India: Competition News Bulletin - November 2015

Last Updated: 17 November 2015

Editor: M M Sharma
Editorial Team: Vinay Vaish, Satwinder Singh, Deepika Rajpal, Danish Khan



Competition Commission of India (CCI) passes cease and desist order against Sonipat Distributor (FMCG) Association

CCI in its order dated October 12, 2015 found Sonipat Distributor ("FMCG") Association ("SDA") contravening the provisions of section 3(3)(b)& (c) of the Competition Act, 2002 (Act). CCI, while passing the "cease and desist" orders against SDA holding them guilty observed that being an association of its constituent enterprises, the association is taking decisions relating to distribution of FMCG products on behalf of the members who are engaged in similar or identical trade of goods. Such an association of enterprises are covered within the scope of section 3(3) of the Act. Further, bye-laws of the association indicate that the members of SDA by agreeing to bye-laws have disturbed the forces of free trade and limited competition amongst the distributors of FMCG products in the area of Sonipat.

Since under the regulations of the association, it is mandatory for each distributor and retailer to become a member of the said association, no new stockist/ distributor is appointed by drugs and pharmaceutical companies unless the person desirous of becoming a stockist/ distributor becomes member of the said association and gets "No Objection Certificate" (NOC) from the old dealer in the proforma issued by the association. The bye-laws provide for a penalty of INR 2500/- on a new distributor if he fails to obtain NOC from an existing dealer. The requirement to obtain NOC by a newly appointed distributor before starting of a business creates entry barriers besides limiting and controlling the supply of services. Besides, the association also imposed areas of distribution upon the members doing business and imposed penalties for not adhering to one's area of distribution. It is apparent that such bye-laws besides limiting/ controlling the supplies also allocated the markets and cause appreciable adverse effect on competition under section 3(3)(b) and section 3(3)(c) of the Act. The prerequisite of NOC by SDA forecloses the competition by hindering entry of new players in the market and SDA has also ensured that the dealers have exclusive area of supply and thereby restricted competition. Such practices primarily stop the distributor from selling products outside the area allocated to it. Therefore, CCI held that the activities of the SDA are in contravention of the provisions of the Act and directed its office bearers to cease and desist from indulging in such activities and further directed the SDAto modify its bye-laws so as to bring the same in accord with the provisions of Act. The CCI also directed SDA to implement, in letter and spirit, a "Competition Compliance Manual"to educate its members about the basic tenets of competition law principles. The CCI decided not to impose penalty since the SDA had stopped the practice of NOC since the case was filed in the CCI.

(Source: Order dated October 12, 2015. For full text see CCI website-

Competition Appellate Tribunal set asides the penalty imposed by CCI against Andhra Pradesh Film Chamber of Commerce

Competition Appellate Tribunal ("COMPAT")in its judgment dated October 14, 2015 set aside the penalty of INR 12.89 lacs imposed by CCI on Andhra Pradesh Film Chamber of Commerce (Appellant). In the case filed by Cinergy Independent Film Service Pvt. Ltd., CCI had held that the Appellant was restricting exhibition of film "Mausam" produced by the Informant, as the Informant had owed certain amounts to a member of Appellant. The Appellant forced its members to abide by its unfair rules and dictates. Certain rules as framed by Appellant were found in violation of Section 3 of the Act as they were limiting and restricting the rights of producers for a period of three years from the date of obtaining Censor Certificate to distribute movies to TV channels and electronic media to telecast.

However, the Hon'ble COMPAT while setting aside the penalty observed that , there was no evidence produced by the Respondents to prove that the Appellant had prevented or obstructed the release of film 'Mausam' on the scheduled date. In fact, the only evidence available to CCI was the letter dated 09.09.2011 sent by a member of Appellant to various parties including the Appellant complaining against the non-payment of outstanding dues in respect of another film("Rann"). Appellant had forwarded the letter to various associations and Cinergy to settle the issue to avoid any inconvenience before the release of the film "Mausam".

There was no evidence produced by Cinergy to prove that the Appellant had prevented or obstructed the release of film "Mausam". COMPAT observed that CCI which was expected to objectively and independently analyse the facts and evidence collected by the DG during the course of investigation abdicated its duty and mechanically approved the findings recorded by the DG. COMPAT set aside the CCI order, which the COMPAT opined was based on assumptions and not on evidences. Further, COMPAT was of the view that the exercise undertaken by the DG to go into the validity of the said rules was per se without jurisdiction because the informant had not questioned the rules on the ground that the same are anti-competitive and thus ultra vires the provisions of the Act.

(Source: COMPAT: Order dated October 14, 2015; for full text see COMPAT website).

Competition Appellate Tribunal sets aside the penalty imposed by CCI against Chemist and Druggist Association, Ferozepur

COMPAT by its judgment dated 30 October 2015 over-ruled the order penalizing Chemist and Druggist Association, Ferozepur, Punjab in a case filed by Arora Medical Hall, Ferozepur, Punjab.

Arora Medical Hall (the Informant) was the largest wholesale dealer of drugs manufactured by several pharmaceutical companies in Ferozepur. Informant had alleged that the Association had issued circulars to boycott the Informant following allegations made by the member of the Associations that the Informant had indulged in malpractices against the members of Association and issued them inflated bills for orders placed on the Informant by the members of the Association. The Informant also alleged that the Association forced any new wholesaler/retailer to procure an NOC from the Association before it could commence business in the area of Ferozepur and surrounding areas.

The report of the Director General (DG) as well as the CCI considered the above allegations and found the conduct of the Association violating Section 3(3)(b) of the Act, on the basis of the allegations, replies filed by the Association and the pharmaceutical companies as well as an undated affidavit of a partner of the Informant.

The COMPAT noted that, firstly, the Association was not the apex association in the district of Ferozepur and neighboring areas. Various other associations and wholesalers and distributors operated in the district of Ferozepur and neighboring areas, without the membership of Informant. The biggest example of the same was the Informant itself who, despite being expelled by the Association, had stated itself to be the biggest wholesaler in Ferozepur.

COMPAT noted that the CCI failed to take into account that the Informant was expelled from the membership of the Association because of its own highhandedness and unethical conduct of charging inflated bills to the members of the Association. In fact, the Informant had already filed a case against the Association against the expulsion in the District Court of Ferozepur but the same was dismissed with costs for failure to prosecute by the Informant. Further, despite the allegations that the Informant lost revenue due to the boycott by the Association, the DG failed to note that the revenue of Informant from the neighboring Fazilka region had rose 100% since the expulsion. The Association had also submitted that the Informant's revenue in Ferozepur area dwindled only as a result of its own conduct.

As regards the practice of NOC, the COMPAT noted that the same was not mandatory by the Association. Those stockists who did not want to take NOC/LOC from the Association did so from the associations in neighboring areas and freely operated in Ferozepur. The DG had conducted the investigation with a predetermination to return a finding of violation of section 3(3)(b) of the Act. In doing so, he ignored the replies filed by majority of the pharmaceutical companies that the Association had not imposed a condition of mandatory procurement of NOC. The DG based his entire finding on the basis of an undated affidavit of the Informant, which he did not even present to the Association to defend against. No opportunity of cross-examination of the Informant was provided to the Association. The CCI mechanically approved the finding of the DG on the issue of violation of section 3(3)(b).

The conduct of the DG as well as the CCI amounted to violation of principles of natural justice. After the CCI had sent the reports (main as well as supplementary) to the Appellants, they filed detailed objections to the findings recorded by DG including the one that the concerned officer had acted in blatant disregard to the rules of natural justice and fairness and had omitted to consider the relevant documents and material. Unfortunately, the CCI did not objectively deal with the objections taken by the appellants and did not advert to the unequivocal stand taken by the eight out of ten pharmaceutical companies that NOC/LOC was not mandatory for appointment of a distributor in district Ferozepur. Resultantly, the CCI arbitrarily concluded that the action taken by the Association amounted to violation of section 3(3)(b) of the Act. The Appeals were allowed and the order of the CCI has been set-aside.

(Source: COMPAT: Order dated October 30, 2015; For full text see COMPAT website)

To read this Bulletin in full, please click here.

© 2015, Vaish Associates, Advocates,
All rights reserved with Vaish Associates, Advocates, 10, Hailey Road, Flat No. 5-7, New Delhi-110001, India.

The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.