On February 10, 2020, CCI dismissed a complaint by Mr. Ambalal V. Patel (‘Mr. Patel’) alleging abuse of dominant position by Central Medical Services Society (‘CMSS’), Anti TB department (‘ATBD’) and RITES India Limited (‘RITES’)[1]. Mr. Patel alleged that CMSS and RITES inserted unfair conditions in tenders for the purchase of anti-TB drugs and HIV drugs respectively with a view to establishing a monopoly in these markets.

CMSS published a tender to procure Anti-TB drugs for supply to various government dispensaries and asked for suppliers to have Geneva WHO-prequalified certificate (mentioned in labelling only). As a result, only two companies that meet this criterion are allowed to participate in the tender. Mr. Patel claimed that there are other companies with WHO certifications, which are better than WHO-prequalified certification, but CMSS designed tender conditions in a way to give an unfair advantage to the two companies.

CMSS has been established as a Central Procurement Agency to streamline drug procurement and distribution system of Department of Health & Family Welfare, Ministry of Health and Family Welfare, Government of India. RITES, is a Government of India enterprise and is a multi-disciplinary consultancy organisation in the fields of transport, infrastructure and related technologies. It also offers consultancy services for comprehensive procurement & logistics management and auditing, covering all phases of procurement cycle. According to the definition of ‘enterprise’ under Section 2(h) of the Act, CCI held that CMSS and RITES are engaged in procurement of health sector goods and offering consultancy services respectively, which are economic activities. Relying on its past decisions[2], CCI observed that since these entities are not performing any sovereign functions, they are ‘enterprises’ for the purposes of the Act.

In its previous decisions involving allegations of abuse of buyer’s power[3], CCI delineated the relevant market by applying the concept of ‘demand side substitutability’ inversely. Accordingly, the relevant product market may be delineated as ‘market for procurement of Anti-TB drugs’ in case of CMSS, and ‘market for procurement of HIV drugs’ in case of RITES. Since suppliers of health sector goods/drugs can participate in the tenders from all across India, CCI defined the relevant geographic market as ‘the territory of India.’

CCI observed that the there is not adequate information in the submission of Mr. Patel or in the public domain to assess whether the opposite parties in this case are dominant in the relevant market delineated above.

CCI also observed that: (i) WHO-prequalified certification is a globally accepted standard of quality, safety and efficacy and the same could be incorporated in the tender to improve the quality standards of the drug and public safety; (ii) CCI’s past jurisprudence[4] suggests that it would not intervene in the buyer’s prerogative to decide the tender conditions/technical specifications unless they appear to be demonstrably unfair/discriminatory, which did not appear to be the case; and (iii) allegations regarding violations of Drugs and Cosmetics Act, 1940 or Public Procurement (Preference to Make in India) Order, 2017 are out of the purview of the Act. Accordingly, CCI held that such a condition for supplying drugs for treating the critical diseases, prima facie, cannot be termed as arbitrary or anti-competitive unless the same is wholly irrelevant or illusory.

[1] Case No. 02 of 2020 [2] Cupid Limited v. Ministry of Health & Family Welfare and Central Medical Services Society, Case No. 45 of 2018. [3] Shri Rajat Verma v. Public Works (B&R) Department Government of Haryana & others, Case No. 70 of 2014; Adcept Technologies Pvt. Ltd. v. Bharat Coking Coal Limited , Case No. 16 of 2013; Cupid Limited v. Ministry of Health & Family Welfare and Central Medical Services Society, Case no. 45 of 2018; V.E. Commercial Vehicles Limited v. UPSRTC, Case No. 80 of 2015. [4] Suntec Energy Systems/National Dairy Development Board/Amul Dairy, Case No. 69 of 2016; Pandrol Rahee v. DMRC, Case no. 03 of 2010; etc