Abuse of Indigestion: Whistleblower in TV Programme Triggers OFT Investigation

(by Andreas Stephan) Today, the UK’s Office of Fair Trading (OFT) issued a statement of objections against Reckitt Benckiser (RB), alleging abuse of a dominant position in its sales of popular heartburn remedy, Gaviscon, to the public health service (NHS). What makes this case different is that it was triggered by a whistleblower appearing in BBC’s Newsnight programme in 2008.

Reckitt Benckiser is alleged to have restricted competition for Gaviscon by de-listing the generic version from the NHS prescription channel. This is used by doctors to select appropriate drugs to prescribe to their patients. General Practitioners using the channel would allegedly have been unable to find the generic version – only the more expensive patented product. This was reportedly priced as much as three times the cost of the generic equivalent.

We are used to whistleblowers and media interest in cartel cases, but hang on a minute – this is abuse of dominance. The 2008 BBC programme alleged that Reckitt “maintained an effective monopoly on the market for years after the stomach medicine came off patent” and that “Reckitt Benckiser executives schemed to create obstacles to block rival manufacturers from selling cheap generic copies”. The whistleblower was a former senior RB executive who told the BBC that ‘the firm had “cheated the NHS” and could have saved it “millions of pounds”’.

It is important to note that these are only allegations at this stage, that RB has denied any wrongdoing and that it is only now being given the opportunity to respond to a statement of objections.  However, cases like this have the potential to raise public interest in competition law enforcement and to increase understanding of abusive conduct. Cases where the victim is a public service provider are particularly newsworthy in this respect, because the potential victims are tax payers rather than a narrowly defined group or downstream firms. The fact that this investigation was triggered by a television programme is particularly encouraging. It may reflect a strengthening competition culture in Britain.

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