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The OFT yesterday issued a decision that Reckitt Benckiser abused its dominant position by withdrawing NHS packs of its Gaviscon Original Liquid medicine, and has imposed a fine of £10.2m. The fine was the subject of an earlier agreement under which the company admitted its conduct infringed UK and European competition law and agreed to co-operate with the OFT.

This brings the OFT's investigation to a conclusion.

The OFT found that Reckitt Benckiser withdrew Gaviscon Original Liquid with the intention of limiting pharmacy choice and hindering competition from suppliers of generic medicines.

Where a branded medicine's patent has expired and a 'generic name' has been assigned to it, GPs can use their prescribing software to search for the brand and then provide patients with an 'open' prescription that refers to its generic name. Pharmacies that receive these prescriptions can choose whether to dispense the relevant brand or equivalent generic medicines. This choice provides for strong price competition between pharmaceutical suppliers and can result in considerable savings to the NHS.

The OFT found that Reckitt Benckiser withdrew NHS packs of its profitable Gaviscon Original Liquid from the NHS prescription channel after the product's patent had expired but before the publication of the generic name for it, so that more prescriptions would be issued for its alternative product, Gaviscon Advance Liquid. Pharmacies that receive prescriptions for Gaviscon Advance Liquid must dispense it, as it is patent protected and there are no generic equivalent medicines.

John Fingleton, the OFT Chief Executive, said:

'Vigorous competition between firms is an important driver of efficiency and value, and where they supply the public sector it is vital to ensure taxpayers get the best value for money.

'This action demonstrates both our willingness to take action against companies abusing dominant positions, and to impose fines that will deter other businesses from engaging in anticompetitive behaviour generally.

'We welcome Reckitt Benckiser's co-operation in this case which enabled us to reach a swift decision, reducing time and costs for both the OFT and the company itself.'

NOTES

1. For further information on the infringement, see the case page.
2. A 'generic product' is defined in the EC Pharma Sector Inquiry Report as a medicinal product which has the same qualitative and quantitative composition in active substances and the same pharmaceutical form as a reference (originator) medicinal product and whose bioequivalence with the reference medicinal product has been demonstrated. 
3. Both Gaviscon Original Liquid and Gaviscon Advance Liquid remain available for purchase over-the-counter. Gaviscon Advance Liquid remains available in NHS packs in the NHS prescription channel. Gaviscon Advance Liquid, which was introduced in 1997, is patent protected until 2016, and is not subject to competition from equivalent generic medicines. 
4. On 23 February 2010, the OFT issued a Statement of Objections to Reckitt Benckiser, setting out its proposed findings. See press release OFT issues Statement of Objections for alleged abuse of a dominant position by Reckitt Benckiser. A Statement of Objections gives notice of a proposed infringement decision under the Competition Act 1998 to the party or parties involved. It sets out the facts on which the OFT relies, the objections raised by the OFT, the action(s) it proposes to take and the reasons for it. The party or parties then have the opportunity to make written and oral representations in response to the case set out by the OFT. 
5. On 15 October 2010, the OFT announced that Reckitt Benckiser admitted infringing UK and European competition law by withdrawing and de-listing Gaviscon Original Liquid from the NHS prescription channel in 2005, and agreed to pay a fine of £10.2 million. The fine was reduced from £12 million to reflect Reckitt Benckiser's admission and decision to co-operate as part of an early resolution agreement with the OFT. See press release Reckitt Benckiser agrees to pay £10.2 million penalty for abuse of dominance.
6. Under the Chapter II prohibition of the Competition Act 1998 and Article 102 of the Treaty of the Functioning of the European Union, the abuse of a dominant position is prohibited. Any business found to have abused a dominant position could be fined up to 10 per cent of its worldwide turnover. 
7. In calculating the appropriate fine, the OFT takes into account a number of factors including the seriousness of the infringement, the relevant turnover of the undertaking in question and any mitigating and/or aggravating factors. The basis of the OFT's considerations is set out in the OFT's guidance as to the appropriate amount of a penalty (pdf 145kb).