On March 12, 2020, CCI found that Bengal Chemists and Druggists Association (‘BCDA’), Alkem Laboratories (‘Alkem’) and Macleods Pharmaceutical Limited (‘Macleod’) along with their office bearers, had contravened the provisions of Section 3 of the Act. CCI’s finding was pursuant to information filed by two pharmaceutical stockists and the branch secretary of Pharmaceuticals Traders Welfare Association of Bengal, alleging restriction/control over supply of pharmaceutical drugs by the opposite parties in West Bengal[1].

The allegations pertained to (i) malpractice of mandating Product Availability Information (‘PAI’) and Stock Availability Information (‘SAI’) which is in the nature of a No Objection Certificate (‘NOC’) for appointment of stockists from BCDA; (ii) requiring payment of illegal donations from the prospective stockists for issuance of SAI; and (iii) requiring payment of illegal donations from the Promotion cum Distributor (‘PCD’) agents of pharma companies for issuance of PAI.

From the evidence on record, CCI observed numerous instances wherein BCDA commenced supply of drugs to stockists after issuing SAI letters to the prospective stockists of various pharmaceutical companies. CCI further perused the statements and donation receipts submitted by various stockists along with the transcripts of telephonic conversations with pharmaceutical companies where the stockists were asked to receive NOC from BCDA before they could get products. CCI further noted that the practice of SAI was admitted by certain officers of BCDA. On the allegation pertaining to donations from PCD agents, CCI perused the statements of certain third party PCD agents recorded by the DG which confirmed that they deposited money to the BCDA to procure PAI. CCI further perused the bank details of BCDA which showed many entries of receipt of such donations from the PCD agents.

CCI further observed that Alkem and Macleod, in agreement with BCDA, indulged in practice of demanding SAI/NOC from the stockists before providing them the supply of drugs. Based on the above, CCI held that Alkem and Macleod contravened Section 3 of the Act. However, CCI decided to not impose any penalty on Alkem and Macleod keeping in mind (i) the steps taken by BCDA to remove the practice of demanding SAI/NOCs from stockists pursuant to CCI’s decision in Santuka Associates Pvt. Ltd. v AIOCD and Others[2]; and (ii) the submissions made by Alkem and Macleod that they engaged in the anti-competitive conduct under threat and duress from BCDA. CCI only directed BCDA to conduct advocacy events by way of outreach activities with its District Committees/ Zone Committees and their office bearers, to impress upon them the need to comply with the provisions of the Act.

[1] Case No. 36 of 2015 (order delivered on March 12, 2020). [2] 2013 Comp.L.R. 223 (CCI)