1. CASE SUMMARY
A. Summary of facts
Bayer manufactured and marketed under the trade name ‘Adalat’ a range of medicinal preparations. Bayer adopted measures to limit exports of Adalat by wholesalers from France and Spain to the United Kingdom (‘UK’). More particularly, Bayer changed its delivery policy in order to prevent or limit exports of Adalat by wholesalers to the UK, and began to cease fulfilling all of the increasingly large orders placed by wholesalers in Spain and France with its Spanish and French subsidiaries. The reason for the change of supply policy was that in the period between 1989 and 1993 the prices charged for Adalat in France and Spain were about 40% lower than those charged in the UK. That led to significant parallel exports of Adalat from Spanish and French wholesalers to the UK, which caused a significant loss of turnover for Bayer’s UK subsidiary.
B. Notes on case history
The Commission contended that there was an agreement between Bayer and the Spanish and French wholesalers in relation to the export of Adalat to other Member States. Its case was that Bayer’s delivery policy amounted to an export ban, to which the wholesalers had consented, in the knowledge that if they did not do so, their orders would be further restricted. According to the Commission, the actions of the wholesalers showed that they had aligned their own conduct in relation to the export ban by limiting their orders from Bayer purely to their domestic requirements. Supplies intended for exports were obtained elsewhere (mostly from non-supervised wholesalers).
Bayer applied to the CFI to annul the Commission decision on the ground that the allegedly infringing conduct was, in fact, unilateral conduct: in the absence of any agreement between itself and its wholesalers relating to the export of Adalat to the UK, the conduct did not fall within the scope of Article 101(1) TFEU. Bayer argued that it had adopted a unilateral policy of limited delivery in order to make parallel exports more difficult and that, far from agreeing to such a policy, the wholesalers had opposed it. Accordingly, the requisite ‘concurrence of wills’ was plainly lacking, in the absence of which Article 101(1) TFEU could not apply.
The CFI accepted Bayer’s position. According to the CFI, the Commission did not prove to the requisite legal standard that Bayer actually imposed an export ban on its wholesalers (i.e. that it established a systematic monitoring of the actual final destination of the packets of Adalat supplied after the adoption of its new supply policy or that it applied a policy of threats and penalties against exporting wholesalers). It also had not sufficiently proven that Bayer had made supplies of that product conditional upon compliance with the alleged export ban. In addition, in the CFI’s view, the documents reproduced in the contested Commission decision did not demonstrate that Bayer sought to obtain any form of agreement from the wholesalers on the implementation of its policy designed to reduce parallel imports.
C. Legal analysis
C.1 - Framework of analysis
The ECJ upheld the judgment of the CFI and thereby confirmed that, under the given circumstances, no agreement in the sense of Article 101(1) TFEU could exist. In doing so, it distinguished certain elements that are needed to arrive at the existence of an anticompetitive agreement under Article 101(1) TFEU, other elements that are not sufficient and lastly elements that are helpful in that respect. The ECJ also distinguished purely unilateral conduct from conduct that is taken into account to assess another agreement which has already been determined to exist.
C.2 - Article 101(1) TFEU – elements needed to qualify as an anticompetitive agreement
The necessary components are:
- a manifestation of the wish of one of the contracting parties to achieve an anti-competitive goal which is considered as an invitation to the other party, whether express or implied, to fulfil that goal jointly (§102);
- acquiescence by the other party, whereby it is necessary to explore the “genuine wishes” of such other party. In this case, when confronted with Bayer’s policy, the wholesalers continued ordering products from Bayer. However, their way of doing so made Bayer believe that the needs of the national markets had grown. On that basis the CFI correctly considered that there was a lack of concordance between the wishes of Bayer and the wishes of the wholesalers (§121-123).
C.3 - Article 101(1) TFEU – elements that are insufficient to qualify as anticompetitive agreement
The ECJ has determined that the following two situations are insufficient to arrive at an agreement:
- the expression of a unilateral policy of one of the contracting parties, which can be put into effect without the assistance of others, even if such unilateral policy is aimed at preventing parallel imports (§101);
- the mere fact that a measure imposed unilaterally by a manufacturer, which has the object or effect of restricting competition, falls in the context of continuous business relations between the manufacturer and its wholesalers (§142).
C.4 - Article 101(1) TFEU – elements that are helpful for the qualification as anticompetitive agreement
The ECJ pointed at two helpful indicators to find an agreement, that are however not by themselves conclusive:
- the establishment of a system of subsequent monitoring and penalties (§83);
- the conduct of the parties concerned (§100).
C.5 - Article 101(1) TFEU – unilateral conduct versus conduct forming part of an agreement
The ECJ distinguished the current case from the case law of AEG and Ford. In the latter cases, it was undisputed that an agreement capable of infringing Article 101(1) TFEU existed. The question addressed in that case law is whether measures subsequently adopted by the manufacturer formed part of the agreement in question and whether they needed to be taken into account when examining the compatibility of that agreement with Article 101(1) TFEU. In the case at hand, the legal question related to the very existence of an anti-competitive agreement. (§106 and 109)