Advocate General considers absolute ban on parallel trade of parallel traded plant protection products is incompatible with free movement

Under previous French law, the grant of a parallel trade permit was subject to the condition that the imported product benefits from a "full" marketing authorisation issued by the exporting Member State in accordance with the Plant Protection Products Directive (91/414). On this basis, the French Ministry of Agriculture systematically refused to issue parallel trade permits where the product is only authorised for parallel import in the exporting Member State.

The French Conseil d'État decided to suspend a case brought by Mac GmbH, a German trader of agrochemicals against the French Ministry of Agriculture to allow the EU Court of Justice to rule on the compatibility with EU internal market rules of the French ban which prevented so-called "double" parallel imports into France of plant protection products ( Case C-108/13, Mac GmbH).

Facts underlying the case

France had issued a marketing authorisation under the old Plant Protection Products Directive to Bayer Cropscience for Cerone®, a plant growth regulator. This product was subsequently imported into the UK by a third party trader, Agrotech Trading GmbH, under a parallel trade permit (using Bayer Cropscience Ltd's marketing authorisation for Cerone® in the UK as a reference product). The imported product was sold in the UK under the name Agrotech Ethephon.

In 2007, Mac GmbH applied for a parallel trade permit in France so that it could import and sell Agrotech Ethephon products from the UK into France where it would be marketed as Mac Ethephone. Bayer Cropscience's Cerone served as reference product.

On 20 February 2008, the French Agency for Food Safety (AFSSA) issued a favourable opinion on the basis that the imported product, Agrotech Ethephon, and the reference product, Cerone, contained an active substance from a common source and had an identical composition.

Despite the established identity between the imported and the reference products, the French Ministry of Agriculture nevertheless refused, on 29 May 2009, to grant the permit to Mac GmbH, on the grounds that the UK had not issued a "full" marketing authorisation for Agrotech Ethephon, but only a parallel trade permit. Mac GmbH initiated an action before the French courts seeking the annulment of the Ministry's refusal arguing that the French law infringed EU rules on free movement.

Question referred to the EU Court of Justice

By decision of 28 December 2012, the French Conseil d'État suspended proceedings and referred the following question to the EU Court of Justice: "Do Articles 34 and 36 of the Treaty on the Functioning of the European Union preclude national legislation which makes, inter alia, the grant of a parallel import marketing authorisation for a plant protection product subject to the condition that the product in question has, in the exporting State, a marketing authorisation granted in accordance with Directive 91/414/EEC, and which consequently does not permit the grant of a parallel import marketing authorisation for a product which has, in the exporting State, a parallel import marketing authorisation and which is identical to a product authorised in the importing State?"

In other words, can parallel imports be legitimately limited only to products imported from Member States where they are sold under a "full" marketing authorisation, thereby excluding products which have been imported themselves into the exporting Member State and have therefore been authorised under a simplified parallel trade procedure (i.e. double parallel importations)?

Advocate General opinion

On 22 May 2014, Advocate General Mengozzi delivered his opinion in this case in which he takes the view that the French rules in question were not justified and therefore unduly frustrated the free movement of plant protection products in the EU.

He recalls that the EU Courts have consistently taken a favourable approach to allowing parallel trade which is seen as an important tool for promoting competition and product availability. At the same time, limits to parallel trade may be legitimate where necessary to ensure an adequate protection of public health and the environment.

Since the facts of this case are governed by the old Plant Protection Products Directive, which did not contain any provision on parallel trade, the Advocate General refers to the key EU cases in which the Courts developed - in the context of free movement - a specific approach to the parallel trade of plant protection products and medicines (e.g. British Agrochemicals and Escalier and Bonnarel). In 2009, this case law was codified in Article 52 of the Plant Protection Products Regulation (1107/2009) replacing the old Directive.

It follows from this body of consistent case law that a parallel trade permit should be issued following a simplified procedure, where it is established by the importing Member State that:

• the imported product is authorised in the Member State of origin; and
• the imported product is essentially identical to a reference product authorised in the importing Member State. In this context, the EU Courts developed the notion of "common origin" according to which products can be held to be identical for instance where they are manufactured by the same (or an associated) company or under licence according to the same formulation and/or contain the same active substance (see e.g. Kohlpharma).

The underlying reasoning is that - if all these conditions are met and the identity between the imported and reference products is thus established - no safety concern should normally arise. Consequently, the imported product should be able to benefit from the marketing authorisation previously issued to the reference product by the importing Member State.

Turning to the specific question put to the Court in this case, the Advocate General argues that no safety concern can justify the adoption of national rules allowing parallel imports only of products sold in the exporting Member State under a full authorisation (as opposed to a parallel trade permit), where the imported product is identical to the reference product. Such national rules unduly frustrate free movement and go beyond what is necessary to protect public health and the environment.

The Advocate General argues that, contrary to what the French authorities claim, Member States normally have sufficient means to ensure that they have access to all information needed for the verification of the identity between the imported and the reference product, also in the case of double parallel importation. For instance, Member States have access to the reference product dossier and are entitled to request additional information from manufacturers/marketing authorisation holders directly and from the exporting Member State.

In the particular circumstances of this case, the Advocate General points out that it was particularly easy for the importing state (France) to verify the identity: the imported product was in fact the reference product, since the latter was the subject of the first parallel import from France into the UK.

Comments

There is no final ruling yet in this case. The opinion delivered by the Advocate General however confirms that parallel imports can be refused if there is a genuine risk to public health. The key factor guaranteeing public health is the importing Member State's ability to adequately verify that the imported product is identical in composition to the reference product which is already authorised for sale and use in its territory.

As indicated, the Plant Protection Products Regulation now contains an express provision on parallel trade in Article 52 setting out the simplified procedure and the conditions which must be fulfilled for a Member State to grant a parallel trade permit. These conditions are that:

• the imported product is authorised in the Member State of origin and the reference product in the Member State of introduction; and
• the product from the Member State of origin and the reference product are of identical composition.

Article 52 does not specify the nature of the marketing authorisation delivered for the imported product in the Member State of origin. For the reasons set out above, the Advocate General however sees no reason to exclude parallel trade of parallel traded products from its scope.

Before the Court, the EU Commission appears to have supported the views expressed by the Advocate General, despite the language in the current EU Guidance document concerning the parallel trade of plant protection product ( DG SANCO/10524/2012 of 31 May 2012) which provides that a "parallel trade permit cannot be granted on a product which is itself a parallel traded product" (page 4).

At the oral hearing the EU Commission attempted to "clarify" its position stating that the facts in this case should be distinguished from the "classic" scenario of double parallel importation which normally involves three different Member States. In the present case, only two Member States were involved since the product was re-imported into France from where it was initially exported. In doing so, the EU Commission may try to limit the impact of the ruling (if it were to follow the Advocate General opinion) only to this particular scenario of double parallel importation.

The Advocate General does however not distinguish between different types of double parallel importation. Also in the more "classic" scenarios involving three Member States, he considers that it should in principle be possible for the importing Member State to carry out an appropriate verification exercise. Only where this cannot be done, the Member State should refuse to issue a parallel trade permit.

Please click on the links below for the other articles in the June 2014 IP/IT newsletter:

• Medicinal products authorised under the "well-established use" procedure benefit from 10-year protection period says Advocate General
• SPCs may be issued for safeners used in plant protection products according to EU Court of Justice
• Advocate General considers "legal high" products do not fall under the legal definition of a "medicine"
• Decisions of the Board of Appeal of ECHA
• New actions before the European Courts