The Competition Commission of India (CCI), an executive body under Competition Act 2002, and Competition amendment Act 2007, An Act to prohibits anti-competitive agreements, abuse of dominant position by enterprises and regulates combinations (acquisition, acquiring of control and M&A), which causes or likely to cause an appreciable adverse effect on competition within India.

On January 05, 2018 the CCI found two Chemists and Druggists Associations; The Chemists and Druggists Associations of Baroda (CDAB), and Federation of Gujarat State Chemists and Druggists Association (Gujarat Federation) respectively to be in contravention of the provisions of the Competition Act. As one of the stockiest based in Vadodara filed an information alleging that despite an earlier order of the Commission in the year 2012, CDAB, through its practices, has continued to limit and control the supply of drugs and medicines in the market by mandating 'No Objection Certificate' ('NOC'/'LOC') prior to appointment of stickiest and payment of 'Product Information Service' ('PIS') charges prior to introduction of new products in the market by pharmaceutical companies.

Investigation carried-out by the Director General ('DG') revealed involvement of the State Level Association, i.e. the Gujarat Federation, besides CDAB, in the alleged conduct. After detailed enquiry, the Commission has found that CDAB and the Gujarat Federation were indulging in the anti-competitive practice of insisting NOC prior to the appointment of new stockists by pharmaceutical companies. Further, the Gujarat Federation was found to be carrying on the practice of making introduction of new products in the market subject to payment of PIS charge and its approval. These practices were held to be limiting and controlling supplies of drugs/medicines in the market, in contravention of Section 3 (3) (b) read with Section 3 (1) of the Act. Further, the Commission has held office bearers of CDAB and Gujarat Federation, namely Shri V.T. Shah (President, CDAB), Shri Jashvant Patel (President, Gujarat Federation), to be responsible under Section 48 of the Act, for their involvement in the anticompetitive practices.

Accordingly, CDAB, Gujarat Federation and their office bearers have been directed to cease and desist from indulging in the aforesaid anti-competitive practices. Further, under the provisions of Section 27 of the Act, the Commission imposed a monetary penalty of Rs. 1, 08,588/- and Rs. 11, 11,549/- on CDAB and the Gujarat Federation, respectively, calculated at the rate of 10% of their respective average incomes. , Penalties of Rs. 34,048/- and Rs. 62,144/-, calculated at the rate of 10% of their respective average incomes, have also been imposed upon Shri V.T. Shah (President, CDAB) and Shri Jashvant Patel (President, Gujarat Federation).

This case is yet another example of how competitive markets and fair-play in the distribution of drugs/medicines are being compromised by persistent anti-competitive behavior of the chemist and druggist associations at the regional and state levels. It is a serious matter that despite various orders by the Commission in similar cases and specific directions through a press notice, chemist and druggist associations have not amended their ways and continue to indulge in such anti-competitive conduct1.

Conclusion:

The Competition Commission of India after considering the larger public interest involved in the distribution of drugs/medicines, deprecates such a conduct and its perpetration in any form by anyone responsible, be it the Associations, Stockists/Distributors/Wholesalers/Retailers or the Pharmaceutical Companies. Given the widespread and continuing indulgence in anti-competitive practices, CCI will be keeping a close watch on the conduct by all such entities in various parts of the country and will not hesitate to take action, wherever deemed necessary.

Footnote

 1 http://pib.nic.in/PressReleseDetail.aspx?PRID=1515612

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