Sudeep P.M. v. All Kerala Chemists & Druggists Association

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The Tax Publishers 2017 TaxPub(CL) 0911 (CCI) Sudeep P.M. v. All Kerala Chemists & Druggists Association COMPETITION ACT, 2002 --Anti-competitive agreements--Complaint against practice of mandating NOC prior to appointment of stockistsCausing of appreciable adverse effect on competition--Practice of mandating NOC resulted in limiting and controlling supply of pharmaceutical product in market--Where evidence on record against druggists associations clearly revealed that practice of mandating NOC prior to appointment of stockists resulted in limiting and controlling supply of pharmaceutical product in the market, which was in violation of section 3, therefore, direction was given to the associations and their office bearers to cease and desist from indulging in anti-competitive practice of mandating NOC.--Wholesalers of pharmaceutical products filed compliant under section 3 against State druggists associations and its district level associations on the ground that the associations were mandating requirement of a No Objection Certificate (NOC) prior to appointment of new stockists, in contravention of provisions of section 3. Further that, pharmaceutical companies had denied supply of pharmaceutical products to such wholesaler for want of NOC under threat of the associations. Therefore, such practice was resulted in limiting and controlling supply of the product in the market, which was in violation of section 3. Associations raised objection that NOC practice had not caused any appreciable adverse effect on competition. *Held:* The associations had not produced any evidence, which established that mandating NOC practice had not caused any appreciable adverse effect on competition and the same was beneficial to distribution channel and given opportunity of free and fair trade to pharmaceutical traders. Evidence on record against the associations clearly revealed that the practice of mandating NOC prior to the appointment of stockists resulted in limiting and controlling the supply of the product in the market. Therefore, the State druggists associations and its district level associations had indulged in anti-competitive practice, which was in violation of section 3. Further that, certain office bearers were found to be liable under section 48 for the anti-competitive conduct of their respective associations. Hence, the associations and their office bearers were directed to cease and desist from indulging in the anti-competitive practice of mandating NOC and also penalty was imposed upon them. Competition Act, 2002 Sections 3 & 48 *REFERRED :* CCI v. Co-ordination Committee of Artists and Technicians of W.B. Film and Television (2017) 140 SCL 655 (SC) : 2017 TaxPub(CL) 0250 (SC); Maruti and Co. v. KCDA (2016) 72 taxmann.com 56 (CCI); and P.K. Krishnan v. AKCDA, Case No. 28 of 2014. FAVOUR : In favour of complainant. A.Y. : IN THE COMPETITION COMMISSION OF INDIA S.L. BUNKER, SUDHIR MITTAL, U.C. NAHTA, AUGUSTINE PETER & G.P. MITTAL, JUSTICE MEMBER Sudeep P.M. v. All Kerala Chemists & Druggists Association Case No. 54 of 2015 31 October, 2017 *Referred:* P.K. Krishnan v. AKCDA, Case No. 28 of 2014 CCI v. Co-ordination Committee of Artists & Technicians of W.B. Film & Television (2017) 140 SCL 655 (SC) : 2017 TaxPub(CL) 0250 (SC) Maruti & Co. v. KCDA, (2016) 72 taxmann.com 56 (CCI) SUBSCRIBE FOR FULL CONTENT

The Tax Publishers 2017 TaxPub(CL) 0911 (CCI)

Sudeep P.M. v. All Kerala Chemists & Druggists Association

COMPETITION ACT, 2002

--Anti-competitive agreements--Complaint against practice of mandating NOC prior to appointment of stockistsCausing of appreciable adverse effect on competition--Practice of mandating NOC resulted in limiting and controlling supply of pharmaceutical product in market--Where evidence on record against druggists associations clearly revealed that practice of mandating NOC prior to appointment of stockists resulted in limiting and controlling supply of pharmaceutical product in the market, which was in violation of section 3, therefore, direction was given to the associations and their office bearers to cease and desist from indulging in anti-competitive practice of mandating NOC.--Wholesalers of pharmaceutical products filed compliant under section 3 against State druggists associations and its district level associations on the ground that the associations were mandating requirement of a No Objection Certificate (NOC) prior to appointment of new stockists, in contravention of provisions of section 3. Further that, pharmaceutical companies had denied supply of pharmaceutical products to such wholesaler for want of NOC under threat of the associations. Therefore, such practice was resulted in limiting and controlling supply of the product in the market, which was in violation of section 3. Associations raised objection that NOC practice had not caused any appreciable adverse effect on competition. Held: The associations had not produced any evidence, which established that mandating NOC practice had not caused any appreciable adverse effect on competition and the same was beneficial to distribution channel and given opportunity of free and fair trade to pharmaceutical traders. Evidence on record against the associations clearly revealed that the practice of mandating NOC prior to the appointment of stockists resulted in limiting and controlling the supply of the product in the market. Therefore, the State druggists associations and its district level associations had indulged in anti-competitive practice, which was in violation of section 3. Further that, certain office bearers were found to be liable under section 48 for the anti-competitive conduct of their respective associations. Hence, the associations and their office bearers were directed to cease and desist from indulging in the anti-competitive practice of mandating NOC and also penalty was imposed upon them.

Competition Act, 2002 Sections 3 & 48

REFERRED : CCI v. Co-ordination Committee of Artists and Technicians of W.B. Film and Television (2017) 140 SCL 655 (SC) : 2017 TaxPub(CL) 0250 (SC); Maruti and Co. v. KCDA (2016) 72 taxmann.com 56 (CCI); and P.K. Krishnan v. AKCDA, Case No. 28 of 2014.

FAVOUR : In favour of complainant.

A.Y. :

IN THE COMPETITION COMMISSION OF INDIA

S.L. BUNKER, SUDHIR MITTAL, U.C. NAHTA, AUGUSTINE PETER & G.P. MITTAL, JUSTICE MEMBER

Sudeep P.M. v. All Kerala Chemists & Druggists Association

Case No. 54 of 2015

31 October, 2017

Referred:

P.K. Krishnan v. AKCDA, Case No. 28 of 2014

CCI v. Co-ordination Committee of Artists & Technicians of W.B. Film & Television (2017) 140 SCL 655 (SC) : 2017 TaxPub(CL) 0250 (SC)

Maruti & Co. v. KCDA, (2016) 72 taxmann.com 56 (CCI)