In Re Alleged anti-competitive practices by Chhattisgarh Chemist and Druggist Association in limiting supply of drugs/medicines in the State of Chhattisgarh (CCI)
Whether the collection of PIS charges by Chhattisgarh Chemist and Druggist Association (CCDA) from pharmaceutical companies was made mandatory/compulsory by CCDA in contravention of provisions of Section 3 of the Act?
The Commission notes that though Macleods Pharmaceuticals Limited though has stated that PIS is mandatory and not voluntary it has, in the same breath, stated that CCDA has not thwarted the launch of any product for want of PIS. The Commission, thus, is not in agreement with the finding of the DG, based on the reply of Macleods Pharmaceuticals Limited, that PIS is not voluntary.
Based on the above, the Commission concludes that there is no cogent evidence on record to suggest that collection of PIS charges by CCDA from pharmaceutical companies was mandatory. This is especially after such companies, which are directly affected parties, have come forward during the investigation to say that there has been no compulsion to pay such charges. Thus, in the facts and circumstances of the present matter, no case of contravention of provisions of Section 3 is made out against CCDA.
FULL TEXT OF THE ORDER OF COMPETITION COMMISSION OF INDIA
A. Background
(1) Mr. Nakul Mohta, Advocate
(2) Mr. Aditya Chadha, Advocate
(3) Mr. Dhruv Rajain, Advocate
(4) Mr. Avinash Agarwal, General Secretary ORDER
1. In the present case, a complaint dated 14.08.2019 was received in the Commission from Mr. Basudev Jotwani against the Chhattisgarh Chemist and Druggist Association (CCDA). It was, inter alia, mentioned in the said complaint that CCDA is duly registered with the Registrar of Firms and Society, Chhattisgarh, vide Registration No. 54, and has been in existence since November 2000, with about 7000 members and its office at Raipur. The members are stated to comprise both wholesalers and retailers of medicines in the State of Chhattisgarh.
2. It has been alleged in the complaint that members of CCDA collectively ensure that no new medicines can be launched by pharma companies in the markets of Chhattisgarh unless a sum of Rs. 5000/- per medicine is given to the said association. CCDA issues receipts against these charges collected towards Product Information Services (PIS) and Letter of Consent/No Objection Certificate (LOC/NOC) and has illegally collected crores of rupees. Because of the unity of the association, no pharma company is able to take any steps against them and even if some company raises any protest, they are boycotted in the State of Chhattisgarh.
3. The Complainant further averred that, if the notes forming part of audit report filed by CCDA with the assessing officer of the Income Tax Department for the period 2016-17 are perused it, would disclose not just violation of the law pertaining to the registration of firms and societies but violation of the provisions of the Competition Act, 2002 (‘the Act’) as well. It was also averred that the assessing officer had raised a demand of Rs. 59,66,760/- and raised certain objections relating to disclosures made by CCDA which is a subject matter of appeal by CCDA. The pressure created by CCDA, whereby it collects monies illegally without which a medicine cannot be launched by pharmaceutical companies, collecting monies for meetings, preventing appointment of new stockists by pharmaceutical companies, misusing official positions, etc., shows violation of the provisions of the Act. Lastly, the Complainant prayed that suitable action be taken against the concerned officers of CCDA, which would be in the interest of the general public and the market.
4. The conduct of CCDA was also stated to be reported in a news article on patrika.com published by Patrika News Network, wherein it was mentioned that CCDA is generating an amount ranging from Rs. 50,000/- to Rs. 5,00,000/- per company in a year by levying the aforementioned charges. The Complainant also alleged that CCDA was taking money under the garb of building and bulletin fund.
5. Copy of receipts issued by CCDA to various pharmaceutical companies have also
been filed along with the complaint, details of which are as under:
Table 1: Details of Receipts
