The ‘Consumer Welfare’ Delusion in GlaxoSmithKline – A Response to Bruce Lyons

(by Pinar Akman) I agree with everything Bruce Lyons has written in his blog entry on GlaxoSmithKline – except for his conclusion. His conclusion is that the ECJ’s judgment in GlaxoSmithKline (6 October 2009) might highlight the need for a professional economist to sit as one of the team of judges in competition appeal cases.

I believe the reason Bruce Lyons offers this solution is because he thinks – rightly – that the Court does not seem to pay attention to the economic effects of prohibiting certain conduct which is most probably benign from a ‘consumer welfare’ perspective. Furthermore, Bruce Lyons appears to think – optimistically – that this is because of a lack in the Court’s understanding of economics and that having an economist sit with them might help to sort this out. I do not think that having an economist sit with the Court could sort anything out simply because I do not think that the Court is unaware of economics or of the economic arguments that were relevant in that case: the Court is simply ‘uninterested’ and does not agree with those who claim that the objective of EC competition law is the protection of ‘consumer welfare’. It is not because the judges of the ECJ do not understand that impeding parallel imports in the case at issue could well have benefitted consumers (not least because Advocate General Jacobs had clearly explained this in his opinion in Syfait v GlaxoSmithKline – albeit in the context of Article 82). Nor is the Court unaware that if the standard of EC competition law were a consumer welfare one, such conduct need not be sanctioned.

The Court is simply saying this: the objective of EC competition law is *not* the enhancement of consumer welfare! It achieves this by overruling precisely the paragraph in which the CFI had held that 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 only in so far as it may be presumed to deprive final consumers of the advantages of effective competition. Thus, the ECJ is clearer than it has ever been before: there is much more to EC competition law than consumer welfare and when the rest – like the single market imperative – clashes with consumer welfare, it is consumer welfare that gives way. Hence, nothing has changed since Consten and Grundig (56 and 58/64 ECJ, [1966] CMLR 418). The single market is still *the* objective of EC competition law (alongside protecting competitors, of course, as the ECJ has now confirmed once and for all at [63]). Finally, the judgment leaves me also wondering about the genuineness of the intentions of the EC Commission: why did the Commission appeal the part of the CFI judgment where the CFI had found consumer harm to be a condition of anticompetitive object if the EC Commission really thinks it is all about consumer welfare? Perhaps I should have entitled my entry ‘The Emperor is not Wearing Any Clothes’. Oh well, there is always the next decision…

Pinar Akman

One Response to The ‘Consumer Welfare’ Delusion in GlaxoSmithKline – A Response to Bruce Lyons

  1. […] ‘Battle for the Sole of Antitrust’ Is Not Over Yet – Andriychuk In Pinar Akman’s post on the objective of competition policy as set out by the Court in GlaxoSmithKline (6 October 2009), […]

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