The Competition Commission of India (CCI) has imposed a penalty of Rs. 10.62 lakh on Chemists and Druggists Association, Goa (CDAG) for anti-competitive practices.
This has been done vide a common order in suo moto case No. 05 of 2013. As per the order, CDAG has disregarded the order of the Commission dated 11.06.2012.
The Commission was informed by Mario Vaz, proprietor of M/s Xcel Healthcare (hereinafter the ‘Informant’) that CDAG had not complied with CCI order and was restraining pharmaceutical companies Glenmark Pharmaceuticals Limited (hereinafter the ‘Opposite Party No. 2’) and Wockhardt Limited (hereinafter the ‘Opposite Party No. 3’) from doing business with his company.
It was alleged that under the guidance of CDAG, all stockists of the Opposite Party No. 3 appeared to have formed a cartel and stopped receiving goods from the Opposite Party No. 3 so as to compel it to stop dealing with the informant. It was also alleged that under the influence of CDAG, the Opposite Party No. 2 and the Opposite Party No. 3 stopped supplies to the informant.
The Commission took suo-moto cognizance of the allegations raised by the informant and formed a prima facie opinion that the alleged collective boycott and refusal to deal with the informant by the Opposite Parties falls foul of the provisions of section 3(3) read with Section 3(1) of the Competition Act. Accordingly, vide order dated 31.05.2013 under Section 26(1) of the Act, the Commission directed the Director General (DG) to cause an investigation into the matter.
In compliance with the Commission's order, the DG investigated the matter and submitted the investigation report on 27.06.2014.
In view of the above, the Commission directs CDAG to cease and desist from indulging in the practices which are found to be anti competitive in terms of the provisions of Section 3 of the Competition Act in the preceding paras of the order.
On the aspect of penalty under Section 27 of the Competition Act, the Commission is of the view that the said anti competitive conducts require to be penalized to cause deterrence in future among the erring entities engaged in such activities. Having regard to all these factors, the Commission feels it appropriate to impose a penalty on the CDAG at the rate of 10% of its receipts based on the financial statements filed by them.
Resultantly, a penalty of Rs. 10,62,062/- (Rupees ten lakh sixty two thousand and sixty two rupees only), calculated at the rate of 10% of the average receipts for three financial years (2010-11, 2011-12, 2012-13) is hereby imposed on CDAG.
As per the order, CDAG is further directed to file an undertaking in this regard within a period of 30 days from the date of receipt of this order dated 27.10.2014. The amount of penalty imposed is directed to be deposited within 60 of the receipt of this order.