The Competition Commission of India (CCI) has closed a 14-year-old antitrust case against several drug companies, leading pharma associations and All India Organisation of Chemists and Druggists (AIOCD), stating that there was insufficient evidence to prove anti-competitive conduct under the Competition Act.
The order dismissed the findings of the Director General (DG), the CCI’s investigative arm, which had concluded that chemist associations had imposed mandatory no-objection certificates (NOCs) for appointment of stockists, required Product Information Service (PIS) approvals before launching new medicines, fixed trade margins and facilitated boycotts against pharma companies that failed to comply.
The CCI held that the investigation largely relied on historical evidence dating back to 2009-11 and could not demonstrate that the alleged practices continued after the agreements between industry bodies ended in 2011. It also said that AIOCD had subsequently undertaken compliance measures, including informing members that NOCs, PIS charges and fixation of trade margins were not mandatory.
“The Commission is of the considered view that since none of the concerned opposite parties have been found to be in contravention of the provisions of Section 3 of the Act, the question of examining the liability of their office bearers or individuals under Section 48 of the Act does not arise in the facts and circumstances of the present case,” the order noted.
The CCI also accepted that the argument of several pharma companies that they were themselves subjected to the boycott threats and pressure exerted by chemist associations, thereby suggesting that such companies were, at best, victims of prevailing trade practices rather than willing participants in any anti-competitive arrangement.
The antitrust regulator also observed that the the evidence relied upon by the DG, particularly communications issued by chemist association to pharma companies, does not conclusively establish that PIS charges were mandatory in nature. “The material available on record indicates divergent practices and does not support an inference that payment of PIS charges was a compulsory pre-condition for market entry or product launches,” the order said.
The case, originally filed in 2012 by the All India Chemists and Distributors Federation, had remained pending for more than a decade after proceedings were stayed by the Karnataka High Court before resuming in 2022.