CCI directs AIOCD from obtaining NOC for appointing stockists, PIS charges from pharma cos

Chennai, 17 May, 2013: Following the direction of the Competition Commission of India (CCI), the All India Organisation of Chemists & Druggists (AIOCD) has issued a circular to its members and office-bearers of state associations communicating the orders of the Commission. The Circular, dated April 18, 2013, states that AIOCD received an order dated February 25, 2013 from CCI, New Delhi on February 28, 2013. The circular was signed by president J S Shinde and it contains the directions of the Commission. In the circular, the president of the organisation said that it would not be required to obtain NOC for appointment of stockists, and pharmaceutical companies, stockists and wholesalers were at liberty to give discounts to their customers. It would not be mandatory to give product information services (PIS) charge. The PIS services could be availed by manufacturers/ pharmaceutical firms on a voluntary basis. Shinde also assures that there will be no boycott of pharmaceutical companies. Earlier, based on a complaint by a distribution in company in Orissa in 2011, the director general of the Commission conducted an investigation and concluded that AIOCD and its associating bodies were infringing Sections 3(3) (A) and 3(3)(B) of the Act. The DG observed that the practices of obtaining ‘no objection certificate’ (NOC) or ‘letter of consent/cooperation’ (LOC), refusal to launch products of the manufacturers/importers for not getting PIS charges, fixing of trade margins and practice of boycott of pharmaceutical companies or their products were contraventions. The Commission has found these practices are anti-competitive and ordered the trade body to desist from such activities. AIOCD’s circular states that it is not mandatory to give PIS charges by companies. The organisation was forced to write this because the Commission in its order against AIOCD under Section 27 of the Act said that delay or withholding PIS approval till the charge is paid is in violation of the Act. It also directs the organisation to issue circular that PIS charges were not mandatory and PIS services could be availed by manufacturers/ pharmaceuticals firms on voluntary basis. Shinde issued circular on the direction of the Commission. On the findings of the director general, the Commission held that the agreement between AIOCD and the manufacturers associations (OPPI & IDMA) to give fixed trade margins to the wholesalers and the retailers has the effect of directly or indirectly determining the purchase or sale prices of the drugs in the market, which is also violation of Section 3(3) (a) of the Act. This direction of the Commission has forced the national body to mention in the circular that pharmaceutical companies, stockists and wholesalers were at liberty to give discounts to their customers. There were complaints from manufacturers, stockists and trade organisations that AIOCD was boycotting some companies for not obeying its instructions. In the circular Shinde now says that his organisation will not boycott any pharmaceutical companies in future.

Pharmabiz