Without issuing a direct order to the office-bearers of All Kerala Chemists and Druggists Association (AKCDA) to desist from organisational activities, the Competition Commission of India (CCI) has reportedly directed the association not to associate its president A N Mohan and general secretary Thomas Raju with its affairs including administration, management and governance in any manner for a period of two years.
As per its reported order, the competition watchdog has imposed a penalty of Rs.4,35,778 on AKCDA and an individual fine of Rs.50,203 on its president A.N. Mohan at a rate of 10 per cent of the average income based on the statements filed by the association and by him.
The CCI’s order has come in the wake of its findings on the anti-competitive activities allegedly committed by the trade association and its president A N Mohan.
Further to the imposition of penalties, the CCI has directed AKCDA to organise a minimum of five Competition Awareness and Compliance Programmes in another six months time for the members of AKCDA. The commission has found that lack of awareness about Competition Act and trade policies is the reason for continuous indulgence in anti-competitive activities by the office-bearers.
The commission heard an information (petition), filed by a drug trader in Palakkadu district, under Section 19 (1) (a) of the Competition Act, 2002 against one manufacturing company, its divisional sales manager and AKCDA as opposite parties alleging contravention of the provisions of Section 3 of the Act.
P K Krishnan, the informant (petitioner) and proprietor of Vinayaka Pharma in Palakkadu, alleged in the petition that the manufacturing company rejected his application for appointment as its stockist because he did not obtain a ‘No Objection Certificate’ (NOC) from AKCDA. It is said that the divisional sales manager of the firm had formally offered him the stockistship of the company in November 2013. But the company subsequently refused to supply drugs to Vinayaka Pharma against a supply order raised by it. It is stated that while enquiring the reason for non-supply, a representative of the company verbally told Krishnan that he had failed to obtain NOC from AKCDA. Later, the company returned the supply order for 48 categories of drugs and a DD of Rs.5 lakh given by him.
The CCI also fined a penalty on the manufacturing company, at a rate of 3 per cent of its income, for its negligence and violation of the Act on the basis of the information filed by P K Krishnan.
The commission, after considering the information and materials placed on record, passed a prima facie order on 29.09.2014 under Section 26(1) of the Act directing the Director General (DG) to conduct an investigation into the matter for the alleged violation of the provisions of the Act. The DG submitted an investigation report to the commission, and based on it, it issued the order on December 1, this year.
On December 9, 2013, the CCI had issued an order that any kind of interference by AKCDA with regard to appointment of stockists or introduction of new products or boycotting of pharmaceutical companies/products was illegal and anti-competitive. Following this order, on 21.2.2014, Mohan and the secretary of AKCDA, Thomas Raju, together submitted an undertaking before the commission that they would follow the order of CCI and assured that instructions would be given to all the 14 district office-bearers to comply with the same. Even then, continuous complains are emerging against the office-bearers from various corners of infringement of trade acts.
In August last year, a group of pharma stockists under the banner, Alliance of Pharmaceutical Traders, Kerala (APT), lodged a complaint with the state drugs control department against AKCDA alleging that it was indulging in anti-competitive activities in the state. The stockists had also raised an allegation that AKCDA was contravening their commitments in the undertaking it had filed with the CCI.
While speaking to Pharmabiz, Thomas Raju, the general secretary of AKCDA, said the state committee of the association will consider the option of filing appeal before the commission and added that he and A N Mohan would obey its orders. The vice-president, N Sankara Narayanan and joint-secretary, K Sivasubrahmaniam will undertake the administrative responsibilities of the association in the next state committee meeting.