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6EC03_01_que_20110617

Reckitt said reckitt benckiser believes it competes

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Unformatted text preview: he letter and spirit of the law. RB has stated that up to 80% of its revenues and profits from pharmaceutical sales could be lost after the launch of generic competitors.’ 20 Other OFT Investigations The Office of Fair Trading’s assault on the medicines market is the latest example of its increasingly aggressive interventions under chief executive John Fingleton. Since arriving at the OFT in 2006, Mr Fingleton has stepped up the regulator’s activities, launching a string of investigations into industries ranging from housebuilding to supermarkets to banking. ‘The OFT recently announced a review of barriers to entry, exit and expansion in the retail banking market. We are now talking to various companies about how well some financial markets work. Except where there are serious breaches of the law, the OFT’s preference is to seek ways for market problems to be resolved by companies themselves rather than by imposing solutions.’ There have been some OFT failures, for instance the attempt to regulate the banks regarding unauthorised overdraft fees failed when the High Court ruled that the charges were beyond the control of the OFT. However, a string of investigations is continuing, into both market abuse cases and more straightforward competition matters. The OFT is seeking, for example, the right to consider the merger of T-Mobile and Orange in the UK, rather than leaving the decision to Europe’s competition watchdogs. 25 30 35 Source: The Independent Online February 24 2010 James Thompson http://www.independent. co.uk/news/business/news/reckitt-could-face-16380m-fine-over-gaviscon-market-abuse-1908493.html’ and http://www.telegraph.co.uk/finance/businesslatestnews/7535749/Are-City-marketsworking-for-business-and-the-economy.html, 30 March 2010 10 38819A_GCE_Economics_June_2011.i10 10 *P38819A0108* 17/11/2010 14:30:34 (a) With reference to Extract 1, explain why governments allow patents to be granted. (b) Assess the economic effects on consumers of increased competition from generic (unbranded) products within the healthcare market. *(c) With reference to the information provided and your own knowledge, to what extent is the government’s competition policy successful in promoting competition between firms? *(d) To what extent does the threat of competition affect a firm’s behaviour? Answer either with reference to the healthcare product industry or to an industry of your choice. *P38819A0118* 38819A_GCE_Economics_June_2011.i11 11 (4) () (1) (16) 11 Turn over 17/11/2010 14:30:34 (a) With reference to Extract 1, explain why governments allow patents to be granted. (4) ......................................................................................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....
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