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Recent Developments in Greece – the milk, oil
and pharmaceuticals Cases
Despina D SamaraCalavros & Partners The year 2006-2007 saw three industry sectors coming under the public consultation procedure, announced concrete structural meas-scrutiny of the Hellenic Competition Commission, namely, milk, oil ures and behavioural recommendations that it considered absolutely and pharmaceuticals. Following either ex-officio investigations or necessary to establish and enforce effective competition in the oil complaints filed by other market participants the national authority market. These measures relate mainly to observance of the principles was dealing with all three sectors by late 2006. Of particular note, in of transparency, non-discriminatory treatment, accounting separa-the pharmaceuticals sector, after almost seven years of proceedings, tion and cost-orientation in setting prices. A more specific look at the Competition Commission reached a much-anticipated decision the measures follows.
in the Syfait case. The oil refining market (Market 1) To waive the restrictions recorded in this particular market and until After a lengthy investigation regarding competition conditions in the the market acquires sufficient stock premises, the Competition Com-milk production and distribution market, the Directorate General mission proposed:of Competition concluded that milk companies had made an agree- • the direct completion of a regulation for observing reserves of ment and controlled the milk market from the source of produc- tion up to consumption at the supermarkets. Officially, the big milk • the study and investigation of the possibility of creating an companies are accused of creating a cartel at the expense not only of organisation for observing reserves of safety, following the the dairy farmers but also of consumers. The companies' agreement, example of many European countries; and according to the findings of the investigation, distorts competition • the state's concession of public land to companies that are conditions in the milk market; therefore, the General Directorate active in the sector to install warehouses and reservoirs of big proposed that sanctions be imposed on the responsible companies.
Based on the investigation, the Competition Commission con- vened in spring 2007 to examine alleged violation of articles 1 of The wholesale market (Market 2) Law 703/77 and 81 EC by 17 companies and collectice institutions Towards enforcement of conditions of effective competition in the involved in the production, and wholesale and retail sale of milk. wholesale market, the Competition Commission, taking into con-More specifically, according to the investigation carried out by the sideration the opinions of the parties in the public consultation, Directorate General of Competition, the following distortions of proposed:competition in the relevant markets are occurring: • notification of discounts made by companies to the responsible • a horizontal agreement on setting the sale prices and sharing Ministry of Development and their integration into the com- procurement points for the market of raw milk between some pleted information system of the Regions (OPSP);2 of the milk companies; • abolition of obstacles to the replacement of private tanker-cars • a horizontal agreement on pricing and discount policies between by oil companies with ones of modern specifications; and some of the milk companies; • waiver of restrictions as to the grant of new authorisations for • a vertical agreement on setting prices for retail sale and forbid- transport of liquid fuels with private tanker-cars. ding sale at a loss between some of the milk companies and their distributors; and The retail sales market (Market 3) • a vertical agreement on setting prices for retail sale between To assist the creation of conditions of competition in the retail sales some of the milk companies and supermarket chains.
market, the Competition Commission proposed:• free operation of service stations; The Competition Commission is expected to reach two decisions • review of legislation that concerns awarding of licences and in the case: one concerning the agreement of the milk companies, terms of operation for service stations to open the market to and the other the agreement between the milk companies and the potential competitors and decrease retail fuel prices; supermarkets, thus including a total of 17 companies and collective • abolition of the provision that imposes maximum retail prices institutions into the proceedings1. • review of the contracts signed by service stations in cases of ‘closed' motorways to lift the restrictions on competition; and The Directorate General of Competition initiated an ex-officio inves- • placement of special electronic signs in ‘closed' motorways brief- tigation of the oil market following the minister of development's ing passing drivers on the price of fuels in the next two service request No. 4871/2.8.2006 for the examination of the sector, pur- suant to article 5 of Law 703/77, which took the form of a public consultation with interested third parties, to enforce conditions of Based on the above and within its competences deriving from arti-effective competition in the oil market. cle 5 of law 703/77, as applicable, the Competition Commission The Competition Commission, after taking into consideration imposed the following measures: both the conclusions of the Directorate General's ex-officio investi- • it obliged domestic petrol-refining companies to set the price of gation and the opinions put forward by interested parties during the petroleum products intended for the domestic market (petrol, transport fuel and heating) at a price that will be known at the 41 pharmaceuticals wholesale companies, (iv) the complaint of three other distribution companies all filed against pharmaceutical • it compelled domestic petrol-refining companies to notify their company Glaxo Wellcome SA (renamed GlaxoSmithKline SA) for customers of the present decision, namely companies marketing infringement of article 2 of law 703/77 and abuse of its dominant petroleum products in the Greek market; position with regard to distribution of three pharmaceutical prod- • it required that oil companies providing discounts to service ucts, namely Lamictal, Imigran and Serevent, (v) ex-officio inves- station owners establish objective national criteria when apply- tigation of the Directorate General of Competition with regard to ing these discounts and notify the Competition Commission of the policy applied by GlaxoSmithKline SA and its parent company GlaxoSmithKline PLC for the distribution system adopted in rela- • it obliged oil companies to quote the sum (euro/litre) of the dis- tion to the above-mentioned pharmaceutical products, to conclude count to their invoices of sale; over the alleged infringement of article 2 of law 703/77 and article • it required oil companies to notify the Competition Commission 82 EC, and (vi) the application of GlaxoSmithKline SA for nega- of the price-setting mechanism and any change thereof that they tive clearance under article 11 of Law 703/77 with regard to its apply to the companies of retail marketing and the rest of their It is noted that, with Decision 229/III/2003, the Hellenic Com- petition Commission had chosen to suspend examining the com- Relevant case law plaints and refer questions to the European Court of Justice for BP and Shell
a preliminary ruling on some aspects that opted for Community Following a two-year ex-officio investigation of the companies mar- interpretation. The ruling of the ECJ rejected the reference for a keting petroleum products, the Competition Commission on 6 April preliminary ruling without examining the substance of the case as it 2006 was called to examine the proposal by the Directorate General held that the Hellenic Competition Commission did not "constitute of Competition relating to an alleged infringement of Law 703/77 a court or tribunal" within the meaning of article 234 EC.3 With no by two of the major companies marketing petroleum products in answer as to the substance of the case, the Competition Commission Greece, namely, BP Hellas and Shell Hellas. More specifically, the convened in summer of 2006. After taking into account all the infor- companies had allegedly applied a common discount policy system mation regarding the specific cases collected for the purposes of the towards their customers (service-station owners) that fostered a sta- Decision 229/III/2003 and the opinions of the involved parties, the ble and non- competitive relationship between them when setting Competition Commission concluded, with Decision 318/V/2006, prices of unleaded petrol (according to the Directorate General, by that GlaxoSmithKline SA abused its dominant position under the agreeing on common discounts the two companies kept retail prices meaning of article 2 of Law 703/77 between November 2000 and of fuels high, artificially, especially, in the so-called ‘expensive pre- February 2001, but had not infringed article 2 of Law 703/77 after fectures' of Greece). The case is pending before the Competition February 2001 and nor had it infringed article 82 EC.
Also the Competition Commission, weighing up the short dura- tion of the infringement and the fact that owing to the small duration Motor Oil and EL PE (Greek Petroleum Company)
no consequences on the Hellenic market were proved, recommended Recently, the Competition Commission reached a decision in that GlaxoSmithKline SA refrain from conduct such as that fol- another case on fuels concerning the ex-officio investigation of lowed between November 2000 and February 2001 in the future. If the Directorate General of Competition No. 1743/27.3.2006 for the infringement were to be repeated, the Competition Commission alleged harmonised practice of refineries in the determination of threatened a fine equal to 3 per cent of GlaxoSmithKline's SA gross aviation fuel sale prices. A relative complaint by the International revenues of the year prior to the infringement. Air Transportation Association (IATA) against the domestic refiner- Finally, the Competition Commission suspended its ruling over ies has also been filed. The Commission based on the documents of GlaxoSmithKline SA's application for negative clearance in relation the file and the hearing found that respondents made simultaneous to its distribution system in the national market, as a ruling on the statements and notices to their customers with regard to their future same case is pending before the European Commission with regard behaviour, thus, eliminating any uncertainty in relation to an inde- to the practice followed by its parent company.
pendent change of a company's pricing or commercial policy. Since horizontal cooperation in setting prices is expressly prohibited by Some thoughts on the case article 1 of Law 703/77, especially where cooperation takes place The pharmaceuticals market is special, owing to the nature of its between two companies with big economic strength covering almost products and the structure of the market itself. The pharmaceutical 90 per cent of domestic demand, the Commission compelled the market is one of the greatest (if not the greatest) regulated markets. respondent companies to: calculate and observe, for three years, Everything, from research and development until the dispensing analytic cost elements for safety reserves of aviation fuel; and notify of the end product to patients is regulated, both at a Community their customers of the decision, that is companies marketing avia- and national level. Nevertheless, there is not a common market tion fuel in the Greek market. In case of non-conformity, the Com- for pharmaceuticals in the European Union as yet: the marketing mission threatened a E10,000 fine to each company for each day requirements for medicines have for the most part been harmonised, of non-compliance. Moreover, the Commission imposed a fine of whereas pricing systems remain within the member states' exclusive E7,344,421 on EL PE and a fine of E1,591,219 on Motor Oil for competence. This difference in prices has in part generated paral- their participation in the harmonised practice.
lel trade of pharmaceuticals in the EU. In such a context, Glaxo-SmithKline SA limited the variety of pharmaceuticals to its Greek distributors to protect distributors in markets where higher prices The Hellenic Competition Commission with its Decision 318/ might be charged. V/2006 reached a determination concerning (i) the complaints of The opinion of AG Jacobs on the case was very interesting4 16 associations of pharmacists (Syfait and others), (ii) the complaint and on the substance was not rejected by the European Court of of Panellinios Syllogos Farmakopothikarion (PSF), the Pan-Hellenic Justice. Nevertheless, the Competition Commission decided to take association of pharmaceuticals wholesalers, (iii) the complaint of a different approach and distinguish between two different periods the european antitrust Review 2008
to reach two different conclusions as to the alleged infringement. of Competition (article 13 of the Rules). The statement of such an Now, a question for a new preliminary ruling has been referred to intention must take place, at the latest, with the submission of the the European Court of Justice by the Appeal Court of Athens and written memorandum and only in exceptional cases, for example awaits discussion. Meanwhile, AG Jacobs retired this year and some when deciding on interim measures, can the statement be submitted of the judges might have done so. Indeed the terms of about half of during the oral procedure before the Competition Commission.
them will have expired by the time the case is brought before the To reduce the time needed for decision-making, the new rules Court for a new ruling sometime next year. This change in personnel foresee specific and concrete deadlines with regard to the publica- might entail a different judgment altogether both for the pharma- tion of decisions by the Commission. Based on the new rules, the ceuticals companies and parallel traders in the European Union. Commission's decision is published after members have conferred With similar cases coming before national courts5 and competi- within 30 days following closure of the oral proceedings. The Com- tion authorities outside strict Greek boundaries, the question still mission is obliged by the new rules to reach its decision within 30 remains whether the European Commission, national competition days from the end of the last conference (article 25, paragraph 2 of authorities and national courts should follow the decision of the Competition Commission with the objective of achieving congruent decisions throughout the Common Market. In June 2007, a proposal was submitted to the Court of State ask- The Rules of Internal Operation and Financial Management of ing for the annulment of the new Rules of Internal Operation and the Hellenic Competition Commission – the changes introduced Financial management of the Hellenic Competition Commission, At the end of 2006, the Competition Commission introduced new and in particular, at a period when it is handling some of the most rules for its internal operation and financial management, to speed important cases that it has faced. If the proposal is accepted, more up oral proceedings and decision-making by the Commission.
than eight cases that are being dealt with by the Competition Com- The most important provision of the new rules is the intro- mission, including the aforementioned milk and fuel cases could duction of the written examination procedure of cases before the be reheard. At the same time, it is highly likely that the validity Competition Commission. It is, subsequently, at the Competition of three decisions already published by the Competition Commis- Commission's discretion to conduct an oral procedure. More spe- sion (including the one on aviation fuels) during the first months cifically, within the new written procedure, the parties must submit of the year could be shaken. It is thought that the proposal will be written memoranda analysing their position in relation to the pro- discussed before the Court of State and if the Court agrees, then posal of the General Directorate of Competition to, and file all the the procedures before the Competition Commission could be sus- supportive evidence and procedural documents that they invoke pended, the decisions reached since the beginning of the year could in the memoranda with, the Secretariat of the Commission. The be annulled and all cases currently heard before the Commission parties' rebuttals are also submitted before the oral discussion of could start afresh. This is a most unpleasant prospect for the opera- the case to support their memoranda (article 11, paragraph 4 of tion of the Hellenic Competition Commission and the protection of competition in the Greek market especially when taking into Another important innovation of the new rules is the possibility account a rather long period of stagnation that the Commission it gives to interested parties to give undertakings to cease the behav- faced last year, owing to internal problems.
iour under examination at the proposal of the General Directorate Update on convergence of Greek competition law to EC Regulation 1/20036
Major changes introduced by EC 1/2003
Corresponding national provisions of Law 703/77
Partially convergent Abolition of notification system for agreements and introduction of a legal exception system (art 1)Parallel application of Community and national competition rules (art 3(2))Power to impose structural remedies (art 7) (Art 9, para 1 (c)) Power to order interim measures (art 8) Power to adopt commitment decisions (art 9) (Art 9, para 1 (b)) Power to seal business premises, books and records (Art 26)(art 20)Power to inspect non-business premises (art 21) Fines on associations of undertakings (art 23(2) and (Art 9 and 12- convergence to art 23(2) not to art 23(4)) Informal guidance (recital 38) Treatment of individual exemptions granted before May (Art 20)1, 2004 (art 43(1)) Investigations into sectors of the economy and into types of agreements (art 17)Does (or will) national law include provisions to facilitate the use of article 15.3 (amicus curiae)? 3 Synetairismos Farmakopoion Aitolias & Akarnanias (SYFAIT) and 1 With regard to the same case, it is also noted that, quite recently others v GlaxoSmithKline AEVE, Case C-53/03 [2005] E.C.R. I-00000.
(16/7/2007), the public prosecutor of Appeals has initiated 4 Opinion of Advocate General Jacobs in SYFAIT and others v proceedings for penal prosecution of the four biggest milk companies GlaxoSmithKline AEVE, Case C-53/03 [2004] E.C.R. I-00000.
of the country for cooperating in the creation of the cartel. More 5 For example, the Greek Supreme Court (Arios Pagos) ruled on a specifically, the public prosecutor, based on the findings of a similar case before it on 11 June 2007 between a pharmaceutical preliminary examination, asked for penal prosecution of the legal company and a pharmaceutical wholesaler acting also as a parallel representatives of these companies for blackmail at continuation, exporter. The Court found that there was no violation of competition profession and habit.
law provisions (Decision No 1334, 2007 (unpublished)).
2 The OPSP has been developed in order to assist the Greek regions 6 For the purpose of the present analysis the term "convergence" in the creation of the necessary infrastructure for the transfer to should be construed as referring to a voluntary process of electronic age.
approximation of national competition legislation to EC regulation 1/2003 and does not imply that such approximation is mandatory in respect of all the provisions of the regulation referred to thereof.
Calavros & partners
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Calavros & Partners enjoys a widely established reputation due to its commitment to always pro- vide top quality legal services. Our firm's overall approach is to combine excellence in results, tak- ing extra care to keep close, personal contact with clients throughout the handling of every case. Tel: +30 210- 36 98 700 (50 lines) Our goal remains to provide practical solutions that meet clients' requirements cost-effectively.
Fax: +30 210- 36 98 750 Calavros & Partners has abroad commercial practice and is distinguished for servicing multina- tional private and public sector companies as well as Greek companies seeking to expand their business abroad. Our advising of national and international pharmaceutical companies during recent years has given us the opportunity to deepen our knowledge and experience of the complex Greek and European Union legal framework regarding pharmaceutical products, their development, protection and circu-lation, as well as their pricing and reimbursement by national health insurance systems.
Calavros & Partners is the exclusive legal counsel of Novartis Hellas Aebe, the Greek subsidiary of the Novartis group. Furthermore, Calavros & Partners acts as the external legal counsel of Glaxo Smith Kline Aebe, in a number of significant legal matters related to free and unfair competition law (e.g. the leading case brought before the Greek Competition Committee with regard to quota systems and their impact on parallel trade), as well as in the judicial proceedings related to product liability matters and administrative law issues. The office consults the Piraeus Port Authority (OLP AE) with regard to a complaint brought before the Greek Competition Commission for potential infringement of articles 1 and 2 of law 703/77, as it is in effect, and articles 81 and 82 EC. In addition, Professor Constantin Calavros is appointed as special legal advisor to the Association of Greek Pharmaceutical Companies – SFEE.
Calavros & Partners Law Firm, now comprising 30 members, including lawyers, trainee lawyers, information technology system operators, accountants and supporting administrative and secre-tarial personnel, is amongst the largest law firms in Greece. Contact: Despina D Samara
the european antitrust Review 2008

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