CCI slaps fine on 2 Gujarat chemist associations

Clamping down on unfair trade practices in pharma business, the Competition Commission has imposed a total penalty of over Rs 12 lakh on two Gujarat- based chemists groupings.
The two associations are -- Chemists and Druggists Association of Baroda (CDAB) and Federation of Gujarat State Chemists and Druggists Association -- responsible for limiting and controlling the supply of drugs and medicines.
The Competition Commission of India (CCI), which has been making efforts to sensitise the public on unfair ways in the pharma industry, has also asked the two associations and their respective office bearers to cease and desist from indulging in anti-competitive practices.

In an order passed on January 4, the fair trade regulator found the CDAB and the Gujarat Federation to be in contravention of the provisions of the Competition Act.
Accordingly, it slapped a fine of Rs 1.08 lakh and Rs 11.11 lakh on the CDAB and the Federation of Gujarat State Chemists and Druggists Association, respectively, under the provisions of the Competition Act, 2002.
Besides, the CCI has levied a penalty of Rs 34,048 on CDAB president V T Shah and Rs 62,144 on Gujarat Federation president Jashvant Patel for their anti-competitive practices.

"Despite several orders of the Commission proscribing the anti-competitive practices of state and regional chemists and druggists associations in, inter alia, mandating NOC (No Objection Certificate) for appointment of stockists and demanding PIS (product information service) charges prior to launching of new drugs in the market, these associations are continuing to indulge in such practices," the regulator noted.

The Finance Ministry in a tweet said that the CCI will keep a close watch on all such entities.
"Given the widespread and continuing indulgence in the anti-competitive practices, the Competition Commission of India will be keeping a close watch on the conduct by all such entities in various parts of the country and would not hesitate to take action, wherever deemed necessary," the ministry tweeted.
"Considering larger public interest involved in the distribution of drugs/medicines, the Competition Commission deprecates such a conduct and its perpetration in any form by those responsible, be it associations, stockists/ distributor/wholesaler/retailer and pharmaceutical companies," it added.

The CCI's order has come following allegations by one Gujarat-based Reliance Agency that the associations were mandating the requirement of NOC prior to appointment of stockists by pharmaceutical companies.
The Commission held CDAB responsible for mandating the requirement of NOC prior to the appointment of stockists which resulted in limiting and controlling the supply of drugs and medicines in Vadodara.
Further, the regulator said that Gujarat Federation is carrying on the practice of NOC/approval required to be taken from it prior to the appointment of a new stockist by pharmaceutical companies, resulting in limiting and controlling the supply of products/medicines in Gujarat.

By indulging in such activities, the two associations have violated the provisions of the Competition Act, the Commission said in the order.