In what could be a major setback to the activities of All India Organisation of Chemists and Druggists (AIOCD), the Indian Drug Manufacturers' Association (IDMA) passed a resolution terminating all memorandum of understandings (MoU's) with AIOCD with effect from November 25. The executive committee of the association passed this resolution in the wake of the notices sent to them by Competition Commission of India (CCI) about an investigation they were carrying out against ‘alleged anti competitive practices' carried out by AIOCD.

The MoUs that were terminated by IDMA were entered between the years 1982 to 2003. IDMA representatives informed that, a letter was sent to AIOCD on December 2 informing them about the passing of the resolution terminating all MoUs with them which AIOCD has acknowledged respectively.

Daara B Patel, secretary general of IDMA informed that since there are approximately 12,000 manufacturers’ and 600,000 chemists, in the country it was necessary to enter into an MoU with AIOCD. He said, “One can imagine the chaos if everybody had different terms and conditions like margins, payment terms, expiries, PIS charges, schemes, etc. Hence, it was important for us to enter into MoUs with AIOCD in order to ensure uniformity and clarity on important terms and conditions for smooth working relationship between industry and trade.”

However Patel added that, in the light of this detailed and probing enquiry, IDMA's executive committee felt that they must reconsider the various MoUs signed by IDMA with AIOCD, more so as they had been earlier advised after the coming into force of the Competition Act that some of the Clauses of the MoU's could be interpreted to violate the provisions of Sections 3 and 4 of the said Act.

It is understood that representatives from IDMA were also summoned to appear in connection with this investigation. IDMA informed that since the MoUs were basically voluntary guidelines, there was no way IDMA could enforce the guidelines on the members. “We have informed all our Members that in view of the termination of the MoUs, the provisions of the MoUs were no longer applicable and should not be pursued as such,” he stressed.

IDMA has also warned and advised their members that it was in their own interest to take utmost care to ensure that none of their actions with trade violate the provisions of the Competition Act and IDMA would not be a party to any such action or dealing nor would the same be treated as being under the guidance or advice of IDMA.