The Competition Commission of India (CCI) has imposed a penalty of Rs. 18.38 crores on Bengal Chemist and Druggist Association (BCDA) and its office bearers for anti-competitive practices. This has been done vide a common order in Suo moto Case No. 02 of 2012 and Reference Case No. 01 of 2013 filed by Dr. Chintamoni Ghosh, Director, Directorate of Drugs, West Bengal.

In the reference filed by Dr. Ghosh, it was alleged that BCDA is inter alia engaged in issuing anti-competitive circulars directing the retailers not to give any discount to the consumers. The CCI after considering the entire material had directed the Director General (DG) to cause an investigation into the matter and to submit a report.

The CCI observed that the activities of BCDA inter alia to direct its members to sell drugs only at their MRP is a palpable anti-competitive conduct which cannot be justified on the ground that most of the members of the BCDA, would be ruined if competitive forces are allowed to operate in the market. The CCI accordingly concluded that the activities of the BCDA are in conflict with the objects of the competition law as they cause restraint of trade, stifle competition and harm the consumers.

Holding that BCDA and its District and Zonal Committees were engaged in anti-competitive practices of directly or indirectly determining the sale prices of drugs and controlling or limiting the supply of drugs through concerted and restrictive practices, the CCI directed the BCDA and its office bearers and executive committee members to seize and desist from indulging in practices found to be anticompetitive in terms of the provisions of the Act.

After giving due consideration on the issue, the CCI decided to impose a penalty on the BCDA and its those office bearers who were directly responsible for running its affairs and play lead role in decision making @10% and on the executive committee members @7%, of their respective turnover/income/receipts.

The BCDA has been further directed to file an undertaking within 30 days that the CCI’s directions regarding seize and desist from indulging in anticompetitive practices have been complied with. The amount of penalty imposed was directed to be deposited within 60 of the receipt of the order. A copy of the order is available on the website of CCI (www.cci.gov.in).

Anti-competitive pricing restraints: penalty and cease and desist directions imposed on association and responsible office bearers for fixing retail drug prices The regulator found that the association issued circulars directing sale at MRP and prohibiting discounts, constituting anti-competitive practices that restrained trade and harmed consumers; the Director General's investigation supported findings that the association and its committees concertedly fixed sale prices and limited supply. The association, its office bearers and executive committee members were directed to cease these practices, to file a compliance undertaking within 30 days, and were subjected to penalties calculated as percentages of their respective turnover/income/receipts, with the penalty to be deposited within the prescribed period.