The Office of Fair Trading ('OFT') has fined the consumer goods group Reckitt Benckiser £10.2 million in relation to its Gaviscon anti-heartburn product, for infringing Article 102 of the TFEU and the Chapter II prohibition of the UK Competition Act 1998. The fine was the subject of an 'early resolution' agreement under which, in return for a reduced fine, the company admitted its conduct infringed both UK and EU competition law and agreed to co-operate with the OFT. Under this arrangement, the fine was reduced by 15% - from £12 million to £10.2 million.
The fine relates to Reckitt Benckiser's decision to withdraw and de-list National Health Service ('NHS') packs of Gaviscon Original Liquid (the 'Original') from the NHS prescription channel in 2005, this being after the expiration of its patent for the product but before the generic name for the product had been assigned. When an out-of-patent drug has expired it is assigned a generic name. General Practitioners ('GPs') can then use prescribing software to search for a well-known branded product, such as Gaviscon, and provide patients with an 'open' prescription that lists the generic name of the product. Pharmacies then choose whether to dispense the branded drug, or an equivalent, but cheaper, generic product. The choice encourages strong price competition between pharmaceutical suppliers and can result in considerable savings to the NHS.
The de-listing and withdrawal of the Original meant that when GPs searched for 'Gaviscon' on the prescribing software, the product identified would be Reckitt Benckiser's alternative product Gaviscon Advance Liquid ('Advanced Gaviscon'), which is patented until 2016. The Original, for which a generic version could have been provided, would not appear. The result is that more prescriptions would be issued for Advanced Gaviscon as pharmacies have to dispense it as it is patent protected and no generic equivalent exists. The OFT said that Reckitt Benckiser's conduct had the intention of limiting pharmacy choice and hindering competition from suppliers of generic medicines.
This is the first time the OFT has laid down a penalty for abuse of dominance under Article 102/Chapter II since 2003. The OFT Chief Executive stressed the public policy concerns in making the ruling, stating that "Vigorous competition between firms is an important driver of efficiency and value, and where they supply to the public sector it is vital to ensure taxpayers get the best value for money." However he did go on to praise Reckitt Benckiser for its early and constructive co-operation which allowed an efficient decision, in terms of both time and money, to be arrived at for both parties.
The OFT states that it is not requiring Reckitt Benckiser to re-introduce NHS packs of the Original, given the limited benefits this would make. The company may however face private actions for damages, with the NHS understood to have launched a High Court claim.
To view Community Week, Issue 517 – 15 April 2011 in full, click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
