Unfair business practices : SC seeks Alkem Laboratories response to CCI plea

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New Delhi | Published: September 30, 2016 6:04:02 AM

Apart from imposing R74.63-crore fine on Alkem, CCI had also penalised two of the company's employees — Johnson Mathew and T K Haridas.

The Supreme Court has sought response from Alkem Laboratories — India’s fifth largest pharmaceutical firm by market share — on the Competition Commission of India’s plea seeking to impose penalty of over R74 crore on the company and its two officials for indulging in unfair business practices.

A bench headed by Justice PC Ghosh issued notice to Alkem on CCI plea against the Competition Appellate Tribunal order that set aside the regulator’s December last year’s penalty order.

Apart from imposing R74.63-crore fine on Alkem, CCI had also penalised two of the company’s employees — Johnson Mathew and T K Haridas.

Compat in its order stated that CCI and its joint DG, who conducted the investigation proceeded on a wholly erroneous assumption that the distributor had been appointed as a stockist by the competent authority of Alkem Laboratories.

The CCI’s ruling had come on a complaint filed by one P K Krishnan, who is into distribution of medicines in Palakkad district, Kerala. He had alleged that the pharma company did not supply medicines even after agreeing to do so. It was also alleged that Alkem had rejected its application for appointment as its stockist since it failed to obtain a no objection certificate from the All Kerala Chemists and Druggists Association (AKCDA).

Besides, CCI had slapped fines on AKCDA and one of its officials as well.

However, the tribunal noted that the distributor had deliberately suppressed vital facts and documents from CCI, which resulted in the order for investigation based on the premise that Alkem Laboratories had refused to appoint it as a stockist and supply the medicines.

Had the facts been stated “the commission would not have entertained the allegations contained in the information and wasted its own time as also the time of the investigating officer and of this tribunal, whose personnel are paid out of public funds”, the tribunal said.

In its 33-page order, CCI had directed Alkem, AKCDA and their officials/office bearers to “cease and desist from indulging in any of the practices which are found to be anti-competitive in terms of the provisions of section 3 of the (Competition) Act”.

Alkem has been slapped with a fine of R74.63 crore while the penalty on AKCDA is R4.35 lakh.

According to CCI, there have been a number of previous cases involving chemists and druggists associations where the diktats of the association are followed by the members without any hesitation.

Such denial of supply to unauthorised stockists to pharmaceutical companies undoubtedly affects competition in the market adversely and appreciably, CCI said in its appeal.

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