In Re: M/s Maruti & Company, Bangalore And Others - (Competition Commission of India) (28 Jul 2016)

Chemists and druggists associations practice of mandating NOC requirement prior to the appointment of stockists held anti-competitive

MANU/CO/0047/2016

MRTP/ Competition Laws

Instant information was filed for alleged contravention by Opposite Parties in denying supply of drugs to Informant for want of a No Objection Certificate (NOC) from OP-1. Informant was appointed as a stockist for Diabetes Care Division of OP-4 on 05th June 2013 in Bangalore. However, Informant was allegedly not supplied with drugs against an order placed by it, as it failed to obtain an NOC.

Chemists and druggists associations existing in different regions and states have been unabashedly indulging in the practice of mandating NOC requirement prior to the appointment of stockists. In a fair and competitive market, players should be given an equal and unhindered opportunity and freedom to operate and compete on merits. Chemists and druggists associations have made NOC a mandatory requirement prior to the appointment of stockists by pharmaceutical companies. Requirement to seek NOC is a hindrance that dissuades new/existing stockists to enter/expand in a market and this practice amounts to an entry barrier for the pharmaceutical stockists. Pharmaceutical companies are succumbing to the practice of seeking NOC, in acquiescence with associations. Fact that impugned practice is being followed by the pharmaceutical company at instance of the association makes the pharmaceutical company also culpable for participation in anti-competitive activity. Commission opined that, such practices under the diktat of associations, restrict supply of goods or services in market, thereby distorting forces of fair play.

In instant case, OP-4 might have acted under influence of OP-1 in insisting for NOC prior to commencing supplies to the newly appointed stockist. However, same cannot absolve it from liability under the Act for its anti-competitive arrangement/understanding/coordination. Existence of any such pressure/influence ought to have been reported to Commission. Commission concludes that there was an anti-competitive arrangement/understanding between OP-4 and OP-1 in violation of Section 3(1) of the Act imposed penalty under Section 27 of the Act

Tags : ANTI-COMPETITIVE PRACTICE PROVISIONS VIOLATIONS PENALTY