The Competition Commission of India (CCI) is an agency under the Competition Act, 2002 (Act), which monitors and eliminates anti-competitive practices, promotes and sustains competitions, protects the interests of consumers and ensures freedom of trade in the Indian markets. The CCI on June 06, 2019, penalized Madhya Pradesh Chemists and Druggist Association (MPCDA), Indore Chemists Association (ICA), Himalaya Drug Company (HDC) and Intas Pharmaceuticals Limited (IPL) along with some of their officials for anti-competitive practices and contravention of the provisions of the Act6.
The Commission ordered a monetary penalty of Rs. 4, 18,404/- on MPCDA and Rs. 39,142/- on ICA, in addition to cease and desist directions. Monetary penalties of Rs. 18, 59, 58,000/- on Himalaya Drug Company and Rs. 55, 59, 68,000/- on Intas Pharmaceutical Limited with additional penalty on certain officials of these companies.
Apart from this, the MPCDA was directed to organize at least five competition awareness programmes for its members in the state over a period of six months and ICA was directed to organize one competition awareness programme in Indore. The Commission also directed Himalaya and Intas to bring into place a Competition Compliance Programme and file the compliance report with the Commission.
Madhya Pradesh Chemists and Distributors Federation, as informant has alleged contravention of the provisions of Section 3 of the Act by MPCDA and 14 others, including 4 pharma associations and 10 pharmaceutical companies. According to the allegations, the named associations through the practice of mandating No Objection Certificate (NOC)/ Letter of Consent (LOC) prior to appointment of stockiest by the pharmaceutical companies limits the competition as mandating NOC/LOC ensures that only those distributors which are favored by associations are eventually selected by the pharmaceutical companies to do business with them.
The named pharmaceutical companies were also actively participating in the anti-competitive practices carried out by associations, since they willingly adhered to their directives and refused to appoint fresh distributors until the associations gave their consent for such appointment, as a result of which supply of drugs to the consumers was restricted and competition stifled in the market.
The Commission after forming a prima-facie opinion under Section 26(1) of the Act directed the office of Director General (DG) to conduct investigation into the matter. The DG submitted the "Main Investigation Report" upon completion of investigation.
Main Investigation Report has confirmed the contravention of Act by said associations, where the pharmaceutical companies and certain officer bearers/ officials of the associations were found to be facilitating such anticompetitive practices. The Commission after appreciation of the detailed submission reports and evidence on record, has established contravention of the provisions of Section 3 of the Act by MPCDA, ICA, Himalaya and Intas Pharmaceuticals7.
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