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* OFT alleges anti-competitive deals to delay Seroxat copies
* GSK "strongly believes" it acted within the law
* Potential fine of up to 10 pct of worldwide turnover
* Alpharma, Generics (UK), Norton also under fire in case
By Ben Hirschler
LONDON, April 19 (Reuters) - Britain's competition bodyaccused GlaxoSmithKline of market abuse for strikingdeals with three generic drugmakers that paid them to delaylaunching cheap copies of its antidepressant Seroxat.
GSK, Britain's biggest drugmaker, said it believed it hadacted lawfully. If it is found to have broken the law, it couldbe fined up to 10 percent of its worldwide turnover, whichamounted to 26.4 billion pounds ($40.4 billion) in 2012.
The move by the Office of Fair Trading (OFT) is the latestexample of regulators trying to curb "pay-for-delay" deals,following a series of investigations against drug companies byU.S. and European antitrust officials.
The OFT alleged on Friday that GSK concludedanti-competitive agreements with Alpharma, Generics (UK) andNorton Healthcare over the supply of paroxetine - a top-sellingmedicine sold by GSK under the brand name Seroxat.
The case relates to deals struck a decade ago. The patentsprotecting paroxetine - known as Paxil in the United States -have now expired and the supply agreements under investigationwere terminated in 2004.
The British watchdog said the agreements includedsubstantial payments from GSK to the generic companies in returnfor their commitment to delay launching their products. Thisamounted to an abuse of GSK's dominant market position, it said.
GSK disputes the allegations, which relate to deals thatwere effective between 2001 and 2004.
"GSK supports fair competition and we very strongly believethat we acted within the law," the company said, adding that thedeals resulted in generic versions of paroxetine entering themarket before GSK's patents expired.
GSK also said the paroxetine case had been reviewed by theEuropean Commission in 2005-2006 and the EU body, which acts asantitrust regulator, formally concluded its inquiry last yearwith no further action.
COST SAVINGS
The OFT said it had a duty to investigate the case given theimportance of generic medicines in keeping a lid on costs forthe country's National Health Service (NHS).
"The introduction of generic medicines can lead to strongcompetition on price, which can drive savings for the NHS, tothe benefit of patients and, ultimately, taxpayers," said AnnPope, senior director of services, infrastructure and publicmarkets at the OFT.
The companies will have an opportunity to respond to theallegations before the OFT decides if competition law has beeninfringed.
Mike van Dulken, head of research at Accendo Markets, saidthe case had taken the shine of GSK shares, following a strongperformance earlier in the week, even though Seroxat/Paxil saleswere only 1.4 percent of group sales in 2012.
The stock was down 0.5 percent by 0918 GMT, underperforminga 0.4 percent rise in London's FTSE 100 index.
The issue of brand-name pharmaceutical companies payingmakers of generic drugs to drop patent challenges was also atthe centre of a European review of the sector in 2008-2009,which did not result in any action against GSK.
The topic has been thrown into the spotlight in recent yearsbecause of the growing role of generics in supplying cut-pricecopies of ageing blockbuster medicines in Western markets at afraction of the cost of the originals.
In the United States, the Federal Trade Commission has alsofought against pay-for-delay deals in court for more than adecade. The issue is now in front of the U.S. Supreme Court,which is expected to issue a decision by the end of June.
