We welcomed this Office of Fair Trading report, which was published on 7 March 2006. As part of its statutory role, the OFT regularly reviews undertakings given by organisations following earlier competition investigations. In this case, the OFT reviewed the undertakings by MSL following a report from the Monopolies and Mergers Commission (MMC), and concluded that competition was being impeded by the impact of government policy in the licensing of imports for opium derivatives. It made the recommendation that the Government consider competition when setting licensing policy for the import of opium derivatives.

The OFT recommendation is in line with the Government's commitment to encourage and enhance the competitive process to bring the wider benefits to the UK economy. Preventing abuse of market power is a key element of this, and it is important to ensure that regulation which affects such market power is operated in a transparent manner. It is therefore clear that the Government should regularly review policy decisions such as this to ensure that the detrimental impact to competition is prevented, or, where other objectives intervene, limited. The OFT report has provided an excellent catalyst for such a review, and the Government will commit to repeating the process of review every five years.

During discussion with MSL and other parties while developing the response, a consistent complaint was the lack of a level playing field between the UK and other European countries (something recognised in the original MMC report). Currently, the UK is the only major European producer to allow imports.

There has been limited discussion of this at European level, and the Government are committed to raising this issue again with the European Commission to develop options for the creation of a single market for these products.

The full government action plan is attached and copies of OFT's report will be placed in the Members’ Library. In preparing this response, we have worked closely with the relevant government departments, in particular the Home Office, which is responsible for licensing policy, and the Department of Health.