The supermarket chain Asda, accused the peers of ignoring consumers' interests and warned they "could legally enshrine price-fixing by manufacturers on everyday medicines and vitamins".
The Consumers' Association attacked the decision as a "tax on the infirm", and said it would mean people would continue paying inflated prices for over-the-counter medicines. Sheila McKechnie, director of the association, said: "It does not help rural areas, it is simply a tax on the infirm."
But the vote - a government defeat - was a victory for pharmacists and local chemists' shops, who warn they will be forced out of business if supermarkets are allowed to slash the price of non-prescription drugs.
The Government defeat came during the final stages of the Competition Bill, when a cross-party amendment was approved by 138 to 81, a majority of 57. The amendment allows community pharmacists several years' breathing space before having to cut the price of non-prescription medicines, and stops the Office of Fair Trading challenging resale price maintenance on over-the-counter medicines in the Restrictive Practices Court
Margaret Beckett, President of the Board of Trade, will seek to overturn the defeat in the Commons, but the Government now faces a dilemma. Frank Dobson, the Secretary of State for Health, and a group of 133 Labour MPs are backing the pharmacists.
The Community Pharmacy Action Group has mounted a successful campaign to defeat the Government in the Lords, and will be stepping up its efforts to prevent the Government reversing the vote with its majority in the Commons.
But Lord Simon of Highbury, the trade minister, warned that the decision could be challenged by the European Commission as anti-competitive.
The amendment was moved by Lord McNally, the Liberal Democrat peer who last month led another successful Lords revolt; against predatory pricing in the newspaper industry. In the debate, he warned that the Competition Bill, as it stood, could do "grave damage" to the Government's aim of expanding pharmacy provision.Reuse content