CCI warns Karnataka chemists and druggists association

The Competition Commission has directed the Karnataka Chemists and Druggists Association, which was penalised recently for unfair business practices, to "cease and desist" from such activities.
The latest directive has come in a case where the association was found to have violated competition norms with respect to the practice of issuance of no objection certificate for appointment of stockists.
The complaint by Belgaum District Chemists and Druggists Association (BCDA) was filed against KCDA as well as Abbott India, Geno Pharmaceuticals and All India Organisation of Chemists And Druggists (AIOCD).
It was alleged that Abbott India and Geno Pharmaceuticals refused to supply drugs to the members of BCDA as they did not have No Objection Certificates from KCDA or AIOCD.

In its order, the Competition Commission of India (CCI) said the practice of mandating NOC as a pre-requisite for appointment of stockists amounts to limiting and restricting the supply of pharmaceutical drugs in the market, in violation of competition norms.
The determination of trade margins for wholesalers and retailers by KCDA "is in contravention" of the provisions of Section 3 of the Competition Act, the regulator noted.

Section 3 pertains to anti-competitive agreements.
The watchdog has asked the association to cease and desist from unfair business practices.
"Commission directs OP 2 (KCDA) to cease and desist from indulging in the practice of mandating No Objection Certificate as a pre-requisite for appointment of stockist and fixing of trade margins for retailers and wholesalers, which have been held to be anti-competitive...," it said in an order issued on Thursday.

However, the watchdog has decided not to penalise KCDA since a monetary fine had already been imposed on it in an earlier matter involving similar allegations.
"Recently a penalty of Rs 8,60,321 was imposed upon OP 2 in a matter involving similar allegations i.E. NOC practice for appointment of stockist. The period of contravention in the said case was subsequent to the period of investigation in the instant matter.
"In view of these, the Commission refrains from imposing any monetary penalty in the present case," the order said.