Reckitt de-listed Gaviscon from the NHS to keep generics out — £10.2M abuse penalty

Gaviscon Original Liquid was one of Britain's best-known heartburn remedies, and its patent had expired. In NHS prescribing that matters, because once a brand loses patent protection it is assigned a generic name. A GP then writes an open prescription for the generic, and the pharmacist may dispense any equivalent — usually a cheaper alginate. GPs' computers make this automatic: type the brand, and the system offers the generic alternative if one is listed. That substitution is what keeps NHS drug costs down.

Reckitt's answer was to remove the problem rather than compete with it. In 2005 the company withdrew NHS packs of Gaviscon Original Liquid from the prescription channel and had the product de-listed — and it did so after the patent had expired but before the generic name had been published. With the brand gone from the NHS list, a GP searching for Gaviscon got no cheaper generic alternative. Demand moved instead to Gaviscon Advance Liquid, still under patent, which a pharmacy receiving that prescription had to dispense.

The move stayed quiet until a whistleblower took it to BBC Newsnight in 2008. The OFT opened a formal investigation on 1 November 2008, issued a Statement of Objections on 23 February 2010, and on 15 October 2010 announced an early resolution: Reckitt admitted infringing both the Chapter II prohibition of the Competition Act 1998 and Article 102 TFEU. The OFT's decision, published 13 April 2011, imposed £10.2 million — cut from an indicative £12 million for the admission and co-operation, but still the largest abuse-of-dominance penalty the OFT had issued.

£10.2M penalty — reduced from an indicative £12M for admitting and settling — then the largest the OFT had imposed in an abuse-of-dominance case.

The tactic was aimed at software, not at customers. Removing a listing changed what the prescribing system returned, so no doctor or pharmacist ever had to make a choice.

Timing did the work: withdrawing after patent expiry but before the generic name was published closed the window in which substitution could happen at all.

Gaviscon Advance was still patent-protected, so a prescription naming it had to be dispensed as branded — the steer locked itself in.

A dominant firm carries a special responsibility not to distort competition, and that duty covers channel engineering as much as pricing.

Reckitt's defence — that the law was unclear and it believed it was acting lawfully — cut nothing. Only the admission and co-operation reduced the penalty.

A loophole in a customer's workflow is not a moat. Reckitt exploited how NHS prescribing software handled generics; the OFT read the same move as abuse of dominance.

Reckitt insisted it had believed it was acting lawfully in a complex area of competition law that had only recently been clarified, and said it respected the OFT's view. Ann Pope, the OFT's senior director, said the fine sent "a clear signal to businesses in a dominant position". The decision became a reference point for withdrawal-and-de-listing conduct in pharma, where a firm removes a patent-expired brand from a reimbursement channel to keep generics out. It also showed that a whistleblower reaching a television programme could start a competition case.