This post was written by Paule Drouault-Gardrat and Julie Gottenberg.

Under French Law, pharmacies benefit from a monopoly on the sale of medicinal products. This monopoly covers reimbursed and non-reimbursed pharmaceutical products. Once they are de-reimbursed, the price setting is free. This is indeed a very important market for the approximately 23,000 French pharmacies, as the current government follows a policy of dereimbursement.

In addition, the French Public Health Code still prohibits a pharmacist from possessing more than one pharmacy and requests the owner of a pharmacy to be a pharmacist who must personally practice the profession, thus preventing large companies from entering the market.

In this legal context, the distribution group run by Michel Edouard Leclerc[1] (“MEL”) launched a media campaign last April asking for the right for hypermarkets to sell non-reimbursed pharmaceutical products. MEL argued that this would result in a price drop of approximately 25 percent.

The widespread commercials showed a woman’s chest decorated with a necklace made of pills and capsules and bearing the comment “with the price increase of drugs, treating a cough will soon be luxury.” This picture and similar slogans were displayed through various media (TV, website, newspapers).

This campaign asking for the break of the monopoly on the non-reimbursed pharmaceutical products has been challenged in a summary proceeding filed by French pharmacists’ representatives[2] before a French Court.

Whereas in the first instance, the French Court (“Tribunal de Grande Instance de Colmar”) granted an order requesting the cessation of the campaign[3], the Court of Appeal (“Cour d’appel de Colmar”) totally reversed the decision[4] in its holding dated 7 May 2008.

Beyond the political and business underlying background, the Court of Appeal’s ruling is interesting for its assessment of the claims related to misleading advertising and denigration.

I.   No Misleading Advertising

The pharmacists’ representatives claimed that the campaign launched by MEL was misleading and confusing since the commercials did not make any clear distinction between reimbursed pharmaceutical products and non-reimbursed ones, on the one hand, and between products sold in pharmacies and those sold in parapharmacies, on the other hand.

The claimants also argued that the challenged campaign tempted to make the pharmacists globally responsible for the rising price of the medicines.

This argument was favorably accepted by the Court of First Instance but was rejected by the Court of Appeal.

The latter asserted that a claim for misleading advertising can only apply to commercial practices and accordingly to goods or services that are actually sold on the market. However, in France, because of the above-mentioned legal context, hypermarkets are prohibited from selling pharmaceutical products.

The Court of Appeal rather defined this campaign as “propaganda in favor of a legislation change.”

Said court also observed that the possible consequence of the end of the pharmacists’ monopoly (the alleged price drop) is an open question secured by the free speech provision included in Article 10 of the European Convention on Human Rights.

According to the Court of Appeal, the message broadcasted by MEL “indirectly enhanced the image of Leclerc supermarkets’ activities in the parapharmacy sector,” but did “not include any misleading element.”

II.  No Denigration

The pharmacists’ representatives claimed that the media campaign was of a smear nature.

The Court of First Instance held that the commercials constituted unfair competition practices taking the form of a collective denigration of the entire profession.

On the contrary, the Court of Appeal considered that the unfair competition claim had no ground in the context since “there is precisely no competition” given the monopoly, hereby reminding that in order for a claim based on unfair competition to succeed, several cumulative conditions must be fulfilled, in particular a competitive relationship.

Furthermore, the Appellate Judges must certainly have been more sensitive to humor than the First Instance Judges.

Indeed, whereas the latter held that “no ironical interpretation” of the commercials was possible, the Court of Appeal ruled that MEL’s campaign did not exceed what is permitted as far as humoristic terms are concerned.

More generally, considering that the French Court’s duty is to stop practices that contradict the law in a manifest way and not “to abstractly arbitrate an ideological debate,” the Court of Appeal rejected all the pharmacists’ claims.

* * *

The pharmacists’ representatives eventually failed in demonstrating an obvious breach of the law as required in such summary proceedings. Yet, whatever the legal arguments that may prevail on the merits in a possible future case, this campaign had the effect of informing the general public of the monopolistic situation of the French pharmacists.

With this case, MEL has above all set the cat among the pigeons at a moment when the Health Minister, Mrs. Roselyne Bachelot, has just authorized the “over-the-counter” selling of 217 medicines (“Decret” n° 2008-641 of June 30, 2008), and whereas France is pressed, urged by the European Commission, to open the capital of French pharmacies to non-pharmacists.

[1] Chairman & CEO of the hypermarkets chain LECLERC.

[2] Union Nationale des Pharmacies de France, Union des Syndicats de Pharmaciens d’Officine, Directlabo SA, Univers Pharmacie SAS.

[3] Ex parte order n° 08/00030 of April, 21st 2008, Tribunal de Grande Instance de Colmar.

[4] Decision n° 08/02047 of Mai, 7th 2008, Colmar Court of Appeal, 1ère Ch. Civ., Section B.