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CCI imposes Rs 74 crore fine on four pharmaceutical companies

The CCI has imposed a heavy monetary penalty on chemists and druggist associations and pharmaceutical companies.

Jun 6, 2019 18:09 IST
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CCI imposes penalty on Chemists, Pharmaceutical Companies

The Competition Commission of India (CCI) has imposed a heavy fine amounting to Rs 74 crore on four chemists and pharmaceutical companies after they were found violating the provisions of Competition Act, 2002.

The CCI found Madhya Pradesh Chemists and Druggist Association, Indore Chemists Association, Himalaya Drug Company and Intas Pharmaceuticals Limited along with some of their office bearers to be in contravention of the provisions of the Competition Act, 2002.

Penalty Imposed

The CCI has imposed a monetary penalty on the associations, which is stated below:

Madhya Pradesh Chemists and Druggist Association (MPCDA): Rs 4,18,404

Indore Chemists Association: Rs. 39,142

Himalaya Drug Company: Rs. 18,59,58,000

Intas Pharmaceutical Limited: Rs. 55,59,68,000

The monetary penalty is, in addition, to cease and desist directions, issued under Section 27 of the Act.

Besides this, penalties were imposed on office bearers who were found to be violating the provisions of the Competition Act, 2002. The penalty was also imposed on certain officials of these companies.  

The Commission, however, did not find any evidence of contravention on the part of certain other associations and pharmaceutical companies.

Other Details

The Commission directed MPCDA to organise at least five competition awareness and compliance programmes in the next six months for its members and directed ICA to organise one competition awareness programme in Indore.

Further, the Commission further directed HDC and IPL to organize a Competition Compliance Programme and file compliance report with the Commission.

Background

The penalties were imposed by the Commission after information was filed by Madhya Pradesh Chemists and Distributors Federation alleging contravention of the provisions of Section 3 of the Act by MPCDA and others including certain pharmaceutical companies.

The allegations stated that the chemist and druggist associations, through their practices of mandating ‘No Objection Certificate’ or Letter of Consent prior to the appointment of stockists were stifling competition in the market by limiting access of consumers to various pharmaceutical products and controlling the supply of drugs in the market.

The Commission had directed the office of Director General to conduct an investigation into the matter, which confirmed the violations by the associations and officials.