The European Commission must reconsider its veto of initiatives undertaken by GlaxoSmithKline (GSK) in Spain to combat parallel importing, the European Court of Justice (ECJ) ruled yesterday.

Europe’s highest court was deciding in a long-running case arising from GSK’s adoption in March 1998 of new sales conditions in Spain, through which it sought to restrict parallel trade by offering wholesalers differentiated prices for 82 of its products, based on whether they were selling them on in Spain on exporting them elsewhere in the European Union (EU).

GSK notified the Commission of these arrangements - which were signed by 75 wholesalers representing more than 90% of GSK’s total sales in Spain in 1998 - to ensure that they did not contravene EU law or, failing that, to obtain a decision granting them an exemption as “an agreement contributing to promoting technical progress.”

But in May 2001, the Commission decided that the arrangements did contravene Community law because they constituted an agreement restricting competition and GSK had not proved that the conditions necessary for an exemption were satisfied.

A September 2006 judgement by a lower EU court, the Court of First Instance (CFI), backed the Commission’s finding but annulled its decision because, it ruled, the Commission had not carried out an adequate examination of GSK’s request for an exemption. This decision was appealed by both GSK and the Commission.

In its ruling yesterday, the ECJ upheld the CFI’s judgement that while the Commission was right to decide that the scheme infringed EU law, it had not taken account of all the relevant evidence produced by GSK for its case. The higher court dismissed all the appeals and told the Commission that it must reconsider whether GSK’s general sales conditions in Spain may be exempted from the Community competition rules.

After the judgement, GSK said it was pleased that the ECJ had upheld the CFI’s annulment of the Commission decision to reject its request for an exemption. “This vindicates GSK’s position that the European Commission did not properly assess its request, and we will now study the ECJ judgment in depth,” said the firm, in a statement.