Reckitt Fined $16.4 Million by U.K. Regulator Over Hearturn Drug Supplies

Reckitt Benckiser Group Plc was fined 10.2 million pounds ($16.4 million) by a U.K. regulator for wrongfully stopping supplies of a heartburn medicine to the National Health Service after its patent expired.

The fine was lowered from 12 million pounds after Slough, England-based Reckitt admitted dropping the drug, Gaviscon Original Liquid, too quickly from the service’s prescription channel in 2005 to boost sales of a version with an active patent, the Office of Fair Trading said today in a statement.

“This case underlines our determination to prevent companies with a dominant position in a market from using their strength to seek to restrict competition from rivals,” OFT Chief Executive Officer John Fingleton said in the statement.

Reckitt, the world’s biggest maker of household cleaners, was accused of removing the drug when the patent expired and before its generic name had been published. The move blocked doctors from prescribing a cheaper generic version and ensured more prescriptions for its alternative product, Gaviscon Advance Liquid, whose patent doesn’t expire until 2016, the OFT said.

The violation took place “under a highly complex area of competition law,” and before cases that clarified the type of infringement, Reckitt spokeswoman Sally Ann Wilkinson said today in a statement.

“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,” Wilkinson said in the statement.

Generic Version

The regulator first made the claims in February after receiving a complaint from Pinewood Laboratories Ltd., which makes a generic version of Gaviscon called Acidex.

“This shows that big companies cannot abuse a dominant position and escape unpunished for anticompetitive behavior,” Pinewood’s lawyer, Marc Israel of Macfarlanes LLP, said in a statement. “Acidex is widely available, but Reckitt’s conduct resulted in market penetration of the cheaper generic alternative being severely limited.”

Reckitt, the maker of Nurofen painkillers and Lysol cleaners, fell 9 pence to 3,443 pence at 9:33 a.m. in London trading.

The fine comes one day after the U.K. government revealed the OFT would be merged with another regulator, the Competition Commission.

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

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