Pharmacy Group Penalized for Price-Fixing and Supply Control, Urged to Stop Anti-Competitive Practices in 30 Days.

The Commission found the Bengal Chemist and Druggists Association (BCDA) guilty of anti-competitive practices, violating Sections 3(3)(a), 3(3)(b), and 3(1) of the Competition Act, 2002. BCDA was involved in price-fixing and controlling drug supply, restricting competition and harming consumers. The Commission held BCDA's office bearers and executive committee members liable under Section 27 of the Act, despite their argument that Section 48 did not apply. Penalties were imposed on BCDA and its members, with orders to cease anti-competitive practices and file undertakings within 30 days, and to deposit penalties within 60 days based on financial statements.

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Issues Involved:
1. Anti-competitive practices by BCDA and its committees.
2. Liability of BCDA's members/office bearers for these practices.

Issue-wise Detailed Analysis:

1. Anti-competitive practices by BCDA and its committees:

The Commission received an email on 28.08.2012 from Shri Arun Kumar Singh alleging that the Bengal Chemist and Druggists Association (BCDA) was engaged in anti-competitive practices by determining the sale price of drugs and controlling their supply, violating Section 3(3)(a) and 3(3)(b) of the Competition Act, 2002. Based on this information, the Commission initiated a suo moto enquiry under Section 19(1) of the Act. BCDA, an association of wholesalers and retailers of drugs affiliated with the All India Organization of Chemist and Druggist (AIOCD), allegedly directed its members not to offer discounts on MRP and enforced compliance through vigilance operations and punitive measures.

The Director of Drugs Control, West Bengal, also filed a reference against BCDA under Section 19(1)(b) of the Act, alleging similar anti-competitive practices. Investigations revealed that BCDA and its committees enforced the sale of drugs only at MRP, preventing price competition among retailers and controlling the supply of medicines through concerted actions, violating Sections 3(3)(a) and (b) read with Section 3(1) of the Act.

The Commission examined the minutes of BCDA's Executive Committee meetings from 2011 to 2013, which showed concerted actions against retailers offering discounts, including organizational movements, threats, and fines. The Commission found that BCDA's actions restricted competition and harmed consumers by preventing lower prices and innovative business practices.

2. Liability of BCDA's members/office bearers for these practices:

The Commission directed the DG to investigate the role of individual office bearers in decision-making. The DG's supplementary report identified office bearers and executive committee members involved in anti-competitive practices. The office bearers argued that Section 48 of the Act did not apply to them, as BCDA is a non-profit company under Section 25 of the Companies Act, 1956. However, the Commission held that the provisions of Section 27 of the Act were sufficient to make office bearers liable for contraventions without Section 48.

The Commission imposed penalties on BCDA and its office bearers and executive committee members, directing them to cease and desist from anti-competitive practices. Penalties were calculated based on their respective turnover/income/receipts.

Order:

The Commission directed BCDA and its office bearers to immediately cease anti-competitive practices and file an undertaking within 30 days. Penalties were to be deposited within 60 days, with amounts specified for each individual based on their financial statements.

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