The Competition Commission of India (CCI) has imposed a penalty on All Kerala Chemist and Druggist Association (AKCDA) and its district units at Thrissur and Kasargod to be in contravention of the provisions of the Competition Act, 2002.
Four wholesalers in the State of Kerala had alleged that AKCDA and its district level associations were insisting the requirement of a No Objection Certificate (NOC) prior to the appointment of any stockists, in contravention of the provisions of Section 3 of the Act, despite cease and desist orders of the Commission in earlier cases involving similar issues.
It was contended that the practice of NOC simply changed from written approvals to verbal threats and was also being given in the form of congratulatory/appreciation letters to avoid any sanctions under the Act.
After getting the matter investigated by the Director General, the Commission has found that AKCDA and its district units at Thrissur and Kasargod were indulging in the anti-competitive practice of insisting NOC prior to the appointment of new stockists by pharmaceutical companies.
This case once again highlights the persistent attempts of anti-competitive conduct by Chemist & Druggist Associations who, despite various orders by the Commission in similar cases and wide publicity through a press notice issued by the Commission with respect to the NOC practice, has not abstained from indulging in such anti-competitive conduct.
Accordingly, AKCDA, its district units at Thrissur and Kasargod, and their office bearers, have been directed to cease and desist from indulging in the practice of insisting NOC prior to stockist appointment.
The Commission has also imposed a monetary penalty of Rs. 4,78,545, calculated at the rate of 10 % of the average income of AKCDA, under the provisions of Section 27 of the Act.
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Penalties of Rs. 59,434 and Rs. 53,889 calculated at the rate of 10 percent of their average income, were also imposed upon Thrissur and Kasargod district Unit of AKCDA, respectively.
In addition, monetary penalties were imposed on the office bearers of AKCDA and its district units at Thrissur and Kasargod, at the rate of 10 percent of their respective incomes.