Kailash Gupta Vs India Organisation of Chemist & Druggist (Competition Commission of India)
The Competition Commission of India (CCI) disposed of proceedings initiated on information alleging anti-competitive conduct by chemist and druggist associations, pharmaceutical manufacturers’ associations, and several pharmaceutical companies under Sections 3 and 4 of the Competition Act, 2002. The allegations centred on the requirement of No Objection Certificates (NOCs)/Letters of Consent (LOCs) for appointment of stockists, collection of Product Information Service (PIS) charges before launch of pharmaceutical products, fixation of trade margins, and alleged boycott of manufacturers that did not comply with such practices. The Director General (DG), after investigation, concluded that various chemist associations had implemented mandatory NOC/LOC requirements, treated PIS approvals as compulsory, and that certain pharmaceutical companies had followed these practices. However, after considering the investigation report, objections, documentary evidence, and submissions of the parties, the Commission found that the material relied upon by the DG largely related to the period 2009–2012 and pre-dated compliance measures undertaken pursuant to earlier CCI orders. The Commission noted that the concerned associations had subsequently filed undertakings confirming that NOC/LOC requirements, trade margin fixation, and PIS charges were not mandatory and had issued communications clarifying that stockist appointments and discounts could be made independently while PIS services were voluntary. The Commission also observed that several pharmaceutical companies had appointed stockists without obtaining NOCs, and the investigation did not establish that appointments or product launches were actually denied due to the absence of NOCs or PIS approvals after the compliance measures. Likewise, evidence did not conclusively establish any consistent or systematic boycott mechanism. With respect to the Memoranda of Understanding (MoUs) executed between the associations, the Commission noted that they had been terminated and found no material demonstrating their continued implementation after the compliance undertakings. Consequently, the Commission held that no contravention of Section 3 of the Competition Act was established against any of the opposite parties. Since no violation was found, the question of liability of office bearers under Section 48 also did not arise. Accordingly, the proceedings were closed.
