CCI order on trade practices leaves chemist groups divided

There have been complaints that they are preventing retailers from offering discounts to consumers

A recent order by the Competition Commission of India (CCI), asking chemist associations and the drug manufacturing industry to desist from unfair trade practices along with a penalty on various chemist associations has triggered conflict between these groups.

District- and state-level associations, such as the Bangalore District and Chemist Association (BDCA), the Assam Drug Dealers Association and the Karnataka Chemists & Drugs Association, have written to their parent body All India Organisation of Chemists and Druggists (AIOCD) that anti-competitive orders were passed by AIOCD and, therefore, it should alone bear the fine and give undertakings.

“You are liable to pay from your hands, the entire amount of penalty imposed by the commission and not from the association funds or contributions from ordinary and life members and district affiliated members,” BDCA wrote in one of its recent letters to its parent organisation.

In the past few months, the CCI has passed several orders against these chemist associations after complaints were lodged with the competition watchdog that these associations were preventing retailers from offering discounts to consumers and boycotting certain pharma companies without justified reasons. While the CCI had slapped a fine of Rs 47.40 lakh on the AIOCD in December 2013, it again imposed separate penalties on various AIOCD-affiliated chemist associations.

A probe by the CCI’s Director General (investigation) found AIOCD and its affiliated associations resorted to the practice of boycott of pharmaceutical companies and their products to enforce certain requirements related to ‘no objection certificate’ (NOC), ‘product information service’ (PIS) and fixed trade margins, among others.

However, the district level associations have claimed that the practices were largely on part of the AIOCD and therefore, it should bear the fine.

According to the findings, the pharmaceutical firms often stopped supplies to the stockists under the threat of boycott of sale or purchase of the products of the company by the AIOCD  and its affiliated associations, CCI had said in one of the orders.

In its latest order, CCI has also asked AIOCD, its affiliates as well as drug manufacturers’ associations such as the Organisation of Pharmaceutical Producers of India, which represents multinational drug makers, and the Indian Drug Manufacturers Association to file an undertaking that the practices carried on by their members on the issue of grant of NOC for appointment of stockists, fixation of trade margins, collection of PIS charges and boycott of products of pharma firms have been discontinued.