The Competition Commission of India (CCI), while passing an interim order in favour of Peeveear Medical Agencies in Kerala, has restrained the All India Organisation of Chemists and Druggists (AIOCD) from issuing any direction or threat to the Mumbai based multinational company Janssen Cilag Pharmaceuticals to terminate its distributorship with Peeveear Medicals.
The CCI has also ordered Janssen Cilag not to discontinue its distributorship with the Palakkadu based Peeveear Agencies. The Commission passed the interim order on 23.08.2011 under section 33 of the Competition Act, 2002.
In an information (petition) filed by Peeveear Medicals it was alleged that the AIOCD was exercising complete and absolute control over individual stockist of drugs and medicines in the country bypassing from the power vested with it as per its Memorandum of Association. It is stated in the memorandum of association of the national trade body that the objective is to protect and promote the interests of persons engaged in drug trading industry and allied lines. The membership of the AIOCD is open only to the state Chemists and Druggists Associations which can either become an ordinary or associate member, not the traders individually.
Peeveear Medicals was appointed as the distributor of Janssen Cilag from March this year and it started sale of their products immediately after it. But, on April 26 the agency received an email that supplies from Janssen Cilag would not be made to it for want of authentic documents to support the appointment of distributorship. The agency in its petition mentioned that the lack of authenticity referred to in the e-mail was about a No Objection Certificate (NOC) from a faction of the All Kerala Chemists and Druggists Association (AKCDA) showing allegiance to J S Shinde, the president of AIOCD. The informant, Peeveear Medical Agencies, belongs to another group led by A N Mohan and K Sivasankaran. The petition says that at the behest of Shinde, a rival group was set up in Kerala to take control of the AKCDA because Shinde has rivalry with A N Mohan and his group members.
Further it was alleged that the main reason for the interruption of supplies from Janssen Cilag was that it did not take consent from the group supported by AIOCD president. The agency informed the Commission that Janssen Cilag has been forced to send the email since their supplies were boycotted in the entire area of Kerala during the period from 12.4.2011 to 26.4.2011 on the advice of AIOCD.
“Under the pretext of protecting the interests of its members, the AIOCD is abusing its dominant position and is regularly involved in anti-competitive agreements which have the result of limiting and controlling the supply and marketing of pharmaceutical products, and thus directly influencing the purchase and sale price of the drugs throughout India. The AIOCD is controlling the trading policies of different manufacturing companies, controlling the profit margins, regulating the stockist/distributor agreements of each manufacturing company, recommending all its members and stockists the profit margins with respect to various companies and collecting Rs.2000 per product from every manufacturer in each state for giving permission to launch their new medicines in the name of Product Information Service”, the information filed before the Commission stated.
The informant has submitted that the AIOCD has been issuing dictats to stockists all over the country not to deal with the stocks of different medicine manufacturers.
Advocate Amit Gupta has appeared before the Commission in favour of the informant. AIOCD and Janssen Cilag were represented by Advocates Yusuf Iqbal and Aditya Narain.
The CCI has directed the Janssen Cilag not to effect its email dated 26.4.2011 stating termination of distributorship with the informant. The Commission considered several Supreme Court Judgments on various similar cases while passing the present interim order.
In May this year the Commission had restrained the AIOCD for the same reason in a case with Cuttack based C&F Agency, Santuka Associates Pvt Ltd.