UK: OFT fines Reckitt Benckiser £10.2 million for abuse of dominant position

01 October 2010

Jeremy Robinson

On 15 October 2010, the Office of Fair Trading (“OFT”) fined Reckitt Benckiser £10.2 million for abuse of a dominant position. Reckitt Benckiser admitted that it had infringed Article 102 of the Treaty on the Functioning of the European Union (“TFEU”) and the Chapter II prohibition of the Competition Act 1998, by withdrawing and de-listing Gaviscon Original Liquid from the NHS prescription channel in 2005 so as to favour its patent-protected Gaviscon Advance Liquid and obstruct generic product entry. The OFT reduced the fine from £12 million because Reckitt Benckiser had admitted the infringement and had co-operated with the OFT.  The case was closed by way of early resolution agreement.

When the patent for a branded medicine expires, and a generic name is assigned to the drug, GPs can search their prescribing software for the brand to provide patients with an “open” prescription that lists the generic name of the product. It is then up to pharmacies receiving these prescriptions to dispense the branded drug or equivalent (but cheaper) generic medicines. As a result, price competition between pharmaceutical suppliers is encouraged and can result in savings to the NHS.

On 23 February 2010, the OFT announced that it had issued a Statement of Objections (“SO”) to Reckitt Benckiser.  The SO alleged that, as a result of the de-listing and withdrawal of Gaviscon Original Liquid from the NHS prescription channel, following expiry of its patent protection but prior to the announcement of any generic name for such product, the product would not appear on GPs’ prescribing software when they searched for “Gaviscon”.  Instead, Reckitt Benckiser’s alternative product Gaviscon Advance Liquid, which is patent protected until 2016, would be identified. Pharmacies would have no choice but to dispense it, as no generic equivalent would be found.   Thus the effect of the withdrawal of Gaviscon Original Liquid was to raise a barrier to entry to generic products in favour of Reckitt Benckiser’s patent-protected Gaviscon Advance Liquid.

The case is significant in several respects:

  • It represents the largest fine the OFT has imposed under the Chapter II prohibition to date;

  • The OFT has applied an early resolution agreement to conclude the case earlier than might otherwise have been the case;

  • The case represents the OFT’s continuing interest in the pharmaceutical sector.

Source: OFT press release