hearing, moreover, GSK was forced to agree.

74 Accordingly, it cannot be accepted that the national regulations in question required GW to apply, in the contracts which it concluded with Spanish wholesalers, prices which differ according to whether or not the medicines which it sells to them will be reimbursed by the Spanish sickness insurance scheme.

Concurrence of wills

75 Article 81(1) EC applies only to bilateral or multilateral conduct on the part of undertakings (Case C-49/92 P Commission v Anic Partecipazioni [1999] ECR I‑4125, paragraphs 79 and 112) and such conduct may take the form of agreements, concerted practices or decisions of associations.

76 In order for there to be an agreement, it is sufficient that at least two undertakings have expressed their joint intention to conduct themselves on the market in a specific way (Case 41/69 ACF Chemiefarma v Commission [1970] ECR 661, paragraph 112; Case C-277/87 Sandoz Prodotti Farmaceutici v Commission [1990] ECR I‑45, summary publication, paragraph 13; and Bayer v Commission, paragraph 47 above, paragraphs 67 and 173).

77 While it is therefore essential that the decisions in which the Commission applies Article 81(1) EC show the existence of a joint intention to act on the market in a specific way, those decisions, contrary to GSK’s contention, are not required to establish the existence of a joint intention to pursue an anti-competitive aim.

78 In the present case, the Decision concludes that there is a joint intention expressed by GW and the Spanish wholesalers who subscribed to the General Sales Conditions to conduct themselves on the market in the manner specified in Clause 4 of those conditions, that is to say, to sell and purchase one or other of the 82 medicines to which those conditions apply at the Clause 4A price or the Clause 4B price, depending on whether the conditions laid down in point A of that clause are or are not satisfied.

79 Clearly, that conclusion is confirmed by the case-file, which shows, first of all, that GW adopted General Sales Conditions providing for a system of differentiated prices. Then, GW sent those General Sales Conditions to 89 wholesalers with whom it had commercial relations in Spain. On that occasion, it requested them, emphasising the importance which it ascribed to that request, to return a signed copy ‘[a]s proof of [their] acceptance’, within a mandatory period. Those factual elements reveal the intention expressed by GW to seek the Spanish wholesalers’ agreement to its General Sales Conditions and, therefore, to make them an offer concerning those conditions. Last, 75 of the 89 wholesalers to whom that offer was made did as requested by GW, signing the General Sales Conditions and returning them to GW within the prescribed period. Those factual elements reveal the intention expressed by those wholesalers to accept GW’s offer and thus to form an agreement with GW, as GSK acknowledged at the hearing.

80 None of the arguments put forward by GSK appears to be capable of upsetting that conclusion.

81 In particular, GSK cannot find support in the fact that the Commission did not adduce evidence of the existence of a formal prohibition on exports imposed by GW on the Spanish wholesalers or of conduct revealing the tacit acceptance of that prohibition by those wholesalers.

82 It is for the Commission to prove the infringements which it finds by adducing, in the decisions in which it applies the competition rules, precise and coherent evidence demonstrating convincingly the existence of the facts constituting those infringements (Joined Cases 29/83 and 30/83 CRAM and Rheinzink v Commission [1984] ECR 1679, paragraph 20, and Joined Cases C‑2/01 P and C‑3/01 P BAI and Commission v Bayer [2004] ECR I‑23, paragraph 62).

83 That evidence may consist of direct evidence, taking the form, for example, of a written document (Joined Cases T‑25/95, T‑26/95, T‑30/95 to T‑32/95, T‑34/95 to T‑39/95, T‑42/95 to T‑46/95, T‑48/95, T‑50/95 to T‑65/95, T‑68/95 to T‑71/95, T‑87/95, T‑88/95, T‑103/95 and T‑104/95 Cimenteries CBR and Others v Commission [2000] ECR II‑491, paragraph 862, and, on appeal, Aalborg Portland and Others v Commission, paragraph 55 above, paragraph 237), or, failing that, indirect evidence, for example in the form of conduct (Bayer v Commission, paragraph 47 above, paragraph 73, and, on appeal, BAI and Commission v Bayer, paragraph 82 above, paragraph 100).

84 In the present case, it was observed above that the Commission had relied on an exchange of documents showing, beyond all possible doubt, that GW had proposed to the Spanish wholesalers that they conduct themselves on the market in the manner specified in the General Sales Conditions and that most of them had agreed to that proposal. The Commission therefore saw no point, as it again emphasised at the hearing, in seeking other evidence, such as evidence of the conduct of GW and the conduct of those wholesalers.

85 Likewise, GSK cannot validly maintain, in essence, that the wholesalers approached by GW would ultimately have disagreed with GW.

86 Where, as in this case, the Commission has adduced evidence of the existence of an agreement, it is for an undertaking which has taken part in that agreement to adduce evidence that it distanced itself from that agreement, evidence which must demonstrate a clear intention, brought to the notice of the other participating undertakings, to withdraw from that agreement (see, to that effect, BAI and Commission v Bayer, paragraph 82 above, paragraph 63; Aalborg Portland and Others v Commission, paragraph 55 above, paragraphs 81 to 84; and Case T‑61/99 Adriatica di Navigazione v Commission [2003] ECR II‑5349, paragraphs 135 to 138).

87 In the present case, while it is true that some of the Spanish wholesalers who had subscribed to the General Sales Conditions expressed doubts as to the legality of those conditions, as stated at recital 12 to the Decision, there is no indication in the case-file that they distanced themselves from the agreement within the meaning of the case-law. Likewise, it is true that a number of them exported medicines purchased from GW at the Clause 4A price. However, it is also apparent from the case-file that they eventually agreed, at GSK’s request, to pay the invoices corresponding to the difference between that price and the Clause 4B price. In any event, those facts concern only a few wholesalers and it cannot be concluded that they all distanced themselves from the agreement which they had previously concluded with GW.

88 It is also true that three trade associations, Aseprofar, the Asociación de empresarios de cooperativas farmacéuticas and Fedifar, lodged complaints with the Commission and with the Servicio de defensa de competencia (service for the protection of competition), as stated at recital 3 to the Decision, and that the members of those associations, direct members in the case of the first two associations and indirect members in the case of the third, included some of the wholesalers who signed the General Sales Conditions. None the less, the mere fact that a number of trade associations whose members included, among others, some of the signatories of the General Sales Conditions, submitted such complaints cannot suffice to prove that all the wholesalers did not really intend, or no longer intended as from the date on which those complaints were lodged, to collude with GW.

89 Accordingly, it cannot be accepted that GW and the wholesalers who subscribed to the General Sales Conditions did not manifest a joint intention.

90 It follows from the foregoing that it is not apparent, on the basis of GSK’s arguments, that the Commission was wrong to conclude that there was an agreement.

3. The existence of a restriction of competition

a) Content of the Decision

91 The Commission found at recitals 116 to 143 and 189 to the Decision that Clause 4 of the General Sales Conditions had both the object and the effect of restricting competition.

92 The Commission began by examining the object of that clause and observed at the outset, at recital 116 to the Decision, that the clause sought to limit parallel trade between Spain and other Member States in the medicines sold by GW. The Commission also found, at recital 117 to the Decision, that a comparison between the Clause 4A price, applicable to medicines intended to be resold and reimbursed in Spain, and the Clause 4B price, applicable to medicines intended to be resold or reimbursed in other Member States, revealed that its application would have the effect, depending on the case, of excluding or impeding parallel trade.

93 The Commission then considered, at recitals 117 to 119 to the Decision, that Clause 4 of the General Sales Conditions produced effects tantamount to those of an export ban in a considerable number of cases while impeding parallel trade in other cases in very much the same way as a system of dual pricing. The Commission also considered, at recitals 120 to 123 to the Decision, that the existence in Spain of national regulations relating to the procedures for fixing the wholesale prices of medicines reimbursed by the national Spanish sickness insurance scheme was not capable of altering that analysis.

94 Last, the Commission observed, at recitals 124 and 125 to the Decision, that the Court of Justice and the Court of First Instance had always qualified agreements containing export bans, dual-pricing systems or other limitations of parallel trade as restricting competition ‘by object’, so that Clause 4 of the General Sales Conditions must be regarded as having the object of restricting competition.

95 The Commission proceeded to examine the effect of Clause 4 of the General Sales Conditions and considered at the outset, at recital 126 to the Decision, that the fact of establishing a higher wholesale price where the medicines were to be exported, to which the transaction costs connected with that operation (shipping, repackaging, etc.) had to be added, tended to limit the parallel trade that would be expected in the absence of that price.

96 The Commission then considered, at recitals 127 to 135 to the Decision, that Clause 4 did not merely neutralise a distortion of competition attributable to the Kingdom of Spain and was not justified by the existence of a specific regulatory context.

97 The Commission also found, at recitals 136 to 140 to the Decision, that the differentiated prices specified in Clause 4 of the General Sales Conditions had the effect, first, of restricting the freedom of action of the wholesalers operating in the Member State of origin of the parallel trade and, second, of restricting competition between those wholesalers and the distributors operating in the Member State of destination of that parallel trade.

98 The Commission finally referred, at recitals 141 to 143 to the Decision, to the extent to which currency fluctuations had contributed to parallel trade in medicines between 1996 and 1998, in particular between Spain and the United Kingdom.

b) Arguments of the parties

99 GSK claims, in substance, that Clause 4 of the General Sales Conditions does not constitute a restriction of competition.

100 In the first place, it maintains that competition is distorted at the outset in the prescription medicines sector and that Clause 4 of the General Sales Conditions seeks only to neutralise that situation, which is attributable to the existence of national regulations governing the price of those medicines and also to the absence of Community rules designed to harmonise the national regulations.

101 In the second place, GSK submits that Clause 4 of the General Sales Conditions does not have the object of restricting competition and that the Commission has not demonstrated that it has the effect of doing so, in the light of the specific features of the relevant market and, more generally, of the legal and economic context in which Clause 4 applies.

102 The Commission, supported by the interveners, disputes the merits of those arguments. It contends that it was correct to find that Clause 4 of the General Sales Conditions, which was capable of excluding or impeding parallel trade, had the object and the effect of restricting competition.

c) Findings of the Court

103 GSK does not dispute the material accuracy of the facts on which the Commission relied for the purpose of applying Article 81(1) EC, but contests the Commission’s assessment of those facts. All of the applicant’s criticisms relate, in substance, to the consequences to be drawn, when analysing the existence of a restriction of competition, from the legal and economic context peculiar to the medicines sector. More particularly, its criticisms concern, in the first place, the competitive situation existing before Clause 4 of the General Sales Conditions was adopted and, in the second place, the restriction of competition attributed to that clause.

The competitive situation existing before Clause 4 of the General Sales Conditions was adopted

104 As GSK rightly asserts, the sector of medicines reimbursed by the national sickness insurance scheme continues to be characterised, in a number of Member States, by the existence of regulations which go beyond the mere regulation of an economic activity, in particular in matters of prices (Case 181/82 Roussel and Others [1983] ECR 3849, paragraph 8). The coexistence of those different national regulations may distort competition (Joined Cases C‑267/95 and C‑268/95 Merck and Beecham [1996] ECR I‑6285, paragraph 47). It tends, moreover, to favour a certain partitioning of the national markets on that point (see, by analogy, Joined Cases 40/73 to 48/73, 50/73, 54/73 to 56/73, 111/73, 113/73 and 114/73 Suiker Unie and Others v Commission [1975] ECR 1663, paragraph 24).

105 However, in accordance with the case-law cited at paragraphs 67 to 70 above, it is only where the sector in which the agreement is applied is subject to regulations which preclude the possibility of competition that might be prevented, distorted or restricted by that agreement that Article 81(1) EC is inapplicable.

106 In the present case, however, there is competition between producers of medicines, which is mainly concerned with parameters other than price, in particular innovation (Roussel, paragraph 104 above, paragraph 9), as GSK maintained in its written submissions and at the hearing.

107 Furthermore, there may be competition between a producer and his distributors, or between parallel traders and national distributors, which specifically takes advantage of the significant differences in price to which the national regulations in question contribute and which, where the medicines are protected by a patent which confers a temporary monopoly on its holder, is, until the expiry of that patent, the only form of price competition envisageable in respect of them, as GSK also maintained in its written submissions.

108 Accordingly, as the regulatory situation described by GSK is capable of restricting competition, but not of excluding it, it does not have the consequence of rendering Article 81(1) EC inapplicable.

The restriction of competition attributed to Clause 4 of the General Sales Conditions

109 As GSK claims that the Commission did not take proper account of the relevant legal and economic context when it examined the existence of a restriction of competition, it should be noted at the outset that the competition referred to in Article 3(1)(g) EC and Article 81 EC is taken to mean effective competition, that is to say, the degree of competition necessary to ensure the attainment of the objectives of the Treaty. Its intensity may vary to an extent dictated by the nature of the product concerned and the structure of the relevant market. Furthermore, its parameters may assume unequal importance, as price competition does not constitute the only effective form of competition or that to which absolute priority must in all circumstances be given (Case 26/76 Metro v Commission [1977] ECR 1875 (‘Metro I’), paragraphs 20 and 21, and CIF, paragraph 66 above, paragraph 68).

110 Consequently, the characterisation of a restriction of competition within the meaning of Article 81(1) EC must take account of the actual framework and, therefore, of the legal and economic context in which the agreement to which that restriction is imputed is deployed. Such an obligation is imposed for the purpose of ascertaining both the object and the effect of the agreement (Société technique minière, paragraph 55 above, pp. 249 and 250; Joined Cases 56/64 and 58/64 Consten and Grundig v Commission [1966] ECR 299, at p. 343; and Case C‑399/93 Oude Luttikhuis and Others [1995] ECR I‑4515, paragraph 20).

111 Thus, when examination of the clauses of an agreement, carried out in their legal and economic context, reveals in itself the existence of an alteration of competition, it may be presumed that that agreement has as its object the prevention, restriction or distortion of competition (see Société technique minière, paragraph 55 above, pp. 249, 251 and 252, and Consten and Grundig v Commission, paragraph 110 above, p. 343), so that there is no need to examine its effect (Consten and Grundig v Commission, paragraph 110 above, p. 342, and Commission v Anic Participazioni, paragraph 75 above, paragraph 99).

112 Where that is not so, on the other hand, it is necessary to examine the effect of the agreement and to prove to the requisite legal standard that it actually or potentially prevents, restricts or distorts competition (Société technique minière, paragraph 55 above, pp. 249, 251 and 252, and Case C-7/95 P John Deere v Commission [1998] ECR I‑3111, paragraphs 75 and 77).

113 In the present case, the Court will examine, in turn, GSK’s arguments concerning the object and the effect of Clause 4 of the General Sales Conditions.

– The existence of an anticompetitive object

114 GSK does not dispute that Clause 4 of the General Sales Conditions was inserted with the intention of limiting the parallel trade between Spain and other Member States, in particular the United Kingdom, in 82 medicines sold by GW.

115 It follows from the case-law that agreements which ultimately seek to prohibit parallel trade must in principle be regarded as having as their object the prevention of competition (Consten and Grundig v Commission, paragraph 110 above, pp. 342 and 343; Case 19/77 Miller International v Commission [1978] ECR 131, paragraphs 7 and 18; Joined Cases 32/78, 36/78 and 82/78 BMW Belgium v Commission [1979] ECR 2435, paragraphs 20 to 28 and 31; and Sandoz Prodotti Farmaceutici v Commission, paragraph 76 above, paragraph 16).

116 It also follows from the case-law that agreements that clearly intend to treat parallel trade unfavourably must in principle be regarded as having as their object the restriction of competition (Joined Cases 96/82 to 102/82, 104/82, 105/82, 108/82 and 110/82 IAZ and Others v Commission [1983] ECR 3369, paragraphs 23 to 25; and Case C‑551/03 P General Motors v Commission [2006] ECR I-0000, paragraphs 67 and 68).

117 However, GSK is correct to maintain that, having regard to the legal and economic context, the Commission could not rely on the mere fact that Clause 4 of the General Sales Conditions established a system of differentiated price intended to limit parallel trade as the basis for its conclusion that that provision had as its object the restriction of competition.

118 In effect, the objective assigned to Article 81(1) EC, which constitutes a fundamental provision indispensable for the achievement of the missions entrusted to the Community, in particular for the functioning of the internal market (Case C‑126/97 Eco Swiss [1999] ECR I‑3055, paragraph 36, and Case C‑453/99 Courage v Crehan [2001] ECR I‑6297, paragraph 20), is to prevent undertakings, by restricting competition between themselves or with third parties, from reducing the welfare of the final consumer of the products in question (Joined Cases T‑213/01 and T‑214/01 Österreichische Postsparkasse and Bank für Arbeit und Wirtschaft v Commission [2006] ECR II-0000, paragraph 115; see also, to that effect, Consten and Grundig v Commission, paragraph 110 above, p. 493, and Case 28/77 Tepea v Commission [1978] ECR 1391, paragraph 56). At the hearing, in fact, the Commission emphasised on a number of occasions that it was from that perspective that it had carried out its examination in the present case, initially concluding that the General Sales Conditions clearly restricted the welfare of consumers, then considering whether that restriction would be offset by increased efficiency which would itself benefit consumers.

119 Consequently, the application of Article 81(1) EC to the present case cannot depend solely on the fact that the agreement in question is intended to limit parallel trade in medicines or to partition the common market, which leads to the conclusion that it affects trade between Member States, but also requires an analysis designed to determine whether it has as its object or effect the prevention, restriction or distortion of competition on the relevant market, to the detriment of the final consumer. As may be seen from the case-law cited at paragraphs 111 and 112 above, that analysis, which may be abridged when the clauses of the agreement reveal in themselves the existence of an alteration of competition, as the Commission observed at the hearing, must, on the other hand, be supplemented, depending on the requirements of the case, where that is not so (Société technique minière, paragraph 55 above, pp. 248 to 251, and Consten and Grundig v Commission, paragraph 110 above, pp. 342 and 343).

120 In particular, in Consten and Grundig v Commission, paragraph 110 above, which gave rise to the case-law cited at paragraphs 115 and 116 above, the Court of Justice, contrary to the Commission’s contention in its written submissions, did not hold that an agreement intended to limit parallel trade must be considered by its nature, that is to say, independently of any competitive analysis, to have as its object the restriction of competition. On the contrary, the Court of Justice merely held, first, that an agreement between a producer and a distributor which might tend to restore the national divisions in trade between Member States might be of such a kind as to frustrate the most fundamental objectives of the Community (p. 340), a consideration which led it to reject a plea alleging that Article 81(1) EC was not applicable to vertical agreements (pp. 339 and 340). The Court of Justice then carried out a competitive analysis, abridged but real, during the course of which it held, in particular, that the agreement in question sought to eliminate any possibility of competition at the wholesale level in order to charge prices which were sheltered from all effective competition, considerations which led it to reject a plea alleging that there was no restriction of competition (pp. 342 and 343).

121 While it has been accepted since then that parallel trade must be given a certain protection, it is therefore not as such but, as the Court of Justice held, in so far as it favours the development of trade, on the one hand, and the strengthening of competition, on the other hand (Case C‑373/90 X [1992] ECR I‑131, paragraph 12), that is to say, in this second respect, in so far as it gives final consumers the advantages of effective competition in terms of supply or price (Tepea v Commission, paragraph 118 above, paragraphs 43 and 56). Consequently, 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.

122 However, if account is taken of the legal and economic context in which GSK’s General Sales Conditions are applied, it cannot be presumed that those conditions deprive the final consumers of medicines of such advantages. In effect, the wholesalers, whose function, as the Court of Justice has held, is to ensure that the retail trade receives supplies with the benefit of competition between producers (Metro I, paragraph 109 above, paragraph 40), are economic agents operating at an intermediate stage of the value chain and may keep the advantage in terms of price which parallel trade may entail, in which case that advantage will not be passed on to the final consumers.

123 That context is described in Section I of the Decision, which deals with the facts, and more particularly in Subsections F, entitled ‘Parallel trade in pharmaceutical products with the Community – impact of national regulatory frameworks and currency fluctuations’ and G, entitled ‘Parallel trade in GW products within the Community – impact of the GW sales conditions’.

124 It is apparent on reading that description that the main characteristics of the legal and economic context are as follows, as GSK agreed both in its written submissions and at the hearing.

125 First, according to recitals 31, 36 and 50 to the Decision, the price of medicines reimbursed by the national health insurance schemes is not determined as a result of a competitive process throughout the Community but is directly fixed following an administrative procedure in most Member States and indirectly controlled by the other Member States.

126 Second, according to recital 31 to the Decision, at this stage the harmonisation of the applicable national provisions is limited. In fact, Directive 89/105 endeavours to provide that where the pricing of those medicines is provided for in national law it must be preceded by a transparent procedure and be based on objective and verifiable criteria. For the remainder, according to recital 50 to the Decision, national law may provide that various criteria are to be taken into account, depending on the policy pursued by the Member State concerned as regards public health and the financing of the national sickness insurance scheme, as Directive 89/105 also explains. That is the case, in particular, of Spanish law, which, according to recitals 37 and 38 to the Decision, provides for the direct fixing of a maximum wholesale price and the indirect fixing of a maximum retail price. United Kingdom law does not provide for the fixing of prices but, according to recitals 44 to 46 to the Decision, for control of pharmaceutical companies’ profits.

127 Third, according to recitals 29 to 31 and 34 to the Decision, the differences between the applicable national provisions are a structural cause of the existence of significant price differentials between Member States.

128 Fourth, according to recitals 30, 32 and 53 to the Decision, fluctuations in exchange rates are a cyclical cause of those price differentials. That phenomenon, which potentially affected all Member States of the Community on 6 March 1998, the date on which GSK notified the General Sales Conditions to the Commission, still affected the United Kingdom, Denmark and Sweden on 8 May 2001, the date on which the Commission adopted the Decision, as stated at recital 53 to the Decision.

129 Fifth, those price differentials are themselves the cause of parallel trade in medicines in the Community, according to recital 29 to the Decision. As indicated at recitals 33 and 34 to the Decision, the main Member States of destination of that parallel trade are Denmark, the Netherlands and the United Kingdom.

130 Sixth, certain Member States have adopted provisions which, independently of the question whether they are intended to encourage parallel trade – which the Commission explains at recitals 31, 33, 34, 36 and 52 to the Decision, but which GSK disputes –, may have such an effect. That is notably the case in the United Kingdom, where, as stated at recital 49 to the Decision, the National Health Service automatically pays pharmacists a sum equal to the manufacturer’s list price on the United Kingdom market, minus a standard discount of 4 to 5%, which is supposed to correspond to the savings made by pharmacists where they obtain their supplies elsewhere, at a lower price.

131 Seventh, as stated at recitals 31 and 51 to the Decision, the patient generally bears only a limited part, although this varies from Member State to Member State, of the price of the medicines reimbursed by the national sickness insurance scheme which he consumes. The national sickness insurance scheme bears the essential part. That is notably the case in the United Kingdom, where, according to recital 48 to the Decision, the patient pays GBP 6 per item, unless he belongs to a category exempt from such payment.

132 The Commission refers to certain aspects of that description when it examines the object of Clause 4 of the General Sales Conditions. It thus makes reference to that description, at recital 117 to the Decision, in order to establish the impact of that requirement on parallel trade, which is not disputed. It also refers to that description, at recital 121 to the Decision, in order to explain that, contrary to GSK’s contention, the pharmaceutical companies have a power of negotiation in the Spanish procedure for setting the wholesale price of medicines.

133 At no point, however, does the Commission examine the specific and essential characteristic of the sector, which relates to the fact that the prices of the products in question, which are subject to control by the Member States, which fix them directly or indirectly at what they deem to be the appropriate level, are determined at structurally different levels in the Community and, unlike the prices of other consumer goods to which the Commission referred in its written submissions and at the hearing, such as sports items or motor cycles, are in any event to a significant extent shielded from the free play of supply and demand.

134 That circumstance means that it cannot be presumed that parallel trade has an impact on the prices charged to the final consumers of medicines reimbursed by the national sickness insurance scheme and thus confers on them an appreciable advantage analogous to that which it would confer if those prices were determined by the play of supply and demand.

135 Incidentally, the Commission itself agrees with what is at first sight the ambiguous impact of parallel trade in medicines on the welfare of final consumers, since it states in Communication COM(1998) 588 final of 25 November 1999 on the single market in pharmaceuticals, which is cited at recital 161 to the Decision and referred to by the parties in their written submissions and in their answers to the written questions put by the Court, that unless parallel trade can operate dynamically on prices, it creates inefficiencies because most, although not all, of the financial benefit accrues to the parallel trader rather than to the health care system or the patient (p. 6).

136 Accordingly, it cannot be considered that examination of Clause 4 of the General Sales Conditions, which according to GSK is designed to ensure that the wholesale price set by the Kingdom of Spain is actually charged only for the medicines to which it was intended by law to apply, reveals in itself that competition is prevented, restricted or distorted.

137 None of the arguments of the Commission or the interveners appears to be capable of calling that conclusion in question.

138 In particular, the Commission is not entitled, as it did at recitals 118 and 119 to the Decision and in its written submissions, merely to draw parallels with the agreements which it has had occasion to examine in its previous practice in taking decisions and take the view that Clause 4 of the General Sales Conditions resembles those agreements or can be treated in the same way as them. Such an approach ultimately ignores the elements of legal and economic context described above, which are not present in the decisions adopted pursuant to Article 81(1) EC to which the Commission referred.

139 Furthermore, the Commission is not correct to claim that the existence of the Spanish regulations on the setting of the wholesale price of medicines is ultimately not decisive, owing to the power of negotiation which those regulations confer on the pharmaceutical companies, as it did in recitals 120 to 123 to the Decision and in its written submissions. Nor is it correct to submit that the coexistence of different State rules on that subject is also not decisive, in the light of the case-law (BMW Belgium v Commission, paragraph 115 above, paragraph 5, and Case T-175/95 BASF v Commission [1999] ECR II‑1581, paragraphs 121 to 123 and 136), as it also did in its written submissions.

140 In effect, even on the assumption that the Spanish regulations confer a power of negotiation on the pharmaceutical companies, as the Commission and the interveners again maintained at the hearing, the fact remains that the existence of those regulations, and their coexistence with the regulations of other Member States, has a significant impact on an essential parameter of competition (see, by analogy, Suiker Unie and Others v Commission, paragraph 104 above, paragraphs 17 and 71), a contextual element which cannot be overlooked in the competitive analysis.

141 No parallel can therefore be drawn between the cases to which the Commission refers, which, as the Commission itself observed at the hearing, concerned price-freezing measures relating to new vehicles (BMW Belgium v Commission, paragraph 115 above, paragraph 5) or vehicle refinishing paints (BASF v Commission, paragraph 139 above, paragraph 123) in force in a single Member State of the Community, and the present case, which is characterised by the fact that the price of the products in issue, which is finally set by the Member States, falls structurally outside the play of supply and demand and is established at structurally different levels throughout the Community, notwithstanding a residual competition which may be revealed by parallel trade.

142 Last, it cannot be inferred from paragraph 75 of General Motors v Commission, paragraph 116 above, to which the Commission referred in its answer to the written questions put by the Court and at the hearing, that the situation of fact recalled in the preceding paragraph should be completely overlooked.

143 In fact, it follows from paragraph 75 of that judgment that the absence of fiscal harmonisation does not prevent the conclusion that an agreement intended to limit parallel trade in motor vehicles has the object of restricting competition, although, as the Commission observed at the hearing, the absence of such harmonisation has an effect on competition in that sector. On the other hand, it does not in any way follow that the State rules at issue in the present case are indifferent to the competitive analysis, when they have as their object to shield the pricing of medicines reimbursed by the national sickness insurance schemes from competition.

144 As regards the interveners, for their part, it does not avail them to rely as they did at the hearing on the fact that, in reality, the national regulations at issue are not intended to shield the pricing of those medicines from the play of supply and demand, but to compensate for the absence of competition caused by the weight of the pharmaceutical companies on the market and to ensure fair prices.

145 When it is dealing with an application for annulment of a Commission decision applying the competition rules, the Community judicature carries out, in accordance with Article 230 EC, a review of the lawfulness of that decision. The interveners’ arguments rely on facts which are neither mentioned nor, a fortiori, examined by the Commission in the Decision. It is not for the Court to substitute itself for the Commission and examine them for the first time.

146 Furthermore, those arguments must be contrasted with GSK’s arguments that the national rules on patents are intended to allow the pharmaceutical companies to recover their research and development (‘R&D’) costs by granting them a temporary monopoly, following which manufacturers of generic medicines restore competition on price, so that parallel traders, which operate on the market during the lifetime of the patents, are the vectors of artificial competition and not of effective competition within the meaning of Article 3(1)(g) EC and Article 81 EC.

147 Consequently, the principal conclusion reached by the Commission, namely that Clause 4 of the General Sales Conditions must be considered to be prohibited by Article 81(1) EC in so far it has as its object the restriction of parallel trade, cannot be upheld. As the prices of the medicines concerned are to a large extent shielded from the free play of supply and demand owing to the applicable regulations and are set or controlled by the public authorities, it cannot be taken for granted at the outset that parallel trade tends to reduce those prices and thus to increase the welfare of final consumers. An analysis of the terms of Clause 4 of the General Sales Conditions, carried out in that context, therefore does not permit the presumption that that provision, which seeks to limit parallel trade, thus tends to diminish the welfare of final consumers. In this largely unprecedented situation, it cannot be inferred merely from a reading of the terms of that agreement, in its context, that the agreement is restrictive of competition, and it is therefore necessary to consider the effects of the agreement, if only to ascertain what the regulatory authority was able to apprehend on the basis of such a reading.

– The existence of an anti-competitive effect

148 In order to examine the effect of an agreement on competition, it is necessary, first of all, to define the relevant market or markets, from both a material and a geographic point of view (Case C‑234/89 Delimitis [1991] ECR I‑935, paragraphs 15, 16 and 18).

149 In the present case, as regards the relevant products market, the Commission considered at recitals 112 and 113 to the Decision that, taking into account GSK’s observations that the nature and scope of parallel trade and the General Sales Conditions could give rise to the existence of a product market comprising all prescription medicines, it was not necessary to determine precisely GW’s market shares for each of the 82 medicines involved. Since the Commission, at the hearing, cast doubt on the existence of the GSK observations on which those recitals are based, it must be held that a reading of the supplementary notification reveals that the Decision is not vitiated by an error of fact on that point.

150 As regards the relevant geographic market, the Commission finally considered, at recital 114 to the Decision, that it must be considered to be the national market, owing, in particular, to the existence in the Member States of the Community of different price and reimbursement regulations, different brand and packing strategies, different distribution systems and different prescribing habits.

151 The markets affected by the agreement were not expressly set out by the Commission. It may be inferred from recitals 112 to 114, 117 and 126 to the Decision, however, as the Commission confirmed in its answers to the written questions put by the Court, that these were, first, the Spanish market, where the Spanish wholesalers may purchase medicines from GW, and, second, all the national markets of the Community where they may resell them, that is to say, those where the differential between the Spanish price and the domestic price is sufficient to make parallel trade lucrative.

152 GSK does not dispute the Commission’s approach to the definition of the relevant geographic market, as it again confirmed at the hearing. It is therefore common ground that the geographic market, which is to be understood as the territory on which the objective conditions of competition relating to the relevant product are, if not the same, at least sufficiently homogeneous for all traders (Case 27/76 United Brands v Commission [1978] ECR 207, paragraphs 44 and 53, and Case T‑83/91 Tetra Pak v Commission [1994] ECR II‑755, paragraph 91), may in the present case be taken to be the national market, having regard in particular to the different regulations on the prices and reimbursement of medicines.

153 On the other hand, GSK disputes the Commission’s approach to the definition of the relevant product market. It maintains that, having regard to the Spanish regulations in that regard, the Commission ought to have drawn a distinction between a regulated market, consisting of the medicines intended to be resold and reimbursed in Spain, and a free market, consisting of the medicines intended to be resold and reimbursed in any other Member State. However, that criticism does not appear to be well founded.

154 It follows from recitals 112 and 113 to the Decision that the Commission did not thoroughly investigate the question of the definition of the relevant product market. However, when questioned about the framework within which it had reasoned in practice, the Commission indicated in its answers to the written questions put by the Court that, while taking the view that it was not required to define the relevant product market in so far as it had been able to conclude that there was an anti-competitive object, it had made a summary definition of that market.

155 It also explained, in its written answers and then at the hearing, that, while not adopting an extremely detailed approach in that regard, it had ultimately adhered to the definition traditionally used in such matters, namely a definition based on the third level of the ‘Anatomical therapeutic classification’ (ATC) drawn up by the European Pharmaceutical Medical Research Association (EphMRA). As stated at recitals 16 and 110 to the Decision, that level corresponds to subgroups defined by reference to the therapeutic indication and the pharmacological properties of the medicines concerned.

156 Where the Court rules on an application for annulment of a Community measure, it falls upon it to interpret that measure itself, in particular where the institution which adopted it provides explanations of the way in which it should be understood (Case C‑194/99 P Thyssen Stahl v Commission [2003] ECR I‑10821, paragraphs 55 and 56). In the present case, a reading of the Decision as a whole reveals that the Commission, by implication but necessarily, reasoned within the framework of a market perceived as the market in medicines reimbursed by the Spanish sickness insurance scheme, in so far as they might be subject to parallel trade to other Member States of the Community. Thus, it was in a global manner that the Commission described the parallel trade in medicines sold by GW in Spain, at recitals 64 to 71 to the Decision, and the impact of the General Sales Conditions on that phenomenon, at recitals 72 to 75 to the Decision. It followed the same approach when it examined the restrictive effect of Clause 4 of those conditions, at recitals 117, 126, 137, 139 and 140 to the Decision, while concentrating its attention on a sample of eight medicines particularly suitable for parallel trade about which GSK had provided information to the Commission. It also followed the same approach, ultimately, when it evaluated the appreciable nature of that anti-competitive effect, at recital 144 to the Decision, and also the appreciable effect on trade between Member States, at recital 146 to the Decision.

157 As may be seen from paragraphs 13 and 14 of Commission Notice 97/C 372/03 on the definition of relevant market for the purposes of Community competition law (OJ 1997 C 372, p. 5, paragraphs 13 and 14), the Commission has undertaken to define the relevant product market principally by reference to demand substitutability and supply substitutability.

158 As regards the first aspect, it follows from Article 1(a) of Commission Regulation No 2790/1999 of 22 December 1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices (OJ 1999 L 336, p. 21) that in the context of an agreement such as that at issue in the present case it is necessary to ascertain what products the buyer regards as interchangeable or substitutable by reason of their characteristics, their prices and their intended use.

159 It does not appear to be manifestly incorrect to consider that the buyer, that is to say, the Spanish wholesaler who might engage in parallel trade, is less interested, for that purpose, in the therapeutic indication and the pharmacological products of each of the medicines which he buys from GW than in the fact that all of those medicines are reimbursed by the Spanish sickness insurance scheme and that their price is therefore set by the Spanish authorities. Likewise, it does not appear to be manifestly incorrect to consider that the buyer is less interested in the price of each of the medicines as such than in the fact that there is a sufficient price differential to render parallel trade lucrative, for all of those medicines, between Spain and the Member State of destination. In those circumstances, it is not manifestly incorrect to accept that all the medicines reimbursed by the Spanish sickness insurance scheme which are capable of being sold at a profit owing to the price differential between Spain and the Member State of destination constitute a product market.

160 As regards the second aspect, it may be noted that, as is apparent from the observations of GSK on which the Commission relied at recitals 112 and 113 to the Decision, Clause 4 of the General Sales Conditions was conceived in order to address, in a global manner, the question of parallel trade in medicines sold by GW between Spain and the Member States to which parallel trade might be lucrative for the Spanish wholesalers.

161 Accordingly, the existence of the Spanish rules appears, from the point of view of both buyers and GSK, to be more a factor which c