The global consumer goods company, Reckitt Benckiser, has agreed to pay a penalty of £10.2 million for an abuse of dominance in relation to its heartburn medication product, Gaviscon Original Liquid.
The fine was imposed after Benckiser entered into an early resolution agreement with the Office of Fair Trading ("OFT"). As part of the deal, the infringement penalty was reduced from £12 million to reflect Benckiser's early admission of guilt and their cooperation with the OFT's investigation.
The facts of the case are quite complex. Broadly, the OFT's allegations centred around an attempt by Benckiser to maintain its market dominance by preventing the development of competition in relation to its heartburn medication.
When a branded medicine's patent expires, a generic name is then assigned to it. This enables price competition from producers of equivalent generic products, as GPs can issue patients with "open" prescriptions. The pharmaceutical dispenser then has the choice of issuing the original "branded" product or an alternative generic product.
In the current case, the OFT alleged that Benckiser withdrew its Gaviscon Original Liquid from the NHS prescription list before a generic name was issued in a deliberate attempt to prevent competition. The withdrawal meant that, in the absence of both the Original Liquid and any authorised alternatives, GPs would be forced to turn to Benckiser's other product - Gaviscon Advance Liquid - which had patent protection until 2016.
Whilst this fine should make Benckiser think twice about its practices in the future, the OFT fine may not be the end of the matter. The Competition Act 1998 allows a third party which has suffered loss as a result of the anti competitive conduct to sue the infringer for damages. Indeed it has been reported that the NHS counter-fraud office is conducting an investigation into the price the NHS was charged for Benckiser's product. Moreover, drug companies which produce Gaviscon equivalent medicines are also reported to be considering private action for loss of sales.
Accordingly, notwithstanding the significant fine imposed by the OFT, Benckiser may be yet still to feel the full "burn" of UK competition law enforcement.