Press Information Bureau

Government of India

Ministry of Corporate Affairs

06-September-2012 18:01 IST

CCI issues Order against Chemist & Druggist Association, Baroda

      The Competition Commission of India (CCI) has found Chemist & Druggist Association, Baroda (CDAB) in violation of the provisions of Competition Act, 2002 which deals with anticompetitive agreements. CCI had imposed a penalty of Rs. 53,837 @10% on the average of the income for financial years 2006-07, 2007-08, 2008-09 on CDAB which has to be paid by it within 90 days from the receipt of the order.

      This case was initiated on a complaint dated 28.04.2009 filed by Shri Uday Joshi of Vedant Bio – Sciences, Baroda before the Monopolies & Restrictive Trade Practices Commission ( MRTPC”) against the Chemists & Druggists Association of Baroda (“CDAB”) .  The complaint had alleged the following anti competitive practices:-

(i)    CDAB had formulated guidelines for its members which require approval or NOC from them for appointment as Stockist / Wholesalers of different companies.

(ii)   CDAB was imposing unfair conditions in sale of pharmaceutical products of different companies.

(iii)  CDAB forces the additional/new Stockist not to sell the products of a pharmaceutical company unless NOC is obtained from the existing Stockist of that pharmaceutical company in that area.

(iv)  CDAB insists on procuring NOC before a pharmaceutical company launches new products or appoints new Stockist.

(v)  CDAB is engaged in fixing margins for pharmaceutical companies.

(vi)  NOC has to be procured for several aspects like launch of new company products, appointment of new Stockist or addition of Stockist.

(vii) CDAB charges Rs. 2000/- per product from all companies launching new product in the market. These charges are collected towards the advertisements in their magazine called ‘Chemists News’. Price structure of each product is controlled through this advertisement and without detailed price structure, the products are not allowed to be launched.

      CCI has directed  CDAB and its members to cease and desist from indulging in and following practices which have been found anticompetitive in violation of Section 3 of the Act. The CDAB has been further directed to file an undertaking that practices with respect to fixing of trade margins of pharma products, non-appointment of stockiest of wholesaler from amongst the non-members of the CDAB, requirement of NOC from CDAB for appointment of stockist of wholesaler and limit on number of stockiest of pharmaceutical companies have been done away within 90 days from the date of receipt of the order.

RC/JR

Anticompetitive agreements restrict stockist appointments and margin-setting, prompting cessation directives and compliance undertakings. The Competition Commission found the Chemists & Druggists Association, Baroda engaged in anticompetitive agreements by requiring NOCs for appointment of new stockists, restricting appointment of non-member wholesalers, fixing trade margins, charging mandatory advertisement fees tied to product price structure, and limiting stockist numbers; it directed cessation of these practices, required an undertaking to eliminate such restraints within a specified period, and imposed a penalty payable within a prescribed timeframe.