The Competition Commission of India (CCI) has imposed a fine of Rs.1.41 crore against Chemists and Druggists Association, Ferozepur (CDAF), Punjab alleging inter alia contravention of the provisions of sections 3 and 4 of the Competition Act. As per sources, copy of the order was received by CDAF on 31 July, 2014.
Earlier in February last year, the CCI had also directed AIOCD to cease and desist from indulging in and following practices which have been found anti-competitive in violation of Section 3 of the Competition Act. The Commission had also imposed a penalty of Rs.47 lakh on the trade body and directed it to file an undertaking that the practices carried on by it and its members regarding grant of NOC for appointment of stockists, fixation of trade margins, collection of PIS (product information service) charges and boycott of products of pharmaceutical companies have been discontinued within 60 days from the date of receipt of this order.
The case against CDAF was filed by Arora Medical Hall, a registered partnership firm engaged in the business of wholesale trade of medicines in Ferozepur, Punjab through its partner Rajesh Arora under section 19(1) (a) of the Competition Act, 2002 against CDAF and its office - bearers alleging inter alia contravention of the provisions of sections 3 and 4 of the Act.
Arora Medical Hall holds the wholesale dealership of a number of companies like Ranbaxy, Abbott Solvey, Abbott Piramal, Abbott India, Ozone, Sun Pharma, Alkem, Alkem Gencare, Hetero, Johnson & Johnson, Pfizer, Pfizer Pharmacia, Cutic, Leeford, Canvarzys, Inuida, Apex Labs, Organon, MSD, Fullford, Biocon, Macleods etc and accordingly, it distributes and sells medicines of these companies to the retailers in Ferozepur District.
Arora Medical Hall has alleged that CDAF has made it mandatory for any chemist or druggist, who wishes to take distributorship for medicines of a company in Ferozepur city, to take a No Objection Certificate (NOC) and Letter of Credit (LOC) from it by making a payment of Rs.2100 per company. It further states that it objected to the said rule in 2010, because of which it was expelled from the primary membership of CDAF.
In view of the above discussion, the Commission has directed CDAF to cease and desist from indulging in such anti competitive practices which have been found to be anti competitive in terms of the provisions of section 3 of the Act.
As per the findings of the Commission, it is evident that CDAF, because of its position, is able to continuously engage in limiting and controlling the supply and market of the drugs and pharmaceutical products by insisting upon NOC for appointment of stockists etc. It cannot be doubted that had these practices not been there, the consumers or patients at large would have been benefited from the competition and consequential attended benefits arising therefrom in the markets.
Considering the totality of facts and circumstances of the present case including the nature of contravention, the Commission decides to impose a penalty on CDAF and its office bearers at the rate of 10 per cent of their respective average turnover which has been calculated as per the financial statements of income/receipts filed by the association/office bearers.