Rs 64 crore fine on GlaxosmithKline, Sanofi: Compat overrules CCI orders

New Delhi: Competition Appellate Tribunal set aside penalties totalling Rs 64 crore imposed by CCI on drug makers GlaxoSmithKline Pharmaceuticals and Sanofi Pasteur India, saying that these are "legally unsustainable".

Besides, the tribunal has restrained the Competition Commission of India (CCI) from imposing penalty on the officials of these companies, who have been held responsible for contravention of Competition Act.

The tribunal's order comes more than a year after the CCI had slapped Rs 64 crore fine on the two firms for alleged collusive bidding in supply of a meningitis vaccine to the government for Haj pilgrims.

The matter relates to supply of polysaccharide Quadrivalent Meningococcal Meningitis (QMMV).

In a 146-page order, Compat said there is no evidence direct or indirect of any meeting between the two firms and the bids given by them were not identical as the quantity quoted by them were different.

The prices quoted by GSK and Sanofi were also different, the tribunal noted.

Further, Compat observed that CCI ought to have taken into consideration the appellants' turnover of QMMV vaccine imported for preceding three financial years.

"Even if we were to assume that the Commission had taken a deliberate decision to impose penalty at three per cent of the turnover of the appellants based on the financial statements filed by them, the same is legally unsustainable because the Commission has taken into consideration the entire turnover of the appellants of which QMMV is a miniscule fraction," the tribunal said.

This tribunal has repeatedly held that while imposing penalty under Section 27(b) of Competition Act, CCI can take into consideration turnover of the relevant product and not the entire turnover of industry/enterprise, the order noted.

In June 2016, the watchdog had imposed a fine of Rs 60.45 crore on GlaxoSmithKline (GSK) and Rs 3.04 crore on Sanofi as well as directed them to cease and desist" from anti-competitive practices.

The quantum of penalties amounted to the respective 3 per cent of their three-year average turnover. The turnover figures for the financial years 2008, 2009 and 2010 were taken into account.