Compat sets aside penalties on Lupin, 2 officials

Citing multiple lapses in probe as well as in deciding the case by CCI, Competition Appellate Tribunal has quashed a Rs 73 crore fine imposed on pharma major Lupin and two of its officials for indulging in unfair business practices.
The matter pertains to alleged anti-competitive ways in supply of drugs in Karnataka.
In July, Competition Commission of India (CCI) had slapped penalties on Lupin and two officials for refusal to supply drugs to the complainant as the latter did not have no-objection certificate from the Karnataka Chemists and Druggists Association (KCDA).
In a strongly-worded order running into 198 pages, the tribunal observed that the approach adopted by the Joint Director General (DG) and its approval by the Commission was casual and the finding recorded by them was not based on any evidence whatsoever.

Setting aside the CCI order, the tribunal noted that the "Joint DG and the Commission committed a jurisdictional error" by returning a finding that Lupin had acted in violation of certain provisions of the Competition Act.
In this regard, it said the conclusion recorded by the Joint DG, which has been approved by the Commission, that Lupin has acted in violation of Section 3(1) read with Section 3(3)(b) is "ex-facie erroneous".

According to the tribunal, this Section cannot be invoked because "there is not a shred of 182 evidence direct or circumstantial to show that the appellants and respondent no. 3 were engaged in identical or similar trade of goods or provisions of services".

Section 3 pertains to anti-competitive agreements.
The plea was against CCI and Bengaluru-based Maruti and Company (respondent no. 2) as well as The Karnataka Chemists and Druggists Association (respondent no. 3) and its President (respondent no. 4).
It was filed by Lupin as well as its two officials -- Amit Kumar Dhiman and Nishant Ajmera (appellants).
Lupin was asked to pay a penalty of Rs 72.96 crore, accounting for 1 per cent of its average turnover for three years starting from 2011-12. The company's two officials were fined Rs 5,117 and Rs 8,393, respectively, as per the CCI order.
Compat also noted that CCI had imposed the penalty by taking into consideration the average of the total turnover of Lupin for the preceding three financial years ignoring the fact that Lupin is a multi-product company.

The penalty is liable to be set aside because CCI did not take into consideration the principles laid down by the tribunal, the Compat order dated December 7 said.
Further, the order said "deliberate suppression of material facts by respondent no 2 coupled with the lack of objectivity in the conduct of investigation has resulted in unwarranted harassment to the appellants who have become victims of rivalry between different factions of respondent no 3.