Decided on August 16,1991



R.A. Jahagirdar, J. (Chairman) - (1.)THIS is an enquiry pursuant to an application of the Director-General of Investigation and Registration under Section 10(a)(iii) of the Monopolies and Restrictive Trade Practices Act, 1969. That application mentions that respondent No. 1 is an association of manufacturers of pharmaceutical products while respondent No. 2 is an association of chemists and druggists. Respondents Nos. 1 and 2 entered into an agreement dated April 27, 1982, under which respondent No. 1 fixed uniform discounts for wholesalers and retailers. It was alleged that this had resulted in the increase of the retail prices in respect of which there is no price control under the Drugs (Prices Control) Order, 1979. Details of the said agreement were mentioned in the application.
(2.)It was also alleged in the application that the respondents have entered into a supplementary agreement dated August 13, 1984, under which member-companies of respondent No. 1 agreed to give a 20% margin on the maximum recommended price to the retailers and a 10% margin to stockists/distributors in respect of all products falling under category IV. According to the Director-General, these agreements fell under Clauses (d) and (e) of Section 33(1) of the Monopolies and Restrictive Trade Practices Act.
Replies have been filed by both the respondents. The first respondent, in its reply, has explained in detail the manner in which the prices of drugs are fixed. It has been pointed out that the Central Government has, in exercise of the powers conferred upon it by Section 3 of the Essential Commodities Act, 1955, issued the Drugs (Prices Control) Order, 1979. This order will be hereafter referred to as "the said Order". We will refer to the provisions of this order later in the judgment. Hence it is not necessary to summarise what has been stated by the first respondent in its reply. However, it is necessary to mention that the first respondent has stated in its reply that nearly 80% of the pharmaceuticals fall under category I, II or III. The prices of these pharmaceuticals are fixed by the Government and any increase in the margin allowed to the traders does not result in the increase of the prices of the pharmaceuticals. Hence no burden is passed on to the consumers as a result of the fixation of higher margins for the traders. It was also contended on behalf of the, first-respondent that the trade practice to which the Director-General has taken exception does not fall under Section 2(o) of the Monopolies and Restrictive Trade Practices Act nor does it fall under Clause (d) or any other clause of Section 33(1) of the Act.

(3.)THE second-respondent also filed a reply in which a detailed history of the circumstances in which the margins were fixed under the two impugned agreements has been given. THE second-respondent also contended that the impugned agreements do not contain any restrictive trade practice under the Monopolies and Restrictive Trade Practices Act.

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