Sri Ramakrishna Services (SRS), a major drug distributor has filed a complaint with the Monopolies and Restrictive Trade Practices Commission (MRTPC) against the unfair trade practices indulged in by the trade bodies and two companies namely Novartis and Sandoz. The complainant has charged that the companies are disrupting supply of lifesaving drugs to the public and are also preventing the business activities of distributors.
The complaint was filed under Sec. 2(O) read with Secs. 33, 36a, 36b and 37 of the MRTP Act, 1969. The trade and industry bodies named are Karnataka Chemists & Druggists Association, Bangalore, Mysore Chemists & Druggists Association, AIOCD, PAMDAL, IDMA and OPPI.
SRS has demanded for a non restrictive supply chain for pharmaceutical products. For over a decade, it has been circulating a newsletter 'SRS Times' voicing trade issues including VAT. The practice of the KCDA insisting upon a NOC to be obtained by SRS for appointment as stockists by pharmaceutical companies was brought to the notice in this newsletter.
The complaint stated that in the last few years, the KCDA has been indulging in distorting competition and supply of drugs to the public. Circulars issued insisted that no manufacturer could appoint a stockist/wholesaler/C&F agents without obtaining NOC from KCDA. In September 2005, KCDA published a list of C&F agents affiliated to it and instructed manufacturers to appoint only them.
The KCDA newsletter published the agreement of Novartis India, Sandoz and GSK. It also stated that GSK agreed to resume supplies to all stockists after recommendation by KCDA, the complaint said.
KCDA made frequent boycott calls on manufacturers citing "trade" issues. It issued a circular about reimbursement of one per cent tax difference to stockists by manufacturers. A directive was sent to all district associations and wholesalers to restore business only to manufacturers who agreed to reimburse the one per cent. It threatened to initiate non co-operation movement by the trade on companies refusing to reimburse the tax difference. It imposed stringent non co-operation with Abbott (I) Ltd and directed all stockists to follow instructions strictly.
AIOCD, the parent body of KCDA, advised all trade bodies to carry out such operations. But most of the wholesalers in Mysore ignored the boycott call. SRS used to place supply orders to Sandoz and received the supplies till mid- June. But, for supplies dated June 23 & 25 and July 6, 2005 for which SRS enclosed a blank cheque bearing No. 679402, it noticed no supplies.
SRS subsequently learnt from Bangalore C&F agents and Sandoz that the supplies were stopped under instructions from KCDA. This was violative of Rule. 18(a), DPCO, 1995 where no manufacturer or distributor could withhold a dealer to supply medicines.
Meanwhile Sandoz appointed a new wholesaler, approved by KCDA.
SRS lodged a complaint with the Assistant Drugs Controller, Mysore district seeking his intervention and to resume supplies by Sandoz but no action was taken. The complaint has requested the MRTP to enquire into the unfair trade practices being carried on by KCDA and AIODC apart from sorting out the issue of drug supplies from Sandoz.