Rs 47 crore Penalty on Glenmark Pharma, other entities for unfair business practices

New Delhi: The Competition Commission on Friday imposed penalties totaling nearly Rs 47 crore on Glenmark Pharmaceutical, its three officials, two other pharma companies and four Gujarat-based chemists associations for indulging in unfair business practices.

Besides, a carry and forward (C&F) agent has been penalized.

All the entities have been fined for violating competition norms with regard to mandating no objection certificates (NOC) from the associations prior to appointing entities as stockists.

In an 86-page order, the Competition Commission of India (CCI) also directed the entities to "cease and desist" from indulging in "the practice of mandating NOC, which has been held to be anti-competitive".

Three pharma companies -- Glenmark, Divine Saviour Pvt Ltd, and Hetero Healthcare Ltd -- have been fined. Fines have also been imposed on C&F agent B M Thakkar & Co, Federation of Gujarat State Chemists & Druggists Association and its three constituent associations as well as their officials.

Glenmark, Divine, Hetero and B M Thakkar have to pay a total penalty of Rs 46.43 crore. Also, three officials of Glenmark and one of B M Thakkar have been slapped with a fine of Rs 88,386.

A total penalty of Rs 12.50 lakh has been imposed on Federation of Gujarat State Chemists & Druggists Association and the three constituent associations -- Amdavad Chemist Association, Surat Chemists and Druggists Association, and Chemists and Druggists Association of Baroda. Their office bearers will have to dish out a total penalty of Rs 2.22 lakh.

The order has come on separate complaints filed by four entities engaged in the distribution of medicines in Gujarat.

"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 and stringent penalties imposed upon them, it is found that these associations are continuing to indulge in these practices," the latest order, dated July 12, said.

Further, the regulator said provisions of the Competition Act and spirit of competition seems to be of least priority to these associations, who only believe in disturbing the fair competition through their unfair means.

Noting that it had recently imposed penalty on Gujarat State Chemists & Druggists Association and Chemists and Druggists Association of Baroda, the regulator said, "the provisions of the (Competition) Act and spirit of competition seems to be of least priority to these associations who only believe in disturbing the fair competition through their unfair means".

Among others, the complainants were aggrieved because of the "rampant" practice of requiring an NOC from local chemists and druggists association by pharmaceutical companies in Gujarat, prior to appointment of new stockists allegedly enforced by the district level chemists and druggists associations and their parent body, the Federation of Gujarat State Chemists & Druggists Association.

Taking a prima facie view that there was an alleged violation of Section 3 of the Competition Act, the regulator had directed its investigation arm -- the Director General (DG) -- to probe the matter.

Section 3 pertains to anti-competitive agreements.