On
Background
On
The complaint referenced certain news articles which reported that the CCDA was generating revenues between INR 50,000 / - to INR 5,00,000 / - from each pharmaceutical company, through the levy of PIS charges. These charges were purportedly being collected under the garb of payments towards the CCDA's "building and bulletin fund".
Based on an examination of the complaint, the CCI was of the prima facie opinion that the CCDA had imposed anticompetitive PIS charges, in contravention of Section 3(3)(b) read with Section 3(1) of the Competition Act, 2002 (Competition Act).
Thereafter, the CCI passed an order under Section 26(1) of the Competition Act directing the Director General,
Investigative Findings
Subsequent to the Prima Facie Order, the DG initiated its examination into the conduct of CCDA and the pharmaceutical companies identified by the CCI.
The scope of the DG's investigation was two-fold. First, whether the payment of PIS charges to the CCDA was mandatory for the launch of new medicines. Second, whether the CCDA was controlling / limiting the appointment of stockists in the
On the levy of PIS charges, the DG concluded that the CCDA had coerced pharmaceutical companies to make payments to the CCDA prior to the launch of new medicines. The conclusion of the DG was based on, inter alia, the email dump of CCDA, a third-party statement by
To this end, the DG found that the CCDA had contravened Section 3(3)(b) read with Section 3(1) of the Competition Act. Two office bearers of the CCDA were also found liable under Section 48 of the Competition Act. The DG, however, did not record any findings against the pharmaceutical companies under investigation.
On the issue of NOCs, the DG found that there was insufficient evidence to ascertain whether prospective stockiests were required to obtain an NOC from the CCDA. Here too, the DG did not record findings against the pharmaceutical companies under investigation.
Alkem, Intas and Koye parallelly preferred writ petitions before the
Analysis and Findings of the CCI
As a first step, the CCI analysed the material on record to determine whether the payment of PIS charges had been made mandatory by the CCDA.
The CCI reviewed the submissions of several pharmaceutical companies (such as, Intas and Koye) which had been made before the DG. Except Macleods, every pharmaceutical company had submitted that the launch of medicines was not impeded by the CCDA for want of PIS. Instead, the payment of PIS was made on a voluntary basis towards the publication of information on new launches in the CCDA bulletin. Such publication leveraged the wide network of CCDA and facilitated the dissemination of information regarding the new medicine to stockists and retailers.
As for Macleods, the CCI acknowledged their submission that the PIS charges were mandatory. However, Macleods had also stated that (i) the CCDA had never hindered the launch of a new medicine in the
The CCI also noted the remaining evidence relied on by the DG including, email dumps and communications between CCDA and AIOCD. However, in light of the categorical submissions by several pharmaceutical companies that the PIS charges were paid voluntarily, the CCI was inclined to extend the benefit of doubt in favour of the CCDA. As regards the requirement of NOCs, the CCI did not delve into the question at all in its assessment.
Conclusion
Based on the above analysis, the CCI rejected the DG's findings and held that the CCDA was not in contravention of Section 3(3)(b) read with 3(1) of the Competition Act. Further, in the absence of a contravention by the CCDA, no question of individual liability of the office bearers of CCDA arose. Much like the DG, the CCI too did not make any observations against the pharmaceutical companies.
Accordingly, the CCI exonerated the CCDA and closed the matter.
Khaitan & Co successfully represented
Footnotes
1. In Re: Alleged anti-competitive practices by the
2.
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