CCI slaps fine on Ferozepur chemists & druggists body

Clamping down on unfair trade practices in pharma business, Competition Commission has slapped a penalty of over Rs 55 lakh on a Punjab-based Chemists & Druggists Association and its office bearers.
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 Ferozepur-based association to "cease and desist" from such practices that restrict supplies of medicines into the market.
Besides, CCI has imposed a penalty of nearly Rs 55.43 lakh on Chemists & Druggists Association Ferozepur (CDAF), its president and six other senior officers for violations of competition norms.

In an order dated February 5, the Competition Commission of India (CCI) said: "It is evident that CDAF because of its position is able to continuously engage in limiting and controlling the supply and market of drugs and pharmaceutical products by insisting upon NOC (No Objection Certificate) for appointment of stockists".
Accordingly, the fair trade regulator has directed the association and its officers "to cease and desist from indulging in such anti-competitive practices".
The watchdog has also imposed a penalty on the entities at the rate of 10 per cent of their respective average turnover. The penalty together amounts to Rs 55.43 lakh.

The association and its officers have been directed to deposit the penalty amount within 60 days.

However, the Commission said that CDAF was following the practice of requirement of NOC prior to appointment of a stockist in Ferozepur, as "authorised" by Punjab Chemists Association (PCA), to which it is affiliated to.
Accordingly, the fair trade regulator has also directed PCA to "cease and desist from insisting upon NOC/LOC before appointment of a stockist by the companies", among others.
The case relates to a complaint filed by Arora Medical Hall which alleged that CDAF had made it mandatory for any chemist or druggist, who wishes to take distributorship for medicines at Ferozepur in Punjab to take a NOC and Letter of Credit (LOC) from it on a payment of Rs 2,100 per company.

Further, the complainant alleged that the activities of the grouping were creating barriers to new entrants in the market as well as driving existing competitors out.
Finding prima facie evidence of violations of competition norms, the Commission had directed its investigation arm, Director General (DG), for a detailed probe. Subsequently the DG completed its probe which concluded that the entities had indulged in unfair trade practices.
"The association is anti-competitive in as much as it limited/controlled the supply/provision of goods/services being in contravention of the provisions of...The (Competition) Act," CCI said.