 "Competition Commission slaps Rs 73 cr fine on Lupin")
Competition Commission of India (CCI) has imposed a total penalty of nearly Rs 73 crore on drug maker Lupin and two of its officials for unfair business practices, with regard to supply of medicines in Karnataka.
Besides, the watchdog has penalised Karnataka Chemists and Druggists Association (KCDA) and its two officials.
When contacted, a Lupin spokesperson said the company would be looking at legal recourses, including filing an appeal against the CCI order.
Together, the regulator has imposed a total fine of about Rs 73 crore on six entities — Lupin, KCDA and four individuals.
They have also been directed to “cease and desist” from anti-competitive practices. Lupin has been asked to pay Rs 72.9 crore, accounting for one per cent of its average turnover for three years starting from 2011-12.
Two officials, Amit Kumar Dhiman and Nishant Ajmera, have been fined Rs 5,117 and Rs 8,393, respectively. KCDA has been penalised Rs 8.6 lakh while its two officials — A K Jeevan and D S Guddodgi — have been fined Rs 56,055 and Rs 4.5 lakh, respectively.
In its order dated July 28, CCI said KCDA restrained pharmaceutical companies from appointing new stockists in Karnataka, unless a No-Objection Certificate (NoC) was obtained from it. Further, it was found Lupin also refused to supply drugs to the complainant in the absence of NoC.
With regard to one KCDA official, K E Prakash, who did not furnish his income tax returns despite specific directions, CCI said it would deal with the issue separately.
CCI’s order has come on a complaint filed by Maruti & Company.
“We, at Lupin, are looking at all legal recourses, including filing an appeal vis-a-vis the order issued by the Competition Commission of India having considered merits, facts and circumstances associated with the case,” a Lupin spokesperson said.
KCDA could not be immediately contacted for comments.
This is the latest clampdown on unfair business practices in pharma industry by CCI, which had earlier also pulled up various firms as well as chemists associations for violating competition norms.
"Despite several orders of the Commission proscribing the anti-competitive practices of state and regional chemists and druggists associations in inter alia mandating NoC for appointment of stockists, it is found that these associations are continuing to indulge in these practices," CCI said.
An official release said CCI's probe arm -- Director General (DG) -- found KCDA was indulging in the anti-competitive practice of mandating NOC prior to the appointment of new stockists by pharmaceutical companies.
"This case highlights the obstinacy of chemists & druggist associations who, despite various orders by the Commission in similar cases in other parts of India with respect to this NoC practice, have not abstained from indulging in such anti-competitive conduct," the release said.
Instead of desisting from such activity, these associations are mandating the NoC requirement, "either verbally (in order to avoid any documentary evidence/proof) or under camouflaged congratulatory/intimation letters, with a view to hide their apparent anti-competitive behaviour behind these benign nomenclatures," the release said.
Further, it noted that CCI has unambiguously clarified that the use of benign nomenclatures by these associations would not absolve them of the legal consequences of their anti-competitive conduct.
Besides, the watchdog has penalised Karnataka Chemists and Druggists Association (KCDA) and its two officials.
When contacted, a Lupin spokesperson said the company would be looking at legal recourses, including filing an appeal against the CCI order.
Together, the regulator has imposed a total fine of about Rs 73 crore on six entities — Lupin, KCDA and four individuals.
They have also been directed to “cease and desist” from anti-competitive practices. Lupin has been asked to pay Rs 72.9 crore, accounting for one per cent of its average turnover for three years starting from 2011-12.
Two officials, Amit Kumar Dhiman and Nishant Ajmera, have been fined Rs 5,117 and Rs 8,393, respectively. KCDA has been penalised Rs 8.6 lakh while its two officials — A K Jeevan and D S Guddodgi — have been fined Rs 56,055 and Rs 4.5 lakh, respectively.
In its order dated July 28, CCI said KCDA restrained pharmaceutical companies from appointing new stockists in Karnataka, unless a No-Objection Certificate (NoC) was obtained from it. Further, it was found Lupin also refused to supply drugs to the complainant in the absence of NoC.
With regard to one KCDA official, K E Prakash, who did not furnish his income tax returns despite specific directions, CCI said it would deal with the issue separately.
CCI’s order has come on a complaint filed by Maruti & Company.
“We, at Lupin, are looking at all legal recourses, including filing an appeal vis-a-vis the order issued by the Competition Commission of India having considered merits, facts and circumstances associated with the case,” a Lupin spokesperson said.
KCDA could not be immediately contacted for comments.
This is the latest clampdown on unfair business practices in pharma industry by CCI, which had earlier also pulled up various firms as well as chemists associations for violating competition norms.
"Despite several orders of the Commission proscribing the anti-competitive practices of state and regional chemists and druggists associations in inter alia mandating NoC for appointment of stockists, it is found that these associations are continuing to indulge in these practices," CCI said.
An official release said CCI's probe arm -- Director General (DG) -- found KCDA was indulging in the anti-competitive practice of mandating NOC prior to the appointment of new stockists by pharmaceutical companies.
"This case highlights the obstinacy of chemists & druggist associations who, despite various orders by the Commission in similar cases in other parts of India with respect to this NoC practice, have not abstained from indulging in such anti-competitive conduct," the release said.
Instead of desisting from such activity, these associations are mandating the NoC requirement, "either verbally (in order to avoid any documentary evidence/proof) or under camouflaged congratulatory/intimation letters, with a view to hide their apparent anti-competitive behaviour behind these benign nomenclatures," the release said.
Further, it noted that CCI has unambiguously clarified that the use of benign nomenclatures by these associations would not absolve them of the legal consequences of their anti-competitive conduct.