20/10    23 February 2010

The OFT has today issued a Statement of Objections alleging that Reckitt Benckiser abused its dominant position in the market for the NHS supply of alginate and antacid heartburn medicines.

The OFT alleges that Reckitt Benckiser sought to restrict competition to its Gaviscon brand by withdrawing and de-listing its NHS packs of Gaviscon Original Liquid from the NHS prescription channel.

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

The OFT alleges that the withdrawal of NHS packs of Gaviscon Original Liquid from the NHS prescription channel was deliberately timed to occur before the publication of the generic name for this product so that when GPs search for 'Gaviscon' prescription packs they will identify Gaviscon Advance Liquid, which is patent protected, and not Gaviscon Original Liquid, for which an 'open' prescription could otherwise be provided.

No assumption should be made at this stage that there has been an infringement of competition law. The OFT will not be in a position to decide if the law has been breached until it has received and reviewed Reckitt Benckiser's response to the Statement of Objections and any comments from interested third parties.

Simon Williams, Senior Director for Goods at the OFT, said:

'This case raises significant and complex competition issues relating to the supply of prescription drugs to the NHS. Reckitt Benckiser will now have a full opportunity to respond to our proposed findings before we decide whether competition law has in fact been infringed.'

NOTES

1. 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 is patent protected until 2016, and is not subject to competition from equivalent generic medicines. 
   
2. Under the Competition Act 1998 and Article 102 of the Treaty on 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. In calculating financial penalties, the OFT takes into account a number of factors including seriousness of the infringement(s), turnover in the relevant market and any mitigating and/or aggravating factors. The basis of the OFT's considerations are set out in the OFT's guidance as to the appropriate amount of a penalty (pdf 145 kb).
   
3. A Statement of Objections gives notice of a proposed infringement decision under the Competition Act 1998 to the parties involved. The parties then have the opportunity to make written and oral representations in response to the case set out by the OFT. Such representations will be considered by the OFT before any final decision is made.
   
4. The Statement of Objections will not be published. In accordance with the OFT's guidance on Involving third parties in Competition Act investigations (pdf 289 kb), any person who wishes to comment on the OFT's provisional findings, and who is in a position to materially assist the OFT in testing its factual, legal or economic arguments, may request a non-confidential version of the statement of objections by contacting the OFT no later than 22 March 2010.