The Competition Commission of India on July 1 this year made ‘absolute’ the interim order it passed on 16.05.2011 under section 33 of the Competition Act 2002 directing the Mumbai-based manufacturing company US Vitamins Ltd not to terminate its C&F agency with Santuka Associates Pvt Ltd based at Cuttack in Orissa.

Further, the Commission had wanted the national trade body, All India Organization of Chemists and Druggists (AIOCD) led by Jagannath S Shinde, not to issue any direction or threat to USV Ltd for terminating its C&F agency with Santuka Associates, the informant (petitioner). The order also wanted the informant and the opposition parties (respondents), AIOCD and USV Ltd, to appear before the court on 01.06.2011.

In pursuance of it, the parties had appeared before the Commission for oral hearing on 01.06.2011 and the counsel for the AIOCD sought time to file written submissions in the matter and requested for adjournment, which was allowed by the Commission. Further, by extending the interim order of 16.05.2011, the Commission directed the parties to appear again for oral hearing on 14.06.2011. On that day the matter was again adjourned and allowed the parties to file written submissions in the matter and to appear for hearing on 30.06.2011. The interim order was made effective till that date.

On June 30, counsels for the parties appeared and advanced oral arguments on their behalf. The opposite parties filed written submissions in support of their case. Later the Commission decided to extend the interim order upto 01.07.2011 to pass the final order under section 33.

In the written submission AIOCD has said that the averments and allegations levelled against it by Santuka Associates are baseless and factually incorrect. It further said C&F agents cannot become the member of any district or state level associations affiliated with it. C&F agent is a service provider to principal manufacturers of pharmaceutical drugs and has no direct linkage with the distribution chain. Further, the trade body has contended that it cannot influence USV Ltd for the alleged cancellation of C&F agency of the informant as the informant is not its member. The AIOCD has also submitted that the subject matter and issues raised by Santuka Associates (informant) do not fall within the purview of the Act.

Whereas the USV Ltd submitted that the informant is merely its agent and the contract of an agency is terminable at its will. The termination is in accordance with terms of the contract and provisions of the Contract Act, 1872. Further, the manufacturing company submitted that the Commission has no jurisdiction to decide the contractual rights of the parties.

The informant has contended that if AIOCD is not restrained, it will threaten other pharmaceutical companies with whom it has C&F arrangement.

After close examinations of the arguments advanced by both the parties, the Commission has found that the contentions raised by the opposite parties have no substance and cannot be accepted. It also found that the information (petition) filed by Santuka Associates was highlighting the anti-competitive conduct of AIOCD. The informant has also filed material to show that the termination of its agency is direct fallout of anti-competitive behaviour of the AIOCD.

By observing all aspects of the case, the Commission found that several allegations made by the informant against AIOCD were correct, and felt that that it was not the only case where the anti-competitive behavior of AIOCD was called in question. It got the evidence that the informant was a life member of both Cuttack District Chemists and Druggists Association and Orissa (Utkal) Chemists and Druggists Association.

On the basis of its findings, the Commission has made a new order by confirming the order issued on 16.05.2011, and directed that it would continue to be effective till further order is issued.