- (1.) 1 This case was initiated on a complaint dated 28th April, 2009 filed by Shri Uday Joshi, Authorised Signatory of Vedanta Bio -Sciences, Baroda ('the informant'), before the Director General (Investigation & Registration), Monopolies and Restrictive Trade Practices Commission ('DG (IR)') alleging that the opposite party, namely, Chemists & Druggists Association of Baroda ('CDAB' or 'Association') is indulging into restrictive trade practices. 1.2 The informant has claimed that he is a Baroda based distributor of few pharmaceutical companies and sells pharmaceutical formulations of the companies through promotion and distribution. 1.3 The allegations contained in the complaint/information, in brief, are as below : (i) CDAB is an unregistered body and is imposing unfair conditions in sale of pharmaceutical products of different companies. (ii) CDAB has formulated guidelines for its members which require any person including a member to obtain permission/NOC before which he can become a stockiest of a particular company. (iii) CDAB forces the additional/new Stockiest not to sell the products of a pharmaceutical company unless NOC is obtained from the existing stockiest of that pharmaceutical company operating in that area. (iv) CDAB insists on procuring NOC before a pharmaceutical company launches new products or appoints new stockiest. In case such NOC is not obtained, then the company is not allowed to launch new product or appoint new stockiest. (v) A circular dated 2nd March, 2009 was issued by CDAB, wherein permission has been granted to be stockiest or take work for some pharmaceutical companies, which indicates that NOC is a must to do business. (vi) CDAB is also engaged in fixing margins for pharmaceutical companies. (vii) NOC has to be procured for several aspects like launch of new company products, appointment of new stockiest or addition of stockiest. (viii) CDAB charges Rs. 2,000 per product from all companies who want to launch new product in the market. These charges are collected towards the advertisements in their magazine called 'Chemists News'. Price structure of each product is controlled through this advertisement and without detailed price structure, the products are not allowed to be launched. 1.4 The informant had prayed to remove the hurdles forced by All India Organization of Chemists & Druggists ('AIOCD') through its State Unit/CDAB in pharmaceutical business which, as per informant, would help the prices of medicines come down by at least 20 per cent, After receiving the complaint, the DGIR, MRTPC undertook a preliminary investigation into the allegations made in the complaint and sought certain information from the informant which was duly provided by him.
(2.) AT this stage, consequent upon the repeal of Monopolies and Restrictive Trade Practices Act, 1969 ('the MRTP Act') the case was transferred to the Competition Commission of India ('the Commission') under section 66(6) of the Competition Act, 2002 ('the Act'). The Commission, after considering the material on record formed an opinion that there existed a prima facie case and vide order dated 18th June, 2010 referred the matter to the Director General ('DG') for conducting investigation. In pursuance of the direction of the Commission the DG conducted investigation and submitted the investigation report dated 4th November, 2010 to the Commission.
(3.) DURING the course of investigation the DG gathered facts out of primary and secondary sources, collected evidences by sending questionnaire to the concerned parties including information providers, analysed the evidence/facts gathered in light of the information supplied to the Commission and recorded the statements of information providers as well as members of CDAB. The DG examined issues relating to practice and decision of the association to find whether (a) the CDAB is insisting upon obtaining no -objection before any concern is appointed as distributor/stockiest by any pharmaceutical company, (b) the association is also deciding upon price margins for wholesalers, (c) the association is also charging any amount towards launch of new products in the name of advertisements and if so whether such conduct fall foul of the provisions of the Act. Findings of DG Report;