CCI imposes Rs 74 cr fine on Himalaya Drug, three others for anti-competitive trade practices

The fair trade regulator held the drug companies responsible for mandating the requirement of obtaining NOC (No Objection Certificate) prior to the appointment as stockists which resulted in limiting and controlling the supply of drugs and medicines in Madhya Pradesh

The Competition Commission of India (CCI) has levied a total fine of over Rs 74 crore on pharma firms — Himalaya Drug Company and Intas Pharmaceuticals — along with its senior officials as well as two Madhya Pradesh-based drug groupings for indulging in anti-competitive trade practices. The two drug associations are Madhya Pradesh Chemists and Druggist Association (MPCDA) and Indore Chemists Association (ICA) as per an order by the CCI.

The fair trade regulator held both the drug associations and pharma companies responsible for mandating the requirement of obtaining NOC (No Objection Certificate) prior to the appointment as stockists which resulted in limiting and controlling the supply of drugs and medicines in Madhya Pradesh.

The act of entities contravened Section 3 of the Competition Act which pertains to anti-competitive agreement,the regulator said in an order dated June 3.

Regarding Himalaya Drug and Intas Pharmaceuticals, CCI noted that “despite advising the pharmaceutical companies not to facilitate such practices of the associations and directing the companies to bring to the notice of the Commission any kind of anti-competitive conduct being forced upon them by the trade association(s), the pharmaceutical companies have failed to demonstrate such ability.”

As per the CCI order, Himalaya Drug was fined Rs 18.59 crore while its three senior officials were fined a total of nearly Rs 4 lakh. Besides, Intas Pharmaceuticals was levied a penalty of Rs 55.59 crore and its four officials were fined Rs 11.78 lakh in total.

Similarly, MPCDA was fined Rs 4.18 lakh and ICA Rs 39,812.

In the matter of associations, the CCI said it has been proscribing anti-competitive practices of state and regional chemists and druggist associations in mandating NOC for appointment of stockists.

However, “despite various orders of the Commission passed in other matters and advisories issued by the Commission, the anti-competitive conduct on the part of the associations and their office bearers has been unrelenting,” the regulator said while imposing fine on MPCDA and ICA.

The ruling came on a complaint filed by Madhya Pradesh Chemists and Distributors Federation (MPCDF) which was aggrieved by the fact that one of its member, Pharma Agencies, despite having valid license was denied supply of products because of insistence on obtaining NOC from the two associations before being appointed stockist by pharmaceutical companies.

MPCDF is affiliated to the All India Chemist and Distributors Federation which is a registered organisation of chemists and distributors in the state of Madhya Pradesh.