SC rejects CCI order against GSK, Sanofi

A lawyer for CCI argued it had evidence that companies engaged in tender rigging

The Supreme Court on Thursday upheld the Competition Appellate Tribunal's (Compat's) order quashing a penalty of Rs 64 crore imposed by the Competition Commission of India (CCI) on multinational drug makers GlaxoSmithKline and Sanofi Pasteur for alleged bid rigging to supply vaccines for Haj pilgrims.

The two companies were accused of colluding in bids for the Quadrivalent Meningococcal Meningitis Vaccine in tenders floated by the Union Health Ministry. GSK and Sanofi Pasteur had first appealed to Compat.

A lawyer on the case told Business Standard that the apex court cited that the facts and figures did not make for a judgement against the pharma majors. 

A lawyer for CCI argued it had evidence that the companies had engaged in tender rigging, that the quantity of bids by GSK and Sanofi together was equivalent to the tender quantity.

CCI did not satisfy the standard of proof required, the court observed.

Earlier, Compat had also quashed the CCI's order, deciding there was no evidence, direct or indirect, of any meeting between the two companies. And, that their bids were not identical, the quantities they had quoted being different.

Compat had also said that even if CCI had to impose a penalty, it should be on the relevant turnover and not total annual turnover for three years. The fair market regulator had imposed a penalty of Rs 60 crore on Glaxo and Rs 4 crore on Sanofi on the basis of their turnovers.

CCI had initiated its investigation on a complaint from Biomed, another pharma company. Biomed alleged the government was facilitating a cartel between GSK and Sanofi from 2008 to 2012. And, that the two companies were abusing their dominant position by convincing the government to incorporate exclusionary conditions such as minimum annual turnover of Rs 10 crore, then Rs 20 crore and Rs 30 crore in three orders placed by the Health Ministry, respectively.

CCI rejected the complaint on abuse of dominant position but said the companies had engaged in bid rigging. It had questioned why each of the two quoted only half the tender quantity. The reply was that the time given to supply the full quantity of the vaccine was not sufficient and import was obviated by the rules in the tender.