* CMA says GSK delayed generic competition to Seroxat
* GSK disagrees and considering grounds for appeal
* Merck KGaA also fined as former parent of generic firm (Adds Merck comment)
By Ben Hirschler
LONDON, Feb 12 (Reuters) - Britain's competition watchdoghas fined GlaxoSmithKline 37.6 million pounds ($54.4million) for market abuse in striking deals to delay the launchof cheap generic copies of its former blockbusterantidepressant Seroxat.
Generic drug companies involved, including Germany's MerckKGaA, were also fined smaller amounts, the Competitionand Markets Authority (CMA) said on Friday, bringing the totalpenalties to 45 million pounds.
GSK said it disagreed with the decision and was consideringgrounds for appeal.
The CMA move is the latest example of regulators trying tocurb "pay-for-delay" deals by drug companies and followsprevious actions by U.S. and European antitrust authorities. Thewatchdog first accused GSK of anti-competitive behaviour overSeroxat in April 2013, but it has only now handed out fines.
"Today's decision sends out a strong message that we willtackle illegal behaviour that is designed to stifle competitionat the expense of customers," CMA enforcement head MichaelGrenfell said in a statement.
The case relates to agreements struck more than a decadeago. Since then the patents protecting paroxetine, the activeingredient in Seroxat, have expired and the arrangements underinvestigation have been terminated.
Between 2001 and 2004, the CMA said GSK paid generic drugcompanies over 50 million pounds with the intention of delayingthe potential entry of independent competitors, therebydepriving the National Health Service (NHS) of cheaper supplies.
When independent generic copies eventually arrived at theend of 2003, average paroxetine prices dropped by more than 70percent in two years.
GSK said it struck the deals in order to settle costly,complex and uncertain patent disputes and its action hadactually brought down the cost of medicine for the state-runhealth service by allowing some generic competition.
"The agreements allowed the generics companies to enter themarket early with a paroxetine product and ultimately enabled asaving of over 15 million pounds to the NHS," the company said.
Among the generic companies involved in the case, the CMAsaid it had fined Merck KGaA 5.8 million pounds, as the formerparent of Generics UK (GUK), while a 1.5 million pounds penaltywas imposed for infringements by Alpharma.
Merck, which sold GUK to Mylan in 2007, said it hadnot been directly involved, adding it had made adequateprovision for the fine, which would have no material impact onits financial results.
The issue of brand-name pharmaceutical companies payingmakers of generic drugs to drop patent challenges was at thecentre of a European review of the sector in 2008-2009, whichdid not result in any action against GSK.
($1 = 0.6909 pounds) (Additional reporting by Nadine Schimroszik in Frankfurt;Editing by Jason Neely and Mark Potter)
Glaxosmithkline (GSK)