Competition Commission has slapped a total penalty of nearly Rs 73 crore on drug maker Lupin and its two officials for indulging in unfair business practices with regard to supply of medicines in Karnataka.
Besides, the watchdog has penalised Karnataka Chemists and Druggists Association (KCDA) as well as its two officials in the case.
When contacted, a Lupin spokesperson said the company would be looking at legal recourses, including filing an appeal against the order passed by the Competition Commission of India (CCI).
Together, the regulator has imposed a total fine of little over Rs 73 crore on six entities — Lupin, KCDA and four individuals. They have also been directed to “cease and desist” from anti-competitive practices.
Lupin has been asked to pay a penalty of Rs 72.96 crore, accounting for 1 per cent of its average turnover for three years starting from 2011-12.
The company’s two officials — Amit Kumar Dhiman and Nishant Ajmera — have been fined Rs 5,117 and Rs 8,393, respectively, as per the CCI order.
KCDA has been penalised Rs 8.6 lakh while its two officials — A K Jeevan and D S Guddodgi — have been fined Rs 56,055 and Rs 4.5 lakh, respectively.
In its order dated July 28, CCI said KCDA restrained pharmaceutical companies from appointing new stockists in the Karnataka unless a No-Objection Certificate (NoC) was obtained from it. Further, it was found that Lupin also refused to supply drugs to the complainant in the absence of NoC.
With regard to one KCDA official, K E Prakash, who did not furnish his income tax returns despite specific directions, CCI said it would deal with the issue separately.
CCI’s order has come on a complaint filed by Maruti & Company.
“We at Lupin are looking at all legal recourses, including filing an appeal vis-a-vis the order issued by the Competition Commission of India having considered merits, facts and circumstances associated with the case,” the Lupin spokesperson said.
KCDA could not be immediately contacted for comments.
This is the latest clampdown on unfair business practices in pharma industry by CCI, which had earlier also pulled up various firms as well as chemists associations for violating competition norms.
“Despite several orders of the Commission proscribing the anti-competitive practices of state and regional chemists and druggists associations in inter alia mandating NoC for appointment of stockists, it is found that these associations are continuing to indulge in these practices,” CCI said.
As per an official release, CCI’s probe arm — Director General (DG) — found KCDA was indulging in the anti-competitive practice of mandating NOC prior to the appointment of new stockists by pharmaceutical companies.