CCI imposes penalty on pharma dealers body in Kerala

The Competition Commission of India (CCI) has imposed a penalty on All Kerala Chemist and Druggist Association (AKCDA) and its district units at Thrissur and Kasargod for contravening the provisions of the Competition Act.

CCI imposed a monetary penalty of Rs4,78,545, calculated at the rate of 10 per cent of the average income of AKCDA. It also imposed penalties of Rs59,434 and Rs53,889 on the Thrissur and Kasargod district units of AKCDA, respectively. Monetary penalties were also imposed on the office bearers of AKCDA and its district units at Thrissur and Kasargod.

CCI has directed the AKCDA, its district units at Thrissur and Kasargod and their office bearers to cease and desist from indulging in the practice of insisting NOC prior to stockist appointment.

CCI said four stockists (wholesalers) in Kerala had brought to its notice that AKCDA and its district level associations were insisting on a 'No Objection Certificate' (NOC) prior to the appointment of any stockists, in contravention of the provisions of Section 3 of the Competition Act, 2002, despite cease and desist orders of the commission in earlier cases involving similar issues.

The CCI noted 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.

An investigation by the Director General (DG), the commission has found that AKCDA and its district units at Thrissur and Kasargod were indulging in the anti-competitive practice of insisting on 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,'' CCI noted.

The commission has found that with a view to hide their apparent anti-competitive behaviour, these associations were insisting on 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 at Thrissur and Kasargod have been indulging in the practice of 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.

The Commission has also found office bearers of AKCDA and its district units at Thrissur and Kasargod, 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.