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Good News! No liability on IDMA and our Office-Bearers in the Santuka case - Competition Commission of India ruling

We are pleased to inform you that Competition Commission of India has ruled in the Santuka case [20/2011) that IDMA and OPPI cannot be held liable and our Office-bearers have no liability for any violations of the Act.

Our detailed written submissions to all queries raised by CCI over the last 2 years {with the guidance of Mr Kasim Master), the frank and transparent oral testimony at the hearings attended by the Secretary-General and the filings of financial statements as called for by the Office-bearers have all been noted by the CCI and have led to them absolving IDMA and our Office-bearers of all liabilities. The Commission has however imposed a penalty of over Rs. 47 lakhs on AIOCD.

The Commission has determined as below (excerpts):

  • IDMA has submitted that they did not agree with all the conclusions drawn in the DG report relating to the role of IDMA vis-à-vis the enquiry against AIOCD which led to the said DG report. It reiterated that the documents furnished by it and the oral testimony given by its Secretary-General during the investigation should be relied upon to determine their true meaning and intent.
  • It [IDMA] has submitted that it is not in the business of manufacturing and marketing of drugs and pharmaceuticals and is formed in the mutual interest of its members inter se and with the outside world. IDMA has put thrust on the point that it is not a kind of association which can or does anti-Competitive practices.
  • IDMA had advised its members that in their own interest any action between each individual Members and AIOCD or any of its affiliates i.e. the State Organizations of Chemists and Druggist which violate the provisions of the Act would be illegal and lead to consequences provided under the Act.
  • OPPI and IDMA are the associations of manufacturers of drugs whereas, on the other hand, AIOCD is the all India association of chemists & druggists.
  • AIOCD, OPPI and IDMA cannot be said to be the associations of enterprises who are engaged in identical or similar trades of goods or provision of services. Therefore, the MOU between AIOCD, OPPI and IDMA cannot be examined for violation of Section 3(3) so far as the OPPI and IDMA are concerned.
  • The fact which should also not be lost sight of is that why an association like IDMA and OPPI would restrict / limit the supply of its own products. Such limit or restrict would obviously be against the very interest of the said associations.
  • It is worthwhile to note that IDMA vide its resolution dated 02.12.2011 had resolved that all the MOUs entered between IDMA and AIOCD during the years 1982 to 2003 deemed to be operative on that date had been terminated and IDMA had informed its members the same through a separate circular dated 01.02.2012.
  • The Commission in this regard is of the view that the OPPI, IDMA and its members appear to be victims of the exploitative tactics of AIOCD and their conduct of entering into MOU with AIOCD is not at par with the conduct of the AIOCD as far as the violation of the provisions of the Act is concerned.
  • Therefore, IDMA and OPPI cannot be held liable for violation of the provisions of the Act.
  • The anti-competitive decision or practice of the association [AIOCD] can be attributed to the members who were responsible for running the affairs of the association and actively participated in giving effect to the anti-competitive decision for practice of the association
  • It is noted that the office bearers of AIOCD have not filed the financial statements of the enterprises they represent, so far.
  • There is no liability of office bearers of OPPI and IDMA in view of the finding given on issue no. 2.
  • It is evident that AIOCD because of its position is able to continuously engage in limiting and controlling the supply and market and influencing the prices of the drugs and pharmaceutical products by insisting upon NOC for appointment of stockists, fixation of trade margins etc.
  • AIOCD shall issue a letter to the organization of pharmaceutical producers of India, Indian Drug Manufacturers Association and to USV Limited i.e. OP-2 to OP-4 that there was no requirement of obtaining an NOC for appointment of stockists and the pharmaceutical companies, stockists, whole sellers were at liberty to give discounts to the customers.
  • It shall also issue circular that PIS charges were not mandatory and PIS services could be availed by manufacturers/pharmaceuticals firms on voluntary basis.
  • The Commission after considering the facts and circumstances of the present case is of the opinion that it is appropriate to impose penalty @ 10% of the average of the receipts for financial years 2008-09, 2009-10 & 2010-11 on AIOCD.
  • The Penalty of Rs. 47,40,613 is imposed on AIOCD.

Thanks and regards,
Daara B Patel

Encl. : Order