Compat sets aside CCI's Rs 74 crore fine on Alkem Laboratories

The Competition Appellate Tribunal has set aside a CCI's order that imposed over Rs 74 crore penalty on Alkem Laboratories.
The Competition Commission of India (CCI) in December had penalised Alkem Laboratories and its two officials for indulging in unfair business practices.
On an appeal filed by the company, the tribunal had first stayed the order in February and finally set aside the ruling through a 145-page order.
Apart from imposing Rs 74.63 crore fine on Alkem, CCI had also penalised two of the company's employees - Johnson Mathew and T K Haridas.
"...Once the tribunal has come to the conclusion that the finding recorded by the commission (CCI) against Appellant No 1 (Alkem Lab) is legally unsustainable, the consequential penalty imposed by the commission on Appellants Nos 1, 2 and 3 (Mathew and Haridas) cannot be sustained and is liable to be quashed," Compat said in the order dated May 10.

CCI's ruling had come on a complaint which alleged that Alkem did not supply medicines even after agreeing to do the same to a distributor in Kerala.

Compat in its order stated that CCI and its Joint DG, who conducted the investigation proceeded on a wholly erroneous assumption that the distributor had been appointed as a stockist by the competent authority of Alkem Laboratories.
"Rather, from the day one, Appellant No 1 had taken a stand that Paul Madavana (Divisional Sales Manager), who had issued letter dated 14.11.2013 appointing Respondent No 2 (distributor) as a stockist was not competent to do so," the order said.

Further the tribunal noted that the distributor had deliberately suppressed the vital facts and documents from CCI, which resulted in the order for investigation based on the premise that Alkem Laboratories had refused to appoint it as a stockist and supply the medicines.
Had the facts been stated "the commission would not have entertained the allegations contained in the information and wasted its own time as also the time of the investigating officer and of this tribunal, whose personnel are paid out of public funds", the tribunal said.
It was alleged that Alkem rejected his application for appointment as its stockist since he failed to obtain a no objection certificate from the All Kerala Chemists and Druggists Association (AKCDA).

Besides, CCI had slapped fines on AKCDA and one of its officials as well.