§ Mr. Nicholas BennettTo ask the Chancellor of the Duchy of Lancaster when the report of the Monopolies and Mergers Commission on the supply of opium derivatives is to be published; and if he will make a statement.
§ Mr. MaudeThe report is published today. The Monopolies and Mergers Commission found that a company with around 87 per cent. of the market in the supply of specified opium derivatives has exploited this monopoly situation by engaging in price discrimination and has been enabled to charge high prices in the domestic market, leading to very high levels of profit. The commission concluded that these practices were against the public interest.
The commission established that Macfarlan Smith Ltd, a subsidiary of Glaxo plc, had around 87 per cent. of the market in the supply of morphine, codeine, dihydroco-deine, diamorphine, ethylmorphine and pholcodine and was therefore a scale monopolist as defined in the Fair Trading Act 1973. The only other manufacturer is the Boots Company plc, which produced codeine and small amounts of morphine, principally for use in-house.
Opium derivatives are subject to domestic and international controls under the Misuse of Drugs Act 1971 and the United Nations single convention on narcotic drugs 1961 and any person wishing to manufacture or process these products in the United Kingdom, or to import them, requires a Home Office licence. There are no imports of opium derivatives into the United Kingdom because it has been Home Office policy for many years not to issue import licences.
The commission stated in its report that to increase competition in this market was of prime importance. It recommended that the Home Office, in conjunction with other Government Departments, should work towards the creation of a single EC market in the reference products through the reciprocal opening up of trade between EC member countries as soon as possible and not later than 1992. It also concluded that a measure of price protection for Macfarlan Smith's customers in the United Kingdom was necessary and recommended that the company should be required not to increase its maximum prices for reference products to these customers for a period of three years, except in the event of substantial and unavoidable increases in its costs.
We accept the commission's findings that the monopoly has effects adverse to the public interest and agree that it is most important to increase competition in this market. Therefore my right hon. and noble Friend the Secretary of State will discuss with my right hon. Friend the Home Secretary, the best means to relieve Macfarlan Smith's customers from the company's abuse of its monopoly power while maintaining adequate safeguards against illicit trade. We hope to achieve this quickly so that a price freeze in the interim will not be necessary. Meanwhile my right hon. and noble Friend the Secretary of State is inviting the Director General of Fair Trading to seek an undertaking from the monopolist that it will continue to make its list of maximum prices available to customers.