GlaxoSmithKline hit by £37m fine from CMA for breaching law on anticompetitive agreements

Pharmaceutical giant GlaxoSmithKline has been hit with a £37m (€47.6m, $53.6m) fine by the Competition Market Authority (CMA) for allegedly adopting an anticompetitive behaviour aimed at reducing competition at the expense of the NHS.

GSK, whose fine makes up most of the combined £45m sanction imposed on a number of pharmaceutical companies by the competition watchdog, said the penalty relates to £50m of payments it made between 2001 and 2004 to ensure its rivals would not be able to develop a replacement for Seroxat, the group's anti-depression treatment.

"GSK challenged these pharmaceutical companies, alleging that their generic products would infringe its patents, and commenced litigation proceedings against GUK and Alpharma," the CMA said in a statement on Friday (12 February).

"Before that litigation went to trial, GUK and Alpharma each entered into agreements with GSK, which included terms prohibiting their independent entry into the UK paroxetine market."

At the time, GSK's Seroxat was a leading product in the industry, with 4.2 million prescriptions issued in 2000 and £90m worth of sales in the following 12 months, the watchdog added, indicating the payment made by the FTSE 100 delayed the arrival of generic treatment on the market.

"These 'pay-for-delay' agreements deferred the competition that the threat of independent generic entry could offer, and potentially deprived the NHS of the significant price falls that generally result from generic competition," the CMA said.

"In this case, when independent generic entry eventually took place at the end of 2003, average paroxetine prices dropped by over 70% in two years."

The watchdog added GSK's individual agreements with GUK and Alpharma, both of which were aiming to enter the market with a generic anti-depression treatment back in 2003, breached competition law prohibition on anticompetitive agreements.

"Today's decision sends out a strong message that we will tackle illegal behaviour that is designed to stifle competition at the expense of customers – in this case, the NHS and, ultimately, taxpayers," said Michael Grenfell, the CMA's executive director for enforcement.

"This investigation shows our determination to take enforcement action against illegal anti-competitive practices in sectors big and small. Cracking down on these practices is essential to protect consumers, to encourage legitimate business activity that such practices stifle, and to stimulate innovation and growth."