The Office of Fair Trading (OFT) announced this morning that Reckitt Benckiser has agreed to pay a penalty of £10.2 million for an abuse of dominant position in the market for the NHS supply of alginate and antacid heartburn medicines.
This brings to an end the OFT investigation into the withdrawing and de-listing of its Gaviscon Original Liquid from the NHS prescription channel in 2005. The original fine of £12 million was reduced to reflect Reckitt Benckiser's cooperation leading to an early resolution agreement with the OFT.
This announcement is a salutary reminder of the July judgment of the General Court in AstraZeneca which confirmed the entitlement of competition authorities to penalise the use (or mis-use) of regulatory frameworks where it impeded entry of generic medicines to the market. In that respect, a possibility of some form of demarcation between licit and illicit conduct is found in the General Court's condemnation of "regulatory procedures ..used without any basis in competition on the merits:"
Pharma, and indeed other sectors which involve management of patent portfolios, can take little comfort from today's short press release. A real challenge faces any holder of intellectual property rights operating in a regulated sector to apply the AstraZeneca judgement in a meaningful way and also to gauge the respective appetites of the OFT and other national competition authorities' to intervene.
Particularly unhelpful in that respect is the recognition that no harm need happen to the market. The General Court's judgement in AstraZeneca was that conduct need be merely 'capable of restricting competition' for it to be classified as abusive. Furthermore, the court decided that it was irrelevant whether AstraZeneca acted in "bad faith or positively fraudulent intent on its part", for "such conduct ... is contrary to the special responsibility of an undertaking in a dominant position not to impair by its conduct genuine undistorted competition in the common market".
The boundaries for abuse have been extended, and notably, so has the exposure to hefty fines. But commerce remains in the dark as to where the boundaries lie for this exposure.