Competition watchdog condemns Anti-Competitive Acts by Druggist Associations

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November 02, 2017

Sudeep P.M. & Ors. v. All Kerala Chemists and Druggist Association

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Date of Judgment- October 31, 2017

In a recent order passed by the Competition Commission of India (Commission), the Commission came down heavily on Chemists and Druggists Associations in India which engage in anti-competitive practices like furnishing of No Objection Certificate (NOC) for appointment of stockists.

In this recent order the Commission held that the alleged activities of All Kerala Chemist and Druggist Association (‘AKCDA’) were in contravention of the provisions of the Competition Act, 2002 (‘Act’) and also imposed penalty on AKCDA for indulging in anti-competitive practices.

 

Background

 

The Informant in the case were four stockists (wholesalers) in the State of Kerala who had alleged that AKCDA and its district level associations were insisting the requirement of 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.

 

 

 

 

 

 

Commission’s Order and Observation

 

In view of the aforesaid complaint, the Commission directed the Director General (DG) to investigate the matter. Pursuant to investigation, the Commission inferred that AKCDA and its District units in Thrissur, Kerala were indulging in the anti-competitive practice of insisting NOC prior to the appointment of new stockists by pharmaceutical companies which was limiting and controlling the supply of drugs in the State of Kerala, in violation of the provisions of Section 3(1) read with 3(3)(b) of the Act i.e. limiting or controls production, supply, markets, technical development, investment or provision of services.

 

The Commission noted that the present 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.

 

Accordingly, AKCDA, its District Units at Thrissur 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/- on AKCDA.

Commission’s order in detail can be accessed here.

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