Glaxo Dual Pricing case - Essay Example

The legislation determining the price was used to identify the price of the drug. The law in Spain allowed for drug sale at prices determined by Glaxo. Hence, Glaxo sold drugs in Spain at low prices while it raised the prices if the drug was to be resold in a country that would buy at a higher price. In 2001 the Commission made a decision which regarded article 81 was applicable to the medicines that were to be sold and thus, they did not warrant exclusion. Glaxo’s position was that the precise factors that were ongoing at that time in the pharmaceutical trade were supposed to lead to various evaluation of competition in the industry.

The precise factors as determined by Glaxo were the impact of parallel trade on medicine consumers, the effect of parallel trade on drug shortages, the effect of price control by European Union member states and the effect of parallel trade on research and development. The attorney general rejected these points of view by Glaxo. They were also nullified by the European Court of Justice. It was stated that the pharmaceutical business was not exempt from the criterion of Competition Law as all industries were under it.

Articles 81(1) and 81(3) were of importance to the case. Glaxo noted the importance of price regulation by countries. The final judgements of the case were applicable to all undertakings in spite of their sectors (Rey and Venit, 2009). The European Commission has protected and encouraged parallel trade for prescription medicines under its administrative wing. Also, the jurisprudence of the European Court of Justice in relation to competition laws and free trade of goods has resulted in existence of parallel trade for prescription medicines.

The pharmaceutical industry depends on its own profits to finance its objectives, hence a reason of encouragement to partake in parallel trade. According to Rey and Venit (2009), variations exist in European Union member countries in terms of their