CCI to issue order on case related to unfair drug trade practices in Madhya Pradesh soon

Laxmi Yadav, MumbaiMonday, June 18, 2018, 08:00 Hrs  [IST]

The Competition Commission of India (CCI) is expected to soon finalise its order on alleged unfair business practices carried out by Madhya Pradesh Chemists and Druggists Association (MPCDA) and its associates - Indore Chemists Association (ICA) and Jabalpur Chemists and Druggists Association (JCDA) in connivance with 12 leading drug companies thus violating the provisions of the Competition Act, 2002.

The Commission, which had issued notices to all the parties including MPCDA, ICA, JCDA, 12 pharma companies such as Himalaya Drugs Company, Intas, Torrent, Sun Pharma, Fourrts (India) Laboratories, Eris Lifesciences, Apex Laboratories, Cipla, Ozone Pharmaceuticals, Win-Medicare, Meyer Organics, Macleods Pharmaceuticals named by Madhya Pradesh Chemists and Distributors Federation (MPCDF) in its complaint, has completed their personal hearings and cross examinations.

The regulator is expected to take a final decision on the case soon, sources said.

In 2014, MPCDF had filed a complaint against MPCDA and the above drug companies for engaging in unfair trade practices resulting in limiting and controlling the supply of drugs and cosmetics which is a violation of Section 3(3)(b) read with Section 3(1) of the Competition Act, 2002.

The MPCDF in its complaint stated that one of its members- Gopal Gupta of Pharma Agencies had approached C&F agents of various pharma companies including the 12 companies seeking supply of their products. However, his demand draft was returned and he was denied supply without according any reason for such denial. It is alleged that MPCDA and its associates issue no objection certificate/letter of consent for appointment of stockists and thus stifling competition in the market by limiting access to various pharma products and controlling supply of drugs in the market by ensuring that only those distributors which are favoured by them are selected by pharma companies.

Further it alleged that the above mentioned pharma companies are also active participants in the anti-competitive practices carried by MPCDA and its affiliates since they are willingly adhere to directive issued by the alleged trade body and refuse to appoint fresh distributors till the trade body gives its consent, due to which the supply of drugs to the consumers is obstructed.

The Director General (DG) of CCI had conducted a probe into the matter and submitted its preliminary report on September 30, 2016 and final report in November 2017. During investigation, DG, which is the investigation arm of the Commission, had found the MPCDA & its associates and 12 pharma companies were involved in anti-competitive practices.

The CCI had issued notices to all the parties, following a detailed probe by its DG seeking their submission by March 16, 2018. It later extended the submission date by April 13, 2018 and asked all the parties to appear for a hearing on May 9 & 10, 2018.

However, the MPCDA and its associates have not filed their submission by the due date and filed application on May 2, 2018 seeking cross examination of certain witnesses.

The MPCDA sought cross examination of Gopal Gupta of Pharma Agencies, Virendra Jain, secretary of MPCDF, RK Vachher, national sales manager of Himalaya and Vishnu Singhal of Singhal Trading Corporation under Regulation 41(5) of the Competition commission of India (General) Regulations, 2009. Similarly ICA in its application dated May 2 this year sought cross examination of Sanjay Dixit, general manager of Intas, Santosh Jhawar of Vijay Trade and C&F agent of Intas.

They were allowed to conduct cross examination of Gopal Gupta, RK Vachher, Santosh Jhawar, Sanjay Dixit which was held on June 13, 2018 in the presence of KP Anand, deputy director (law), CCI. As per Section 138 of the Indian Evidence Act, the CCI allows cross examination in cases where witness has led evidence by way of oral submissions.

In the past also, several state units of the All India Chemists and Druggists Association (AIOCD) have come under the CCI scanner and some were found to be violating competition norms. Recently, the watchdog fined the Chemists and Druggists Association of Baroda (CDAB) and Federation of Gujarat State Chemists and Druggists Association (Gujarat Federation) for restricting the supply of drugs and cosmetics which it found in violation of  the provisions of the Competition Act, 2002.