[Ip-health] OFT fines Reckitt £10m for Gaviscon market abuse

Riaz K Tayob riaz.tayob at gmail.com
Sun Oct 17 13:31:41 PDT 2010

[And lets just forget that the "scientific" (or scientism) community 
"suppressed" data on h.pylori and ulcers for decades, so that antacid 
makers could make money... perhaps in mortality and morbidity terms, Big 
Pharma does make the tobacco industry look better...]

  OFT fines Reckitt £10m for Gaviscon market abuse

By Alistair Dawber

/Saturday, 16 October 2010/

Reckitt Benckiser was slapped with a £10.2m fine by the Office of Fair 
Trading yesterday for abusing its dominant market position in relation 
to the National Health Service.

The maker of pharmacueticals and domestic products was penalised after 
it admitted that it unlawfully stopped supplying Gaviscon Original 
Liquid, a heartburn treatment, after its patent had expired. The effect 
was to boost sales of the similarly named Gaviscon Advance Liquid, whose 
patent does not expire until 2016 -- a move that is banned under 
competition law.

Where a branded medicine's patent has expired and a generic name has 
been assigned to it, doctors can use software to search for the brand 
and then provide patients with a so-called "open prescription", which 
allows pharmacies to choose whether to dispense the relevant brand, or a 
cheaper alternative.

Reckitt's action blocked GPs from prescribing a cheaper generic version 
and ensured more prescriptions for Gaviscon Advance Liquid.

The fine was reduced from £12m reflecting the company's early admission 
and, according to the OFT, its decision to co-operate as part of an 
early resolution agreement. "This OFT investigation relates to an 
infringement that took place a number of years ago under a highly 
complex area of competition law, on which there have only more recently 
been clarifying cases," Reckitt Benckiser said in a statement last night.

"Therefore, while the company believed at the time it was acting within 
the law, as is always our intent, we respect the view of the OFT in this 
matter and have agreed to settle."

Reckitt, which has a market capitalisation of £25bn, refused a request 
for an interview.

A spokesman for the OFT said it was not required to disclose how much 
the firm's action move had cost the health service. The UK market for 
heartburn medicine is worth between £15m and £20m.

"This fine sends a strong signal to deter others that are in a dominant 
market position," said Anne Pope, a senior director in the OFT's goods 
group. "The law is complicated in this area, but it does specifically 
prohibit abuse of a dominant market position -- it is clearly not 
possible for the law to list all the possible examples.

"The market for this type of drug is worth between £15m and £20m, so 
this fine accounts for a large proportion of Reckitt's turnover in this 

Industry analysts brushed the fine aside, arguing instead that Reckitt's 
proposed acquisition of SSL International, the maker of Durex condoms 
and Scholl foot care products, was a significantly more important event 
for the company.

"The fact the SSL deal looks as if it is going to complete soon is 
extremely positive," said Tom Gidley-Kitchin, an analyst at Charles Stanley.

Other sector experts said Reckitt might be on the lookout for further 
acquisitions. Chas Manso de Zuniga, of Evolution Securities, argued that 
a number of American companies could be on Reckitt's radar.

More information about the Ip-health mailing list