The Competition Commission of India, in the case of Sudeep PM and Others vs All Kerala Chemist and Druggist Association, has found the association (AKCDA) and its district units in Thrissur and Kasaragod to be in contravention of the provisions of the Competition Act, 2002.
Four stockists (wholesalers) in Kerala had alleged that the AKCDA and its district-level associations were insisting the requirement of a No Objection Certificate (NOC) prior to the appointment of any stockists, in contravention of the provisions of Section 3 of the Act, despite cease and desist orders of the commission in earlier cases involving similar issues. It was contended that the practice of NOC simply changed from written approvals to verbal threats and was also being given in the form of congratulatory/appreciation letters to avoid any sanctions under the Act.
After getting the matter investigated by the Director General, the commission found that the AKCDA and its district units in Thrissur and Kasaragod were indulging in the anti-competitive practice of insisting NOC prior to the appointment of new stockists by pharmaceutical companies. This case once again highlights the persistent attempts of anti-competitive conduct by chemist & druggist associations who, despite various orders by the commission in similar cases and wide publicity through a press notice issued by the commission with respect to the NOC practice, have not abstained from indulging in such anti-competitive conduct. The commission found that with a view to hide their apparent anti-competitive behaviour, these associations were insisting the NOC requirement through different nomenclatures.
Based on the evidence collected by the DG during investigation in this case, the COMMISSION Concluded that AKCDA and its district units were indulging in the practice of issuing NOC prior to the appointment of stockists by pharmaceutical companies, which was limiting and controlling the supply of drugs in the state, in violation of the provisions of Section 3(1) read with 3(3)(b) of the Act.
Further, the commission found office bearers of the AKCDA and its district units, namely AN Mohan Kurup (president, AKCDA), Thomas Raju (general secretary, AKCDA), OM Abdul Jaleel (treasurer, AKCDA), V Anver (president, Thrissur district unit, AKCDA), Rajesh AB (secretary, Thrissur district unit, AKCDA) and Venugopala S (president, Kasargod district unit, AKCDA), responsible under Section 48 of the Act, for their involvement in the anti-competitive practice.
Accordingly, the AKCDA, its district units in Thrissur and Kasaragod, and the office bearers named above, have been directed to cease and desist from indulging in the practice of insisting NOC prior to stockist appointment. Further, the commission imposed a monetary penalty of Rs. 4,78,545, calculated at the rate of 10 % of the average income of AKCDA, under the provisions of Section 27 of the Act. Penalties of Rs. 59,434, and Rs. 53,889, calculated at the rate of 10% of their average income, were also imposed upon Thrissur and Kasargod district unit of the AKCDA, respectively. In addition, monetary penalties were imposed on the office-bearers of the AKCDA and its district units in Thrissur and Kasaragod, at the rate of 10% of their respective incomes.
Read the Order Here