Competition Commission of India
Shri Suprabhat Roy, Proprietor, M/S ... vs Shri Saiful Islam Biswas, District ... on 12 March, 2020
COMPETITION COMMISSION OF INDIA
Case No. 36 of 2015
In Re:
Shri Suprabhat Roy, Proprietor, M/s Suman Distributors,
Informant
Murshidabad
And
Shri Saiful Islam Biswas, District Secretary of Murshidabad District
Opposite Party No. 1
Committee of Bengal Chemists and Druggists Association
Shri Bajlur Rahaman, Organising Secretary of Murshidabad District
Committee of Bengal Chemists and Druggists Association and Opposite Party No. 2
Secretary of Nowda Zone Committee
Shri Nikhilesh Mondal, Treasurer of Murshidabad District Committee
of Bengal Chemists and Druggists Association and Secretary of Opposite Party No. 3
Nabagram Zone Committee
Shri Ujjal Paul, Vice-President of Nowda Zone Committee Opposite Party No. 4
Shri Fajlul Haque, President of Nowda Zone Committee Opposite Party No. 5
Bengal Chemists and Druggists Association Opposite Party No. 6
Case No. 31 of 2016
In Re:
Shri Sankar Saha, Branch Secretary, Pharmaceuticals Traders
Informant
Welfare Association of Bengal - Burdwan Branch
And
Shri Hitesh Mehta, Depot Manager of Alkem Laboratories Limited Opposite Party No. 1
Shri Sanjoy Banerjee, GM-Sales (West Bengal) of Alkem
Opposite Party No. 2
Laboratories Limited
Shri Kaushik Deb, District Sales Manager of Alkem Laboratories
Opposite Party No. 3
Limited
Alkem Laboratories Limited Opposite Party No. 4
Burdwan District Committee of Bengal Chemists and Druggists
Opposite Party No. 5
Association
Bengal Chemists and Druggists Association Opposite Party No. 6
Shri Chintamoni Ghosh, Director, Directorate of Drug Control,
Opposite Party No. 7
Government of West Bengal
Shri Basudeo Narayan Singh, Executive Chairman of Alkem
Opposite Party No. 8
Laboratories Limited
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 1
Shri Dhananjay Kumar Singh, Joint Managing Director of Alkem
Opposite Party No. 9
Laboratories Limited
Shri Sandeep Singh, Joint Managing Director of Alkem
Opposite Party No. 10
Laboratories Limited
Shri Balmiki Prasad Singh, Executive Director of Alkem
Opposite Party No. 11
Laboratories Limited
Shri Mritunjay Kumar Singh, Executive Director of Alkem
Opposite Party No. 12
Laboratories Limited
Shri Kaushick Mallick, Proprietor of M/s Siddheshwari Medical
Opposite Party No. 13
Hall, Burdwan
Case No. 58 of 2016
In Re:
Shri Joy Deb Das, Proprietor, M/s Maa Tara Medical Agency,
Informant
Murshidabad
And
Shri Rajeev Mishra, authorised signatory of Macleods
Opposite Party No. 1
Pharmaceuticals Limited
Macleods Pharmaceuticals Limited Opposite Party No. 2
Murshidabad District Committee of Bengal Chemists and Druggists
Opposite Party No. 3
Association
Shri Samir Ranjan Das, Former General Secretary of Bengal
Opposite Party No. 4
Chemists and Druggists Association
Shri Tushar Chakrabarti, Former Director of Bengal Chemists and
Opposite Party No. 5
Druggists Association
Shri Subodh Kumar Ghosh, present General Secretary of Bengal
Opposite Party No. 6
Chemists and Druggists Association
Bengal Chemists and Druggists Association Opposite Party No. 7
All India Organization of Chemists and Druggists Opposite Party No. 8
CORAM
Ashok Kumar Gupta
Chairperson
Sangeeta Verma
Member
Bhagwant Singh Bishnoi
Member
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 2
Present:
For Shri Suprabhat Roy, Informant in Case No. 36 of
Shri Indranil Ghosh, Ms. Arushi
2015, Shri Sankar Saha, Informant in Case No. 31 of
Arora and Shri Palzer Moktan,
2016 and Shri Joy Deb Das, Informant in Case No. 58
Advocates
of 2016
For Bengal Chemists and Druggists Association
Shri Nakul Mohta and
('BCDA') and Shri Subodh Kumar Ghosh, General
Shri Johnson Subba, Advocates
Secretary of BCDA
For Murshidabad District Committee of BCDA, Shri
Saiful Islam Biswas, District Secretary of Murshidabad
District Committee of BCDA, Shri Nikhilesh Mondal,
Treasurer of Murshidabad District Committee of None
BCDA, Shri Bajlur Rahaman, Organising Secretary of
Murshidabad District Committee of BCDA, and
Burdwan District Committee of BCDA
Shri Krishnan Venugopal, Senior
For Alkem Laboratories Limited ('Alkem'), Shri B.N. Advocate with Shri Manas Kumar
Singh, Executive Chairman of Alkem, Shri Sanjoy Chaudhuri, Shri Aman Singh
Banerjee, Senior General Manager of Alkem, Shri Baroka, Ms. Alisha Mehra and
Hitesh Mehta, Regional Distribution Manager of Shri Kaushik Mishra, Advocates,
Alkem, and Shri Kaushik Deb, Zonal Sales Manager of alongwith Ms. Divya Mewani,
Alkem Senior General Manager (Legal)
and Assistant C.S., Alkem
Shri Raju Ramachandran, Senior
Advocate with Shri Rishad A.
Chowdhury, Ms. Madhurika Roy
and Shri Shankarnarayan,
For Macleods Pharmaceuticals Limited ('Macleods')
Advocates alongwith
Shri Himanshu Ranvah, General
Manager (Legal) of Macleods
Shri Jayant Mehta, Ms. Archana
For Shri Rajendra Agarwal, Managing Director of
Sahadeva and Ms. Anu
Macleods
Srivastava, Advocates
Shri Sahil Bhalaik, Shri Tushar
For Shri Rajeev Mishra, Senior Vice-President, Field
Giri and Shri Sewa Singh,
Operations and Sales Administration of Macleods
Advocates
For Shri Subrata Sadhukhan, Deputy Sales Manager,
Shri T. Sundar Ramanath and
West Bengal of Macleods and Shri Pradipta Dhar,
Ms. Prerna De, Advocates
Zonal Sales Manager of Macleods
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 3
ORDER UNDER SECTION 27 OF THE COMPETITION ACT, 2002
Background:
Case No. 36 of 2015
1. Information in Case No. 36 of 2015 was filed by Shri Suprabhat Roy, Proprietor, M/s
Suman Distributors, Murshidabad ('IP-1') on 01.05.2015 under Section 19 (1) (a) of
the Competition Act, 2002 (the 'Act') alleging the malpractice of mandating Product
Availability Information ('PAI') and Stock Availability Information ('SAI') being
carried on by the Opposite Parties arrayed in the information. The Opposite Parties
were stated to be involved in the retail/ wholesale medicine trade in the District of
Murshidabad in West Bengal and were stated to be members of Bengal Chemists and
Druggists Association ('BCDA'). They were also stated to be holding the posts of
office-bearers in the Murshidabad District Committee of BCDA as well as different
Zone Committees of Murshidabad District Committee of BCDA. It was alleged by IP-
1 that for issuance of PAI and SAI, the office bearers of Nabagram Zone Committee
of Murshidabad District Committee of BCDA charged hefty amounts from it. Further,
it was alleged that despite making such payments, no SAI was issued to it. IP-1 also
alleged that BCDA was an active participant/ silent supporter of such anti-competitive
practices of PAI and SAI being adopted by the various identified office-bearers of
Murshidabad District Committee and Nowda Zone Committee in the District of
Murshidabad, thereby limiting and controlling the supply of drugs and pharmaceutical
products in the market of Murshidabad.
2. Considering the above information and after hearing IP-1 and the arrayed Opposite
Parties in the information, the Commission passed an order dated 08.10.2015 under
Section 26 (1) of the Act, opining that prima facie, the conduct of BCDA appears to
be in contravention of Section 3 (3) (b) read with Section 3 (1) of the Act. The
Commission directed the Director General ('DG') to investigate the conduct of
BCDA and also examine the role of other arrayed Opposite Parties who were the
District/ Zonal office-bearers of BCDA.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 4
Case No. 31 of 2016
3. Information in Case No. 31 of 2016 was filed by Shri Sankar Saha, Branch Secretary,
Pharmaceuticals Traders Welfare Association of Bengal ('PTAB') - Burdwan Branch
('IP-2') on 23.03.2016 under Section 19 (1) (a) of the Act alleging that Alkem
Laboratories Limited ('Alkem'), despite issuance of Offer Letter for Stockistship
('OLS') to M/s Siddheshwari Medical Hall, did not make supplies to it and rather
insisted on it to obtain 'No Objection Certificate' ('NOC') or SAI from BCDA under
the garb of imposing the condition that M/s Siddheshwari Medical Hall needs to 'get
clearance from the required authorities' for grant of stockistship of Alkem. When M/s
Siddheshwari Medical Hall insisted on getting supplies, it received a letter dated
10.08.2015 from Alkem declining its request for stockistship altogether on the ground
of already existing adequate dealer network in the region. IP-2 thus, alleged that
BCDA and the Burdwan District Committee of BCDA, owing to their strong presence
in the State of West Bengal and Burdwan District respectively, and Alkem and its
Chairman, Directors and Managers, have an understanding amongst themselves of not
supplying essential drugs to any licensee without the prior endorsement and direction
of BCDA. As a result, they have been able to restrict/ control the supply and
distribution of lifesaving drugs in the West Bengal market, particularly in the District
of Burdwan.
4. Considering the above information, the Commission passed an order dated
05.05.2016 under Section 26 (1) of the Act clubbing the present case with Case No.
36 of 2015 and directed the DG to investigate the matter. The Commission took
cognizance of the OLS dated 28.02.2015 as well as the subsequent letter dated
10.08.2015 of Alkem and noted the change in its stand. In light of such facts of the
case, the Commission was of the opinion that there existed a prima facie case of
contravention of the provisions of the Act by Alkem, Burdwan District Committee of
BCDA and BCDA. The DG was also directed to investigate the role of officials of
Alkem and office-bearers of Burdwan District Committee of BCDA and BCDA.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 5
Case No. 58 of 2016
5. Information in Case No. 58 of 2016 was filed by Shri Joy Deb Das, Proprietor, M/s
Maa Tara Medical Agency, Murshidabad ('IP-3') on 20.06.2016 under Section 19 (1)
(a) of the Act alleging that upon grant of OLS by Macleods Pharmaceuticals Limited
('Macleods'), IP-3 was asked to procure usual SAI/ PAI from BCDA as part of
fulfilling the formalities. However, he was denied the same by Murshidabad District
Committee of BCDA when he applied for it, as he had earlier agitated against the
same. IP-3 had even applied to the office-bearers of BCDA on multiple occasions,
besides making several requests to Macleods in this regard. Finally, he was able to
obtain NOC from BCDA and only thereafter, supplies of drugs was made to him by
Macleods.
6. Considering the above facts and allegations, the Commission, being prima facie
satisfied that BCDA, alongwith its District Committees, has been mandating NOC/
SAI for appointment of stockists in West Bengal, passed an order dated 21.09.2016
under Section 26 (1) of the Act clubbing the present case with Case Nos. 36 of 2015
and 31 of 2016 and directed the DG to investigate violation of Section 3 (3) (b) read
with Section 3 (1) of the Act by BCDA and Macleods. Further, the Commission was
of the view that the role of the concerned office-bearers of BCDA for such alleged
NOC practice and of the officials of Macleods for implementing such NOC practice
was also needed to be examined. In addition, it was observed that though there was no
specific allegation against All India Organization of Chemists and Druggists
('AIOCD') in the information, yet it being the parent association of all the chemists'
and druggists' associations, its role also required investigation.
Investigation by the DG:
7. The DG, after causing an investigation, submitted a consolidated investigation report
to the Commission in all the three cases. During its investigation, the DG issued probe
letters to the Informants, to the arrayed Opposite Parties, and to various third parties.
It also recorded the statements on oath of several individuals and analysed the video
and audio recordings submitted by the Informants. Based upon the allegations made
in the informations, the orders passed under Section 26 (1) of the Act by the
Commission, the submissions made before the DG by the various parties, and other
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 6
documentary evidences collected during the course of investigation, the DG observed
as follows:
7.1 BCDA was carrying on the practice of issuance of SAI/ NOC for appointment of
stockists, which was required prior to their appointment by the pharma
companies. BCDA was also collecting donations in lieu of issuing SAI to
prospective stockist(s) through the nomenclature of 'donation' or 'well wishes'
from prospective distributors which were not voluntary in nature but rather forced
upon them by BCDA. Such practices adopted and followed by BCDA resulted in
limiting and controlling the supply of drugs in the West Bengal market. Thus, the
same were in contravention of Section 3 (3) (b) read with Section 3 (1) of the Act.
7.2 Authorised distributors appointed by small companies to promote the products of
pharma companies are known as Promotion cum Distributor ('PCD') agents in
trade parlance. It has been admitted by some PCD Agents that almost all PCD
Agents used to take PAI from BCDA after paying a subscription fee and
thereafter, on the basis of PAI, District Committee of BCDA issued to them a SAI
after receiving some amount as donation. BCDA was thus, also carrying on the
practice of issuing PAI letter in camouflaged form, which was required before
pharma companies' PCD agents commenced their supplies of the product in the
zone/ District concerned. Such practices also resulted in limiting and controlling
the supplies of drugs in the market, particularly in the State of West Bengal, thus,
being in violation of Section 3 (3) (b) read with Section 3 (1) of the Act.
7.3 Alkem and Macleods made their first supplies to the new stockists only after
BCDA issued a circulation letter stating that "To enable to publish your
appointment as Alkem Laboratories Ltd./ Macleods Pharmaceuticals Ltd.
stockiest in the Ousadh-O-Prasadhani/ Journal of BCDA, please deposit a sum of
Rs. 100/- as circulation charges". Further, when BCDA delayed the release of
such circulation letter, Alkem also correspondingly delayed its appointment/ first
supply to the concerned stockist. Hence, for Alkem and Macleods, BCDA's letter
was considered as an important criterion in the appointment of new stockist.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 7
7.4 Furthermore, though BCDA gave information in its Journal declaring the
distributor having been appointed as stockist of Alkem or Macleods without any
verification from the companies, Alkem or Macleods never objected to the same.
The only possible reason for BCDA to not verify the factual status of the new
stockists before circulation and for Alkem or Macleods to not object to this
irregular practice was that both of them were aware that publication in the
Ousadh-O-Prasadhani/ Journal of BCDA was a camouflaged NOC for starting
the supplies and this camouflaged practice was to avoid the ire of regulatory
bodies such as the Commission. Hence, there was an anti-competitive agreement
between BCDA on the one hand and Alkem and Macleods on the other hand in
the appointment of stockists by Alkem and Macleods on account of which, a
dealer was not able to get the supplies of pharmaceutical products as an
authorised dealer/ distributor of Alkem or Macleods until an NOC/ SAI was
issued by BCDA. Therefore, Alkem and Macleods, in concert with BCDA,
actively forced the applicant stockists to obtain clearances from BCDA, thereby
creating entry barriers for new entrants in the West Bengal drug market. Thus,
Alkem and Macleods are liable under Section 3 (1) read with Section 3 (3) (b) of
the Act for their such anti-competitive agreements with BCDA.
7.5 The failure of AIOCD to respond to the repeated queries of the DG on actions
taken by it to prevent recurrence of anti-competitive activities post decision of the
Commission in the case of Santuka Associates Pvt. Ltd., Cuttak v. AIOCD and
Others, Case No. 20 of 2011 decided on 19.02.2013, leads to the credible
inference that AIOCD has been tacitly supporting the anti-competitive activities
being indulged in by BCDA and its affiliate committees.
7.6 Lastly, the following persons were found liable under Section 48 (1) of the Act,
being in-charge of and responsible to their respective companies/ associations, for
the conduct of their business:
OP PERSON ROLE
Shri Subodh Kumar Ghosh, General Taken a lead role in the anti-
BCDA
Secretary competitive activities of BCDA
Shri J.S. Shinde, President Vicariously liable for the anti-
AIOCD
Shri Suresh Gupta, General Secretary competitive conduct of AIOCD
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 8
OP PERSON ROLE
Alkem Shri B.N. Singh, Executive Chairman
Person in-charge of and responsible
for the conduct of business of the
Macleods Shri Rajendra Agarwal, Managing Director
company at the relevant time
7.7 Further, the following persons were found liable under Section 48 (2) of the Act
for their active connivance:
OP PERSON EVIDENCES
NOCs issued by BCDA were signed by him
Shri Subodh Kumar
He had telephone conversation with IP-3 whereby
BCDA Ghosh, General
he called IP-3 to meet in person regarding the SAI/
Secretary
NOC letter
Shri Saiful Islam,
District Secretary
Murshidabad Shri Nikhilesh
District Mondal, Treasurer They accepted that BCDA carried on the practice of
Committee Shri Bajlur issuance of mandatory NOC/ SAI
of BCDA Rahaman,
Organising
Secretary
He issued OLSs on behalf of Alkem
Shri Sanjoy He wrote letter to District Secretary of Murshidabad
Banerjee, Senior District Committee of BCDA with regard to
General Manager appointment of M/s Manorama Medical Stores,
Murshidabad as stockist of Alkem
Shri Hitesh Mehta, NOC/ SAI was submitted by M/s Subha Medical
Regional Agency, Murshidabad to him
Distribution He insisted on NOC/ SAI to be procured by M/s
Manager Siddheshwari Medical Hall, Burdwan from BCDA
Alkem
He had verbally assured M/s Siddheshwari Medical
Hall, Burdwan that an additional stockist in
Burdwan was required by Alkem but later Alkem
Shri Kaushik Deb, cancelled the OLS of M/s Siddheshwari Medical
Zonal Sales Hall on the ground of unviable economic
Manager commercial parameters leading to postponement of
additional stockist appointment in Burdwan
He insisted on NOC/ SAI to be procured by M/s
Siddheshwari Medical Hall, Burdwan from BCDA
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 9
OP PERSON EVIDENCES
He admitted that officials of Macleods used to
Shri Rajeev Mishra,
regularly go through Ousadh-O-Prasadhani/ Journal
Senior Vice-
of BCDA and verify the contents related to
President, Field
Macleods. Thus, though Macleods (including Shri
Operations and
Rajeev Mishra) was aware of BCDA circulating
Sales
incorrect information about stockists of Macleods, it
Administration
did not object to the same
Macleods
Shri Subrata He sent a letter to IP-3 stating that its OLS would
Sadhukhan, Deputy soon be treated as cancelled
Sales Manager, He was informed telephonically by IP-3 about
West Bengal receipt of SAI/ NOC from BCDA
Shri Pradipta Dhar, He was informed telephonically by IP-3 about
Zonal Sales receipt of SAI/ NOC from BCDA and he sent one
Manager Shri Liton Das to collect the same from IP-3
Proceedings before the Commission:
8. After receipt of the DG's investigation report, the Commission, vide its order dated
06.02.2019, decided to forward an electronic copy thereof to the Informants in all the
three cases and the Opposite Parties against whom evidence was found in the DG
report of contravention of the provisions of the Act as well as to their respective
individuals who were found liable by the DG under the provisions of Section 48 of
the Act. The Commission gave the parties an opportunity to file their objections/
suggestions, if any, to the DG Report, and thereafter appear for an oral hearing on the
DG Report. The Commission also directed the Opposite Parties and their individuals
found to be liable by the DG in terms of the provisions of Section 48 of the Act, to
furnish their financial statements for the Financial Years ('FYs') 2013-14, 2014-15,
2015-16, 2016-17 and 2017-18. The Commission however, did not forward the report
to AIOCD against which, though the DG had given a finding of contravention, but no
evidence was available in the DG Report.
9. Thereafter, upon requests of the parties from time to time, the time for filing the
objections/ suggestions to the DG Report and financial statements was extended and
final hearing in the matter, accordingly rescheduled. In the meanwhile, upon request,
Macleods was given an opportunity to conduct cross-examination of IP-3 which took
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 10
place on 03.07.2019 and Alkem was given an opportunity to conduct cross-
examination of IP-2 which was conducted on 11.07.2019. The records of such cross-
examinations were forwarded by the Commission to the parties giving them an
opportunity to file their comments, if any, upon such cross-examinations.
10. Finally, after receiving the objections/ suggestions to the DG Report and comments
on the cross-examination proceedings from the parties, and after rescheduling the
hearing on the DG Report four times, the final hearing in the matter took place on
04.09.2019 and 06.09.2019. The Commission heard extensive arguments made on
behalf of all the parties and decided to pass an appropriate order in the matter.
Thereafter, written submissions in the matter were also received from various parties.
Submissions of the parties:
11. In their objections/ suggestions to the DG Report, arguments made during the oral
hearings, and in their written submissions filed post hearings, the parties have
essentially made the following submissions:
11.1 BCDA and Shri Subodh Kumar Ghosh, General Secretary of BCDA
i. Taking NOC/ SAI/ PAI from BCDA or its Committees is not mandatory for
appointment of stockists or sale of medicines by pharmaceutical companies in
the State of West Bengal. BCDA, vide its letter dated 23.04.2013, had informed
all its District Secretaries that they are not required to obtain NOC for
appointment of stockists and there would be no boycott of any pharmaceutical
company on this account.
ii. Representatives of Alkem and Macleods have stated on oath before the DG that
they have not faced any resistance from BCDA while appointing stockists and
NOC/ approval from BCDA is not a pre-condition for appointment.
iii. The evidence forming part of the DG Report also shows that BCDA did not
interfere with the supply of medicines and appointment of stockists.
iv. Several distributors/ stockists like M/s Westland Distributors, M/s Park Blue
Print, M/s Durga Agency, M/s Gayatri Pharmaceuticals, M/s Das Medical
House, M/s Kanak Medical Agency, M/s Binapati Enterprise etc., while
replying to the DG, have acknowledged that no donation/ contribution/ approval
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 11
of BCDA is required for appointment of stockist. They have stated that in the
absence of stockist circulation letter and publishing information of appointment
in the BCDA journal, no retailer or wholesaler will come to know that a new
stockist of any pharmaceutical company has been appointed and for such
circulation, other than Rs. 100 charges, no money of any sort is required to be
paid to anybody.
v. Publication of price list in the BCDA Journal ensures circulation of such
information amongst medicine dealers. Thus, the same is not anti-competitive.
vi. All the three Informants have filed the present informations with mala fide
interests. The DG has failed to notice that the telephonic conversation between
IP-1 and Shri Bajlur Rahaman dated 01.03.2014 reveals that the District
Committee had received several complaints from retailers regarding expiry and
breakage of medicines supplied by IP-1 and that IP-1 was not taking back the
expired stock. Further, even the doctors were not prescribing IP-1's medicines
because of their poor quality as a result of which stock had piled up with the
retailers. IP-1, however, falsely alleged in its information that its products could
not be sold due to boycott by BCDA. IP-2, on the other hand, is a Branch
Secretary of another rival association of BCDA viz. PTAB and thus, he had a
vested interest in filing false complaints against BCDA. With regard to IP-3, it
may be noted that the very fact that he recorded the conversation happening
between him and officials of Macleods and him and Shri Subodh Kumar Ghosh,
General Secretary of BCDA which took place in March, 2016 shows that he was
planning to file the present information for a very long time and was trying to
create a trail of evidence.
vii. Admittedly, IP-1 was appointed the promoter-cum-distributor agent of M/s
Trumac Healthcare and Alna Biotech Private Limited in 2009 and 2008
respectively, in Districts of Murshidabad, Nadia and Birbhum. Though IP-1 has
made allegations regarding charges in this regard for commencement of sales
being demanded by BCDA or its office-bearers with respect to the District of
Murshidabad, IP-1 has been selling the products of these companies in the
Districts of Nadia and Birbhum without any obstruction. Further, admittedly,
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 12
IP-2 is in pharma trade since 1999 and has stockistship of at least 7 pharma
companies in respect of which he has made no allegation regarding requirement
of NOC/ approval from BCDA. Admittedly, he was most recently appointed a
stockist by USV Pvt. Ltd. in March 2017 without any NOC/ approval from
BCDA. Also, admittedly, IP-3 has the stockistship of Standard Pharmaceuticals
(since 2005), Cadilla Pharmaceuticals (since 2013), RPG Lifescience (since
2016) and Glenmark Pharmaceuticals Ltd. (since 2017) in respect of which
there is no allegation of requirement of NOC. Even Macleods, before the DG,
while giving the complete record of its stockists' appointment during the period
2014-2016, has stated that it has appointed multiple stockists without
intimation/ approval/ NOC from BCDA.
viii. IP-2 is the Branch Secretary of Burdwan branch of PTAB, which is a rival
association of BCDA. In Burdwan District, there are 5150 pharmaceutical
dealers of which 300 belong to PTAB. Yet IP-2 has been unable to provide any
evidence to the DG that BCDA had issued NOC/ SAI to any pharmaceutical
trader in Burdwan.
ix. Voluntary interactions between BCDA, pharmaceutical companies and their
prospective stockists is not a per se anti-competitive activity. The Expert
Committee Report prepared by Dr. R.A. Mashelkar has concluded that a healthy
interaction between Chemists and Druggists Association and pharmaceutical
companies is beneficial for preventing the entry of spurious drugs in the market.
Thus, without prejudice, even if SAI letters, if any, were issued to stockists, it is
in compliance with the Mashelkar Committee Report.
x. BCDA cannot be held responsible for the alleged contravention by the
Murshidabad District Committee of BCDA. The total number of members in
BCDA is around 34,000. The functions of BCDA is divided into 24 Districts in
the State of West Bengal, further divided into 214 zones. The Districts and
zones conduct their affairs under the supervision of the respective District
Committee and Zone Committee. It is expected that such Committees would
function according to the guidelines issued by BCDA. However, if any element
in them goes rogue and misuses the position of the association, BCDA has only
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 13
limited coercive powers against such defaulter element as no employer-
employee relationship exists and no salaries or remuneration of any kind is paid,
BCDA being a non-profit company. When IP-1 had complained to BCDA
against demand of SAI and PAI by Murshidabad District Committee and
Nowda Zone Committee members, BCDA had taken steps in the form of
dissolving the Murshidabad District Committee, briefing its members about
Competition Law, holding training session in Competition Law on 23.07.2016
at Calcutta University Institute Hall for its District leaders etc. which
information was given to the DG. It even introduced an amendment to its
Articles of Association on 02.07.2016 to empower the Executive Committee to
take drastic actions against persons violating the norms of the Association, as it
was committed to put an end to NOC/ PAI/ SAI etc. Admittedly, IP-1 was
selling the products of M/s Trumac Healthcare and Alna Biotech Private
Limited in the Murshidabad District, Nadia District and Birbhum District from
2008 to 2014, without any obstruction. Thereafter, he, for the first time,
allegedly faced problems with Murshidabad District Committee members, in the
District of Murshidabad. However, he has been selling the products of these
companies in Nadia and Birbhum without any obstruction. This shows that there
was no State-wide direction with regard to mandating PIS/ NOC/ PAI/ SAI by
BCDA.
xi. The statements made by Shri Saiful Islam Biswas, Shri Nikhilesh Mondal, and
Shri Bajlur Rahaman cannot be relied upon. All these three persons are now
members of a rival association of BCDA viz. Progressive Chemists and
Druggists Association ('PCDA'). Further, Shri Saiful Islam Biswas, due to
political rivalry, has also deliberately made false statements against BCDA.
They, while being members of Murshidabad District Committee of BCDA, had
deliberately violated the norms of BCDA. It may be noted that the present
matter pertains to a period when these three persons only were the office-bearers
of Murshidabad District Committee.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 14
xii. The DG is wrong to conclude that there existed an 'agreement' between BCDA
on the one hand and pharmaceutical companies like Alkem and Macleods on the
other, that no stockist can be appointed without NOC/ SAI from BCDA. There
is no evidence on record that any such 'agreement' existed. There is no evidence
regarding any 'meeting of minds' between pharmaceutical companies and
BCDA and the DG has based its findings on mere coincidences. There is no
evidence of any correspondence between BCDA and Alkem or Macleods which
may establish that BCDA was responsible for non-supply of medicines by them.
xiii. There are justifiable reasons for pharmaceutical companies not to supply
medicines to the newly appointed stockists immediately after issuing OLS. They
need to make sure that existing stockists clear their outstanding dues before
learning the appointment of a new stockist; they also need to check if there are
any complaints against the prospective stockists in the market. Such reasons
have even been stated before the DG by M/s Pharma Centre which issues the
appointment approval letters to the stockists of Macleods. The DG has erred in
concluding that such delay was on account of SAI mandated by BCDA.
xiv. Even in the telephonic conversation between IP-3 and Shri Subodh Kumar
Ghosh, General Secretary of BCDA, Shri Ghosh nowhere required that IP-3
should get SAI from BCDA. This clearly shows the non-mandated nature of
such document.
xv. BCDA, after receipt of DG Report, conducted a market survey of companies
selling their products in the State of West Bengal without paying any charges to
BCDA and of stockists who have been appointed without SAI being issued by
BCDA. Illustrative lists thereof show that at least 45 companies have been
selling their products in the State of West Bengal without paying any charges to
BCDA and that at least around 1,000 stockists have been appointed by various
pharmaceutical companies in various Districts of West Bengal, without any
NOC having been issued by BCDA.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 15
xvi. BCDA being a non-profit company in terms of Section 8 of the Companies Act,
2013, is entitled to receive donations, which are exempted from its income
subject to tax, under Section 80G of the Income Tax Act, 1961. BCDA receives
such donations to carry out certain public charitable activities. Even for its day-
to-day functioning, such donations are required. However, there is no evidence
apart from mere allegations to show that such donations had to be paid by the
stakeholders under coercion. The DG has wrongly concluded that such
donations had to be paid for obtaining SAI. It is clearly evident from the DG
Report itself that for issuance of circulation letters in the Journal, BCDA
charges only Rs. 100 from its members. In fact, thousands of stockists have
been appointed in the State of West Bengal without receipt of any donations
from them. Such donations were paid on a voluntary basis. Receipts of
donations only constitute proof of payment; they do not, in any manner, reflect
that payment so made was mandatory.
xvii. Even if there was an 'agreement' between BCDA on the one hand and
pharmaceutical companies like Alkem and Macleods on the other, no AAEC as
a result of such agreement was caused in any market. No 'relevant market' has
been delineated by the DG in its report. Multiple stockists have been appointed
by various pharmaceutical companies in the State of West Bengal without any
NOC/ SAI/ approval from BCDA which clearly shows that there are no barriers
to entry or foreclosure of competition in the market. No harm to consumers has
been established. The number of stockists appointed has no direct impact on
consumers. Consumers purchase drugs from retailers and there are a large
number of retailers present in the market. The evidence in this matter primarily
relates to Murshidabad District wherein issues being faced, if any, were
temporary in nature due to some District Committee members who were later
suspended.
xviii. Regarding Shri Subodh Kumar Ghosh, General Secretary of BCDA, no direct
evidence is available. His specific role and function in such alleged practice of
NOC, if any, has not been examined by the DG. He became the General Sectary
of BCDA only in September 2014. Several facts of this matter relate prior to
September 2014 for which Shri Ghosh cannot be made liable.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 16
11.2 Alkem and its officials Shri B.N. Singh, Executive Chairman, Shri Sanjoy Banerjee,
Senior General Manager, Shri Hitesh Mehta, Regional Distribution Manager, and Shri
Kaushik Deb, Zonal Sales Manager
i. As per the decisions of the Hon'ble Delhi High Court in Mahindra Electric
Mobility Limited and Another v. Competition Commission of India and
Another, W.P. (C) No 11467 of 2018 and others decided on 10.04.2019 by
Division Bench and Cadd Systems and Services Private Limited v.
Competition Commission of India, W.P. (C) No. 6661 of 2019 decided on
17.07.2019 by Single Bench, in the absence of a judicial member in the
Commission, no hearing on the DG Report can be held or final order be passed
by the Commission.
ii. The letters of Alkem requiring prospective stockists to obtain 'necessary
clearance from required authorities' do not imply NOC from BCDA. Alkem
has repeatedly clarified that this phrase refers to documentation such as drug
and food licenses, PAN, VAT, etc.
iii. The delay in supply of pharmaceuticals to M/s Subha Medical Agency and
M/s Manorama Medical Stores was not on account of lack of NOC. In case of
M/s Subha Medical Agency, delay was because of non-submission of requisite
documents by it such as food and drugs license till 11.03.2016. Upon receipt
of such documents, supplies commenced from 18.03.2016. In case of M/s
Manorama Medical Stores, delay was occasioned due to receipt of a new
application from it on 10.06.2015 and a new OLS been issued to it on
15.07.2015. Thereafter, documentation was submitted by M/s Manorama
Medical Stores on 20.01.2016 and supplies started from 25.01.2016.
iv. The letter dated 16.09.2014 addressed by M/s Subha Medical Agency to
BCDA only requests BCDA "... to do the needful ...". It does not imply
issuance of NOC from BCDA. Further, Alkem was not aware of any such
letter being written by M/s Subha Medical Agency or even by M/s Manorama
Medical Stores to BCDA. There is also no evidence that any NOC was
submitted by M/s Subha Agency to Alkem. Thus, no adverse finding against
Alkem can be drawn on this count.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 17
v. Since date of first supply i.e. 18.03.2016, Alkem has been continuously
supplying pharmaceuticals to M/s Subha Medical Agency and has received no
complaints from it.
vi. Letter dated 01.09.2014 addressed by Shri Sanjoy Banerjee of Alkem to
BCDA was not related to stockistship of M/s Manorama Medical Stores. M/s
Manorama Medical Stores had applied for stockistship only on 10.09.2014.
Also, the letter does not mention the name of any particular stockist. During
investigation, Shri Sanjoy Banerjee had clarified that the said letter was
written with the strategic intent to create pressure on the two existing stockists
of Alkem who were in default of certain payments. Even the letter dated
25.07.2017 addressed by Alkem to the DG providing the list of defaulting
stockists proved that Alkem had initiated claims of recovery against them.
Also, Shri Sanjoy Banerjee, who is the Senior General Manager of Alkem, is
not even involved in the process of appointment of stockists.
vii. There was no delay in appointment of M/s Siddheshwari Medical Hall as a
stockist by Alkem. On 28.02.2015, OLS was issued by Alkem to M/s
Siddheshwari Medical Hall. Since no communication for three months was
received from M/s Siddheshwari Medical Hall, vide letter dated 08.06.2015,
the OLS was terminated. Thereafter, Alkem addressed a second letter to M/s
Siddheshwari Medical Hall on 10.08.2015 reiterating revocation of OLS. Due
to change of circumstances during this period of 6 months, Alkem no longer
required a stockist in that region. Such decision was a prudent business
decision. Thereafter, M/s Siddheshwari Medical Hall addressed a fresh letter
dated 19.01.2016 to Alkem cancelling all previous orders placed by it on its
own accord and placed a fresh order for supplies. In this letter, M/s
Siddheshwari Medical Hall acknowledged that previous orders were being
cancelled because it did not have the requisite FSSAI license. Though Shri
Kaushik Mallick, proprietor of M/s Siddheshwari Medical Hall alleged that it
was told by Alkem to write such letter, there is no evidence produced by him
in support of its such claim. Upon receipt of letter dated 19.01.2016 from M/s
Siddheshwari Medical Hall and upon receiving all its documentation, supplies
were commenced from 27.06.2016.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 18
viii. There are contradictions in the statements and cross-examination statements of
IP-2 and Shri Kaushik Mallick, proprietor of M/s Siddheshwari Medical Hall.
ix. M/s Dutta Syndicate was appointed for Kalna, a region different than that for
which M/s Siddheshwari Medical Hall was issued the OLS. They had been
issued OLS on 14.02.2015, submitted their documentation on 04.12.2015, and
supplies commenced from 05.12.2015.
x. IP-2, during his cross-examination, has categorically admitted that he does not
have any documentation to prove the averments made in his information or to
prove that BCDA had issued NOCs to stockists operating in Burdwan District
of West Bengal.
xi. The signatures of IP-2 upon the information filed by it under Section 19 (1) (a)
of the Act and the Affidavit filed in support thereof, do not match. His
signatures on the Affidavit match his signatures put on various other
documents during the course of investigation. This establishes that the
signatures put on the information were not made by IP-2 himself. Therefore,
the information filed itself is invalid in terms of Regulation 15 of the
Competition Commission of India (General) Regulations, 2009. Also, the date
of the Affidavit filed in support of the information precedes the date
mentioned on the information itself. Thus, evidently, at the time of getting the
Affidavit attested, the information itself was not signed.
xii. It has come in the cross-examination of IP-2 that he suppressed material
information in the form of letter dated 14.05.2015 addressed by Shri Kaushik
Mallick, proprietor of M/s Siddheshwari Medical Hall, to PTAB requesting for
issuance of SAI, and that he did not furnish the details of all the associations of
which he was a member from 1999 to 2012 despite specific order of the
Commission dated 18.07.2019 directing him to do so. He, being a member of
rival association PTAB of BCDA, seems to be only interested in challenging
the conduct of BCDA, without even establishing as to how the end consumers
in the State of West Bengal or the District of Burdwan are adversely affected
by the business model of Alkem.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 19
xiii. The contents of letter dated 14.05.2015 addressed by Shri Kaushik Mallick,
proprietor of M/s Siddheshwari Medical Hall, to PTAB requesting for issuance
of SAI, do not indicate that the requirement of NOC was mandated by Alkem
or that Alkem was even aware of such a request being made by Shri Kaushik
Mallick.
xiv. There is no link between the circulation letter issued by BCDA and the
commencement of supplies made by Alkem. There is no evidence that
issuance of such circulation letter was even communicated to Alkem. To the
best of knowledge of Alkem, the BCDA Journal is published at the end of
every month with details of preceding months, that is pursuant to the date of
first supply to the stockist by Alkem. Thus, publication of circulation letter
takes place after commencement of supplies. It is in no way substantiated by
the DG as to how would Alkem even come to know of issuance of a
circulation letter in favour of the stockist. Further, the DG could have drawn a
causal link between submission of documentation by the stockists and
commencement of supplies by Alkem, but it does not.
xv. Statements of Shri Saiful Islam Biswas, Shri Nikhilesh Mondal and Shri Bajlur
Rahaman, cannot be relied upon as corroborative evidence in the absence of
any actual evidence against Alkem on merits that it insisted upon obtaining
NOC from BCDA. There is also no documentary evidence in support of the
claims made by these three third parties, who are erstwhile members of
BCDA, against Alkem.
xvi. Even if a practice of issuing NOC by the Association is presumed, an
'agreement' in terms of Section 2 (b) of the Act cannot include one-sided
enforcement of a condition. There should be 'meeting of minds' to achieve a
common objective, which is lacking in the present matter. The DG has failed
to demonstrate any 'rational economic motive' for Alkem to enter into such
anti-competitive agreement with the Association in terms of Section 3 of the
Act. It would, in fact, be contrary to the rational business interests of Alkem to
allow the Association to dictate the terms of its distribution network.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 20
xvii. Assuming but not conceding that Alkem had, in fact, mandated its distributors
to obtain a prior NOC from the Association, such agreement entered into
between Alkem and the Association would not fall within the scope of Section
3 (3) (b) of the Act. Section 3 (3) covers only those agreements which are
entered into between enterprises 'which are engaged in the identical or similar
trade of goods or provision of services'. BCDA comprises of wholesalers and
retailers of drugs, while Alkem is engaged in the manufacturing of drugs;
hence, they operate on different levels of supply chain and cannot be called to
be engaged in same business or identical market. Also, any alleged
'agreement' between Alkem and Association cannot contravene Section 3 (1)
of the Act on a standalone basis. Section 3 (1) is interlinked with Section 3 (3)
and Section 3 (4) and the same cannot be read mutually exclusive of each
other. Such interpretation gains strength from the non-use of the word "or"
between different sub-sections of Section 3.
xviii. No appreciable adverse effect on competition ('AAEC') has been caused as at
all times, M/s Siddheshwari Medical Hall was free to procure the products of
Alkem from Alkem's other stockists. Also, no AAEC in terms of the factors
contained in Section 19 (3) of the Act has been established by the DG. There
are approx. 55,000 wholesalers and retailers that operate in the State of West
Bengal. In Burdwan District alone, there are around 5,000 traders. Less than
2% of traders in West Bengal are members of BCDA. There are numerous
pharmaceutical companies operating in West Bengal; thus, Alkem is not in a
position to cause any market harm or impact market dynamics. Few incidents
of delayed supply by Alkem, if any, cannot cause any AAEC in West Bengal.
During the alleged delay, such prospective stockists could have approached
competitors of Alkem, without any cost. Thus, there were no barriers to entry
being created by Alkem. AAEC could have only established had the DG found
that significant number of pharmaceutical companies in West Bengal have
been mandating such NOC from BCDA. The DG was thus, required to assess
the aggregate impact of the alleged requirement of NOC or collective impact
of pharmaceutical companies in the Districts of Murshidabad or Burdwan, or
the State of West Bengal to arrive at a finding of AAEC. The DG has failed to
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 21
establish any 'refusal to deal' by Alkem or establish any 'harm to end
consumers' been caused.
xix. The DG chose to investigate only Alkem and Macleods despite it having
evidence of similar nature against other pharmaceutical companies also like
Blue Cross Pvt. Ltd., Allergan India Pvt. Ltd., Alembic Pharmaceuticals Ltd.,
East India Pharmaceuticals Works Ltd. etc.
xx. In the absence of any finding of contravention against Alkem by the
Commission, the DG erred in giving a finding against the officials of Alkem at
a premature stage.
xxi. With regard to Shri B.N. Singh, Executive Chairman of Alkem, the DG has
given an adverse finding without establishing his role and without even giving
an opportunity to him to defend himself. Shri B.N. Singh, being not involved
in the process of appointment of stockists by Alkem, had no knowledge, of
contravention of the provisions of the Act, if any, being committed by Alkem.
His role in the company is limited to facilitation of decision making by the
Board, Board Committees and individual Directors, and developing and
assisting with regard to overall corporate strategy of Alkem and he is not in
any day-to-day field work of Alkem.
xxii. With regard to Shri Sanjoy Banerjee, General Manager of Alkem,
contravention, if any, committed by Alkem was without his consent or
connivance. He was not involved in the process of appointment of stockists by
Alkem. His role was only limited to the overall business promotion of Alkem
in the State of West Bengal. The letter dated 01.09.2019 that he addressed to
BCDA was a one-time exception, and as explained earlier, was necessary to
ensure recovery of dues from defaulting stockists of Alkem. None of OLSs has
been signed by Shri Sanjoy Banerjee.
xxiii. With regard to Shri Kaushik Deb, who was the Zonal Sales Manager of Alkem
for the States of West Bengal and Odisha, contravention, if any, committed by
Alkem was without his consent or connivance. He leads an entire team of Area
Managers, Regional Managers, Division Managers who are delegated the
responsibility of executing sales and marketing decisions. It is highly
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 22
improbable that he is involved in day-to-day operations like appointment of
stockists. His concern in such area is limited - he merely recommends a
prospective stockist for appointment which is a mere formality as groundwork
regarding suitability of the prospective stockist has already been undertaken by
the field staff.
xxiv. Penalty, if any, to be imposed upon Alkem for alleged contravention may be
mitigated keeping in mind that: (a) Alkem is not the ring leader/ perpetrator of
the practice of requirement of NOCs, though it may have been a mere follower
of such practice under threat to its business, BCDA being in a position to
severely affect its business operations; (b) Alkem never refused to make
supplies to its stockists though on few occasions there may have been delays;
and (c) No profit was derived by Alkem out of mandating such practice.
11.3 Macleods and its officials Shri Rajendra Agarwal, Managing Director, Shri Rajeev
Mishra, Senior Vice-President, Field Operations and Sales Administration, Shri
Subrata Sadhukhan, Deputy Sales Manager, West Bengal, and Shri Pradipta Dhar,
Zonal Sales Manager
i. As per the decisions of the Hon'ble Delhi High Court in Mahindra Electric
Mobility Limited and Another v. Competition Commission of India and
Another, W.P. (C) No 11467 of 2018 and others decided on 10.04.2019, it is
impermissible in law for the Commission to carry out its quasi-judicial
functions (including final hearings) in the absence of a judicial member. Thus,
the present proceedings ought to have been kept in abeyance until appointment
of a judicial member in the Commission.
ii. Investigation in the matter has been carried out by one officer of the rank of
Deputy Director General while the investigation Report has been authored by
another officer of the rank of Joint Director General. Thus, the DG Report has
been authored by a person other than the one who had actually carried out the
investigation. Therefore, it is liable to be disregarded and set aside.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 23
iii. IP-3 has filed the information in Case No. 58 of 2016 with mala fide intention
to harass Macleods and its senior officials. The conduct of IP-3 is such that
though he was made advance supplies of drugs by Macleods and was allowed
to make payments subsequently through cheques, three of his cheques got
dishonoured on account of insufficient funds. He made online payments of
those amounts later on. Nonetheless, such conduct of IP-3 raised grave doubts
in the mind of the company about his integrity and financial viability. Thus,
his credit facility was discontinued and he was asked to make advance
payments for receiving supplies. Hence, IP-3 has filed this mala fide
information against Macleods. IP-3 has given no proof that Macleods
cancelled his OLS vide letter dated 16.08.2014 on account of non-furnishing of
SAI.
iv. Macleods never asks its stockists, much less insists, to get an NOC from
BCDA. In all regions of the country including in West Bengal, there are
numerous instances of stockists being appointed by Macleods without any
NOC. On odd instances, stockists may have submitted NOC alongwith other
papers to Macleods. However, this was without Macleods asking for the same
and merely on account of force of habit (as this practice existed earlier) or with
the hope that this may strengthen their chances of appointment. However, this
practice has never been explicitly or implicitly been encouraged by Macleods
and therefore, Macleods cannot be held liable for the same.
v. The letter dated 17.04.2014 written by IP-3 to BCDA requesting for issuance
of SAI was written on his own accord. Macleods or its officials had not asked
IP-3 to procure such SAI. Macleods has no policy of seeking a SAI/ NOC. In
fact, Macleods had issued a circular whereby it had laid down the requirements
for appointment of stockists and had denounced the practice of obtaining any
SAIs or NOCs from BCDA. When IP-3 submitted his requisite documents
(PAN Card, drug licenses, VAT registration, proof of ownership, proof of
storage area etc.) on 11.04.2016 to Macleods, it started making supplies to IP-
3 from 14.04.2016.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 24
vi. There was no delay in making supplies to the stockists by Macleods. As can be
seen from the DG's investigation report itself, almost all of its stockists
received their first supplies within 2-3 months of the issue of OLS and the
same was done upon completion of documentation formalities by the stockists.
Any coincidence with respect to the procurement of BCDA circulation letter
by these stockists is nothing more than just co-incidence. The SAI letter had
nothing to do with appointment of stockists by Macleods. Any delay in
supplies post issue of OLS is a contractual issue and not a competition issue.
Such delays may be caused for various reasons in normal course of business.
vii. Factual findings of the DG are conjectural and speculative. The sample of
stockists selected by the DG has no basis. The DG has cherry picked a few co-
incidences to conclude violation against Macleods.
viii. The telephonic conversations and transcripts thereof relied upon by the DG are
inadmissible in evidence and of doubtful veracity. No Certificate in terms of
Section 65B of the Indian Evidence Act, 1872 has been given by IP-3 in
support of these telephonic conversations submitted by him. Further, no
verification of the same has been done by experts to ascertain as to how far the
recordings have been edited for selective presentation before the Commission.
ix. Unauthorised acts by company's executives in clear violation of declared
company policy cannot be imputed to the company. Any action by junior level
sales executives which might be construed to have an anti-competitive element
is outside the scope and ambit of their authority and cannot be attributed to the
company. The format allegedly given to IP-3 on 02.04.2016 mentioning "NOC
Copy from the association" as one of the items is not a company document. It
is neither on letterhead of the company nor sent to IP-3 as part of its OLS.
Most significantly, Shri Liton Das, a junior sales representative of Macleods,
who allegedly gave this format with receiving of documents to IP-3 on
02.04.2014 and who could have shed light on the reason why such checklist
was used, was not examined before the DG. Thus, the said document cannot
be imputed to Macleods.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 25
x. Just because Shri Pradipta Dhar, Zonal Sales Manager of Macleods asked IP-3
as to whether he has the SAI in the alleged telephonic conversation between
them, it does not mean that Macleods insists upon the SAI to appoint its
stockists. Further, just because in the alleged telephonic conversation Shri
Dhar asks Shri Subrata Sadhukan, Deputy Sales Manager, if SAI is needed and
Shri Sadhukan casually responds that a photocopy or original may be given,
does not imply that SAI was mandated. Such conversation between two junior
employees of a company does not prove the company's policy or that the
company had an 'agreement; with BCDA. Furthermore, all references to SAI
in these alleged conversations at the most show that BCDA coerced the parties
to indulge in the practice of SAI and not an agreement between Macleods and
BCDA in this regard.
xi. Without prejudice, failure to appoint a stockist cannot amount to an anti-
competitive activity. No applicant has an absolute right to be appointed as a
stockist of a company.
xii. Ingredients of an 'agreement' in terms of Section 3 read with Section 2 (b) of
the Act are not established. For existence of an agreement, the parties to the
agreement, the relationship between the parties in terms of chain of
production/ distribution, the objective of the agreement and broad contours of
the agreement have to be identified. However, the DG has failed to do the
same. The DG has not identified the parties to any such agreement nor
explained how such agreement would serve the commercial objective of
Macleods. Even if such practice did exist, Macleods was only a silent witness
to the same. There was no voluntary 'meeting of minds' of Macleods. Even the
telephonic conversations, if believed to be correct, suggest that Macleods was
a victim of harassment and economic coercion by BCDA and on the basis of
the same, no 'agreement' between BCDA and Macleods is established.
xiii. Merely because BCDA issues the circulation latter without verifying the
authenticity of the claim of stockist cannot become a basis to conclude that
there is an 'agreement' between Macleods and BCDA.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 26
xiv. Without prejudice, if Macleods in fact does insist upon SAI from BCDA by its
prospective stockists, it is because of the fact that BCDA exercises significant
coercion upon the pharmaceutical companies to follow its diktats, else their
sales and supplies are boycotted. There is sufficient evidence in this regard in
the DG Report itself. Such coercion cannot be called an 'agreement'. Merely
because Macleods may not have complained against coercion, it does not
imply that Macleods was an active participant in such practice.
xv. Without prejudice, even if BCDA did insist on SAI letters to be obtained by
the proposed stockists before their appointment by pharmaceutical companies,
it is not an anti-competitive practice but rather an act in compliance with the
Mashelkar Committee Report.
xvi. Even if an agreement is established, there was no AAEC in the market. Firstly,
the DG has delineated no 'relevant market'. Secondly, there was robust supply
of pharmaceutical drugs in the District of Murshidabad in West Bengal of
Macleods as well as of other competing companies. Therefore, merely on
account of non-empanelment or purported cancellation of empanelment of any
stockist (IP-3), there could have been no impact whatsoever in the market,
much less an appreciable adverse impact. Macleods had a large number of
stockists in the State of West Bengal who made huge sales, which clearly
evidences that there was no shortage of drugs of Macleods in the market.
Further, Macleods has multiple competitors in West Bengal across several
categories of drugs. Thus, it cannot be said that there were any significant
barriers to new entrants in the market. There are a large number of stockists
operating in the Murshidabad District and they have a good market. Further,
Macleods has given numerous instances of stockists been appointed without
NOC practice. Further, no harm to consumers has also been caused.
Consumers purchase drugs from retailers and there are a large number of
retailers present in the market.
xvii. Without giving a finding of contravention against a company, a finding against
any official of that company cannot be given.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 27
xviii. With regard to Shri Pradipta Dhar, Zonal Sales Manager, and Shri Subrata
Sadhukhan, Deputy Sales Manager, they are very junior officers and not
Director, Secretary or other officer within the meaning of Section 48 (2) of the
Act. They are not 'manager' within the meaning of the term as given in the
Companies Act, 2013. Shri Dhar's job profile only included training field staff
and improving market sales and assisting the company to appoint a suitable
stock distributor. His role is limited to due diligence and sending documents to
Head Office for final approval. These two individuals have no power to decide
appointment of a new stockist. The alleged telephonic conversations of Shri
Pradipta Dhar and Shri Subrata Sadhukan with IP-3 also do not indicate any
consent or connivance of Shri Dhar or Shri Sadhukan in the alleged NOC
practice.
Analysis by the Commission:
12. The Commission has perused the informations filed by the Informants, the
investigation report of the DG and the evidences collected by the DG, the objections
and suggestions to the DG Report and the written submissions filed by the Opposite
Parties and the Informants, the material available on record, and also heard the oral
arguments of the respective learned counsel representing the parties in the matter.
13. At the outset, the Commission notes that Alkem and Macleods have raised a
preliminary objection regarding absence of a judicial member from the hearing of the
Commission. As per Alkem and Macleods, in light of the decision of the Hon'ble
Delhi High Court in Mahindra Electric (supra) and Cadd Systems (supra), without
the presence of a judicial member, the final hearing in the present matter ought not to
take place and no final order by the Commission in this matter can be passed.
14. In this regard, the Commission notes that though the Hon'ble Delhi High Court, in the
Mahindra Electric (supra) decision, had stressed upon the need of having a judicial
member present in the Commission at the time of final hearings and at the time of
passing the final order, it has clarified in its subsequent order in Cadd Systems (supra)
that the Mahindra Electric (supra) decision cannot be interpreted to mean that the
functioning of the Commission is interdicted till the time such appointment is made.
The Hon'ble Delhi High Court, in Cadd Systems (supra), has observed "... Court did
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 28
not interdict the functioning of the CCI pending such appointment. There is no
specific direction that was issued to the aforesaid effect. The Central Government was
directed to fill the vacancy within the period of six months and it cannot be assumed
that the Court had interdicted the working of the CCI during this period. ..."
Therefore, in light of such clarification given by the Hon'ble Delhi High Court, the
Commission is of the view that the plea raised by the parties in this regard is
misconceived and there exists no bar in proceeding with the matter.
15. Further, the Commission notes that Macleods has also raised another objection by
pointing out that though the investigation in the matter has been carried out by the
Deputy Director General, the investigation report has been authored by the Joint
Director General. In this regard, the Commission notes that once a matter is sent for
investigation to the Office of the DG, the DG assigns the same to an investigating unit
which comprises of Additional Director Generals, Joint Director Generals, Deputy
Director Generals, Assistant Director Generals, etc. who are all covered within the
definition of the 'Director General' as contained in Section 2 (g) of the Act. The
investigating unit then carries out the investigation under the supervision of the DG in
terms of Section 16 (2) of the Act. Thus, the objection raised by Macleods is
unmerited and is rejected.
16. Having disposed of the preliminary objections raised by the parties, the Commission
proceeds to decide the matter on merits. In this regard, at the outset, the Commission
notes that in terms of Section 2 (b) of the Act, an 'agreement', inter alia, includes any
'arrangement' or 'understanding' or 'action in concert', whether or not formal or in
writing or intended to be enforceable by legal proceedings. Thus, evidently, this
definition, being inclusive and not exhaustive in nature, is a wide one. Understanding,
for the purposes of Section 2 (b), may be tacit and the definition covers situations
where the parties act on the basis of a nod or even a wink.
17. The Commission is cognizant of the fact that there is rarely any direct evidence of
action in concert and in such situations, the Commission has to determine whether
those involved in any anti-competitive dealings had some form of understanding and
were acting in co-operation with each other. In light of the definition of the term
'agreement', the Commission assesses the evidence in Section 3 cases on the basis of
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 29
benchmark of preponderance of probabilities. The Commission is also cognizant of
the fact that since prohibition on participating in anti-competitive agreements and
penalties the offenders may incur are well-known, it is normal that such activities may
be conducted in a clandestine manner, where the meetings are held in secret and the
associated documentation is reduced to a minimum. Even if the Commission
discovers evidence explicitly showing unlawful conduct between enterprises such as
minutes of a meeting, it will normally be only fragmentary and sparse.
18. Hence, it is to be kept in mind that it is often more than necessary to reconstruct
certain details by deduction. In most cases, the existence of an anti-competitive
practice or agreement has to be inferred from a number of coincidences and indicia
which, taken together, may, in the absence of any other plausible explanation,
constitute evidence of the existence of an anti-competitive agreement.
19. Keeping in view the above, the Commission now proceeds to analyse the evidence
collected by the DG, party wise, as follows:
20. BCDA and its General Secretary Shri Subodh Kumar Ghosh
20.1 As per the informations, three anti-competitive practices were alleged to be
indulged into by BCDA:
(a) Mandating procurement of 'Stock Availability Information (SAI)' which is
in the nature of an NOC from BCDA by a prospective stockist of a
pharmaceutical company, before commencement of supplies of
pharmaceuticals by the pharmaceutical company to the stockist;
(b) Requiring payment of illegal donations (in addition to the circulation
charges) from the prospective stockist(s) for issuance of such SAI; and
(c) Requiring payment of illegal donations (in addition to subscription fee) from
the PCD agents of pharma companies for issuance of 'Product Availability
Information (PAI)' to them which was again mandated to be procured before
pharma companies' PCD agents could commence their supplies of the
product in the zone/ District concerned.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 30
20.2 With regard to the practices of mandating SAI and charging of a monetary
consideration for issuance thereof, the DG collected evidence in the form of
numerous instances wherein BCDA had issued SAI letters to the prospective
stockists of various pharmaceutical companies and it was only thereafter that
supply of drugs to them commenced from the pharmaceutical companies. An
illustrative list of the same is as follows:
Date of Date of
Name of
S. Name of Circulation Invoice of
pharma Date of OLS
No. Stockist Letter by first
company
BCDA supply
14.07.2014
"... you are requested to
M/s Pal
Blue Cross complete all the procedure
1. Distributors, 16.03.2016 08.04.2016
Pvt. Ltd. with your local organisation
Murshidabad
for smooth business
transaction."
10.04.2014
M/s New "... final appointment as a
Allergan
Drug stockist is subject to your
2. India Pvt. 18.01.2016 28.01.2016
Agency, agreement to work as per
Ltd.
Murshidabad company's terms and
conditions."
19.09.2015
"You are requested to
M/s Surya Alembic
complete all the necessary
Medical Pharma-
3. formalities with BCDA State 17.03.2016 29.06.2016
Agency, ceuticals
Committee and provide us
Murshidabad Ltd.
the relevant documents for
our doing the needful."
M/s Matri East India 15.06.2015
Agency, Pharma- "... other formalities will be
4. 21.09.2015 30.09.2015
Uttar ceuticals informed to you in due
Dinajpur Works Ltd. course."
11.09.2014
M/s Subha "... we have no objection to
Alkem
Medical give you an appointment as a
5. Labo- 09.02.2016 18.03.2016
Agency, stockist for our products
ratories Ltd.
Murshidabad provided you get necessary
clearance."
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 31
Date of Date of
Name of
S. Name of Circulation Invoice of
pharma Date of OLS
No. Stockist Letter by first
company
BCDA supply
11.09.2014
M/s
"... we have no objection to
Manorama Alkem
give you an appointment as a
6. Medical Labo- 18.01.2016 25.01.2016
stockist for our products
Stores, ratories Ltd.
provided you get necessary
Murshidabad
clearance."
07.04.2014
M/s Maa Macleods
"You are requested to fulfil
Tara Medical Pharma-
7. the formalities and tender 29.03.2016 22.04.2016
Agency, ceuticals
the same to us for speedy
Murshidabad Ltd.
execution".
20.3 When the DG made enquiries in this regard from such stockists, M/s Subha
Medical Agency stated it had to obtain SAI from BCDA as 'necessary clearance'
after paying a sum of Rs. 13,000/- to get supplies from Alkem. M/s Manorama
Medical Stores also stated that it had to obtain SAI from BCDA as 'necessary
clearance' after paying a sum of Rs. 13,000/- to get supplies from Alkem. M/s
Matri Agency which was appointed stockist of East India Pharmaceuticals Works
Ltd. also informed about payment of donation of Rs. 30,000 on 01.10.2015 to
BCDA in lieu of issuance of SAI by BCDA. They also submitted the donation
receipts from BCDA.
20.4 Apart from the above, Shri Arajit Das of one M/s Green Vision, even submitted
transcripts of his telephonic conversations with the officials of Alembic
Pharmaceuticals Ltd. wherein he was asked to submit NOC from BCDA. Such
transcript was also supported by a Certificate in terms of Section 65B of the
Indian Evidence Act, 1872. Relevant extracts of such conversation are noted
below:
Shri Arajit Das and Shri Samrat Mukherjee
"Arajit Das: Don't you give anything except the stockist?
Samrat Mukherjee: no, we do not give except stockist. Though
goods may be given except stockist, but there are many proceedings.
Any one has to complete that procedure. You have to submit an
application stating that you are interested and you have to produce
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 32
your turnover. You will submit an application stating that you have
this type of works. That application will be scrutinised by the head of
marketing. They will scan the necessity of that at Dumdum then
checking the validity of that the signing authority will sign. Four to
five persons will sign that copy. You will show that to BCDA then
they will approve that and after generating your party code, offer
letter will be given, after showing that the work will be done. This is
the total procedure."
Shri Arajit Das and Shri Sandip
"Arajit Das: No, I have no business with any other division of your
company. But how I will get the order supplied.
Sandip: This is the matter of stockist.
Arajit Das: I have sent order, Cheque everything. What you have to
do after this?
Sandip: You have to collect one N.O.C from local B.C.D.A. There
are some Formalities.
Arajit Das: Yes but don't I get the order supplied. Actually I have
many requirements this area. You will see that I have placed an
order consulting with the parties. We have made a projection of
seven days and placed the order. Don't we get the order supplied?
Sandip: Hear me, I am giving a number of your area manager who
control the area of Dum Dum, You please consult with him. He will
take steps if necessary.
Arajit Das: What is the procedure, please tell me.
Sandip: Procedure means, we cannot supply to the parties directly,
if they did not get the approval from B.C.D.A though we have
vacancy of stockist in that area. So, in that situation there is problem
in catering. You consult with him. OK? You please note the number."
Shri Arajit Das and Shri Koushik Das
"Arajit Das: I am saying that you came to our office Green Vision
few days ago and we have talked about delivering goods to you.
Koushik Das: Yes, talking means I have send it in your text, it has
been noticed about many procedures, but nothing has been discussed
as there is year ending. Another reason is one interest certificate
issued by you is required. You are interested to make business with
Alembic and to establish this you have to produce this interest
certificate. Thereafter, you have to procure one N.O.C from
B.C.D.A. as there is no stockist vacancy in your region. There is no
opening for sell.
...
Shri Arajit Das: what you are telling about meeting? About N.O.C.?
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 33
Koushik Das: Yes, one BCDA N.O.C. is required with the
application.
Shri Arajit Das: Yes, that is essential, you prepare your papers I
need the orders, otherwise it is problem to me. I have submitted my
drug licence number, trade licence number everything.
Koushik Das: Yes, but only those papers are not enough, there are
something more, you have deal with Alembic before and done with
other parties also.
Shri Arajit Das: that is not required.
Koushik Das: interest letter is required.
Shri Arajit Das: what you are telling about B.C.D.A.
Koushik Das: N.O.C.
Shri Arajit Das: N.O.C. required, is it?
Koushik Das: yes, yes, and one interest letter is required, that you
are interested to deal with Alembic."
When the transcript of his conversation was confronted to Shri Samrat
Mukherjee, Regional Manager of Alembic Pharmaceuticals Ltd., he admitted to
have had such conversation and further stated that he is aware that NOC from
BCDA is being collected by the prospective stockists.
20.5 IP-3 also submitted transcripts of his telephonic conversation dated 28.03.2016
with Shri Subodh Kumar Ghosh, General Secretary of BCDA regarding SAI for
supplies from Macleods. This was again supported by a Certificate in terms of
Section 65B of the Indian Evidence Act, 1872. The relevant extracts of such
conversation are noted below:
"IP-3: I shall go. But one condition, if I get the SAI of Macter's
Pharmaceuticals, then I shall move.
Subodh Ghosh: Oh! I cannot speak much about this over
telephone. I am telling you to come. What else I can say you. I am
saying you to come tomorrow..."
When this conversation was confronted to Shri Subodh Kumar Ghosh, he denied
his voice on the audio recording. In these circumstances, the DG obtained the
CDRs of Shri Subodh Kumar Ghosh from his service provider Vodafone. When
such CDRs submitted by Vodafone are compared with the audio recording
submitted by IP-3, it can be seen that the duration of the call recording submitted
by IP-3 matches the duration of the call received by Shri Subodh Kumar Ghosh
on the said date from IP-3.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 34
20.6 Further, the practice of SAI from BCDA being submitted by the prospective
stockists to the pharmaceutical companies being in vogue was even accepted by
the erstwhile office bearers namely Shri Saiful Islam Biswas, Shri Bajlur
Rahaman and Shri Nikhilesh Mondal, of Murshidabad District Committee of
BCDA. They accepted before the DG that when approached by a stockist, the
District Executive Committee of Murshidabad made a recommendation to the
State Committee, and based on the same, BCDA issued a Circulation Letter (SAI)
in favour of the stockist. Shri Nikhilesh Mondal, erstwhile treasurer of
Murshidabad District Committee of BCDA, also admitted that monetary
considerations were being received in the form of donations for issuance of SAI
to distributors.
20.7 From the aforesaid evidences collected by the DG, the Commission is of the view
that it is established that BCDA was carrying on the practice of requiring the
prospective stockists of pharmaceutical companies to obtain its SAI/ NOC, before
supply of drugs to them from the pharmaceutical companies could be
commenced. Further, it also stands established from the aforesaid evidences that
certain District Committees of BCDA such as Murshidabad District Committee,
used to collect monetary considerations in the form of donations from prospective
stockists before recommending their name to BCDA for issuance of the SAI
letters.
20.8 Once such practices being carried on by BCDA are established, the same would
be presumed to have an appreciable adverse effect on competition ('AAEC') by
virtue of the provisions contained in Section 3 (3) of the Act. The onus to rebut
such presumption would then lie upon the parties. In the present case, BCDA has
been unable to rebut the said presumption in terms of the factors contained sin
Section 19 (3) of the Act. It has been unable to show as to how its such impugned
practices resulted in accrual of benefits to consumers or made improvements in
the production or distribution of pharmaceutical products in the State.
20.9 In fact, it has come out in the investigation that Shri Saiful Islam Biswas had even
written a letter dated 01.03.2015 to the General Secretary BCDA wherein he
wrote that:
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 35
"It is emphatically stated that some of the stake holder raised
objection against the issuance of SAI paper and subsequently, in a
further representation dated 15th November, 2014, they prayed inter
alia for issuance of SAI paper, which representation is already lying
with your office. Under the circumstances above, the respective SAI
paper should be issued as early as possible for following reasons:-
i. People of the rural area are suffering from inconvenient useful
Medicine supply.
ii. Pressure is being mounted from common people for convenience
of useful medicine supply of respective locality smoothly.
iii. Each and every medicine agency is submitting repeated
representation to us for communicating the same to you, as well
as they are also expressing their dissatisfaction for non issuance
of SAI paper.
iv. Apart from the above reasons, on moral ground it is to be looked
upon that common people are affected due to non issuance of SAI
paper.
Hence, I would like to draw your kind attention, to re-look the above
mentioned matter ...".
When Shri Subodh Kumar Ghosh, General Secretary of BCDA, was confronted
with this letter and certain NOCs issued by him, he had no justification for the
same. The contents of such letter in fact, categorically show that because of such
SAI/ NOC practice being indulged in by BCDA, the supply of medicines in the
rural areas of West Bengal was limited/ controlled.
20.10 In view of the above, the Commission finds that by indulging in the practice of
issuing SAI and by charging monetary considerations for issuance of the same,
BCDA and its District Committees, have contravened the provisions of Section 3
(3) (b) read with Section 3 (1) of the Act.
20.11 The third allegation for which the DG has found evidence against BCDA pertains
to charging of illegal donations from the PCD agents of pharma companies for
issuance of PAI - a mandatory requirement before pharma companies' PCD
agents could commence their supplies of the product in the zone/ District
concerned. In this regard, the Commission notes that in its information, IP-1, the
PCD agent of M/s Trumac Healthcare and Alna Biotech Pvt. Ltd., responsible for
selling their products to the retail chemists, had alleged that the office-bearers of
BCDA's Nowda and Nabagram Zone Committee, through the retail chemist
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 36
members of these Committees, threatened to boycott the products of M/s Trumac
Healthcare and Alna Biotech Pvt. Ltd. sold by IP-1, unless Rs. 30,000 was paid in
the name of approval for such marketing to BCDA. Further, IP-1, even in his
statement recorded by the DG, stated that he was forced to deposit Rs. 32,000/-
with BCDA as donation for obtaining PAI for circulation of ten products of M/s
Trumac Healthcare and Alna Biotech Pvt. Ltd.
20.12 To examine the veracity of the above allegations, the DG recorded the statements
of some PCD agents other than IP-1. These included Shri Prabir Kumar Chanda,
PCD Agent of M/s USP Lifesciences and M/s Genova Biotech and Shri Prasanta
Chaudhari, PCD Agent of Gentech Health Care Pvt. Ltd. and Oscoderma Pvt.
Ltd. They all also stated that they had to deposit money with BCDA (through its
Zone/ District Committee) to procure PAI from BCDA.
20.13 When Shri Nikhilesh Mondal and Shri Bajlur Rahaman, office-bearers of Nowda/
Nabagram Zone Committee of Murshidabad District Committee were confronted
with the aforesaid statements, they denied the allegations levelled by Shri Prabir
Kumar Chanda and Shri Prashanta Chaudhari and only admitted that during their
tenure, almost all PCD Agents used to take PAI from BCDA after paying a
subscription fee.
20.14 However, on examination of the bank details of BCDA which have been
collected by the DG, it is observed that there are 216 entries of Rs. 30,000 each
credited from various distributors. Two of them when contacted by the DG
confirmed making such donations to BCDA.
20.15 Having considered the aforesaid, the Commission is of the view that it is highly
unlikely that all these distributors would have given the donations of exact Rs.
30,000 only, voluntarily. Thus, from the above evidences collected by the DG,
the Commission finds that evidently, BCDA was also indulging in the anti-
competitive practice of charging monetary considerations in the form of
'voluntary' donations form the PCD agents of pharma companies for issuance of
PAI, for them to start marketing drugs of their respective pharma companies.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 37
20.16 In view of the above discussion, the Commission holds BCDA guilty of indulging
in anti-competitive activities in contravention of the provisions of Section 3 (3)
(b) read with Section 3 (1) of the Act on three counts: (i) it used to require
pharmaceutical companies in at least some Districts of the State of West Bengal
have their new stockists obtain a prior SAI/ NOC from BCDA before supply of
drugs can be commended to them; (ii) it used to collect monetary considerations
from the prospective stockists against issuance of SAI to them, through its
District Committees; and (iii) PCD agents of pharma companies had to obtain
PAI from BCDA after payment of monetary considerations to it in the form of
donations, to start marketing drugs of their respective pharma companies in the
State of West Bengal.
20.17 In light of the aforesaid evidences collected by the DG against BCDA on all the
three counts, the arguments of BCDA regarding mala fide of the Informants in
instituting the present cases or of the erstwhile office bearers of its Murshidabad
District Committee in making admissions before the DG, are of no significance.
Further, though BCDA has argued that it had issued a letter dated 23.04.2013 to
all its District Secretaries stating that they are not required to obtain NOC for
appointment of stockists and has placed on record a copy of such letter, the
Commission notes that despite issuing such letter, BCDA, through its General
Secretary Shri Subodh Kumar Ghosh, in fact issued NOCs/ SAI/ Circulation
Letter, as and when demand in this regard came to it from BCDA's District
Committees. Also, though BCDA has argued that when it came to know that the
Murshidabad District Committee was charging money for issuance of SAI and
PAI, it dissolved the Committee and also held competition compliance
programme, the Commission notes that despite taking such steps, BCDA
continued to issue SAI, as and when demanded by the prospective stockists in the
District of Murshidabad. Furthermore, even assuming as contended by BCDA
that thousands of stockists all over the State of West Bengal have been appointed
by pharmaceutical companies without any SAI from BCDA, yet, from the
material on record, the Commission finds that it is evident that at least in certain
districts (Murshidabad, Burdwan etc.), several remnants of such practice still
remained.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 38
20.18 As far as Shri Subodh Kumar Ghosh, General Secretary of BCDA is concerned,
the Commission notes that the DG has found Shri Ghosh to be liable for the
conduct of BCDA, in terms of Section 48 (1) as well as Section 48 (2) of the Act.
The Commission notes that the NOCs/ SAIs issued by BCDA were signed by
Shri Subodh Kumar Ghosh. He had the telephonic conversation dated 28.03.2016
regarding SAI with IP-3. Therefore, the Commission is of the view that sufficient
evidence is available against Shri Subodh Kumar Ghosh to hold him guilty of
contravention of the provisions of the Act in terms of Section 48 of the Act.
20.19 The Commission is further of the view that for the conduct of Murshidabad
District Committee of BCDA, the DG has rightly identified Shri Saiful Islam
Biswas, District Secretary of Murshidabad District Committee of BCDA, Shri
Nikhilesh Mondal, Treasurer of Murshidabad District Committee of BCDA and
Shri Bajlur Rahaman, Organising Secretary of Murshidabad District Committee
of BCDA, to be liable in terms of Section 48 (2) of the Act. These persons have
accepted the anti-competitive activities being indulged into by Murshidabad
District Committee of BCDA and BCDA itself.
21. Alkem and its officials Shri B.N. Singh, Shri Sanjoy Banerjee, Shri Hitesh
Mehta, and Shri Kaushik Deb
21.1 With regard to the appointment of stockists by Alkem, the DG first approached
M/s Subha Medical Agency, one of the stockists appointed by Alkem in 2014 for
Murshidabad District. Alkem had issued OLS to M/s Subha Medical Agency on
11.09.2014 which stated that "... we have no objection to give you an
appointment as a stockist for our products provided you get necessary
clearance." However, it commenced supplies to it only from 18.03.2016 after
M/s Subha Medical Agency got the SAI from BCDA on 09.02.2016. In this
regard, when asked by the DG as how did it get 'necessary clearance', M/s Subha
Medical Agency stated it had to obtain SAI from BCDA as 'necessary clearance'
after paying a sum of INR 13,000/- to get supplies from Alkem. From the same, it
is evident that M/s Subha Medical Agency had to procure SAI from BCDA
before Alkem commenced supplies. Though Alkem has argued that delay in
making supply to M/s Subha Medical Agency was on account of non-submission
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 39
of documents by it till 11.03.2016, the Commission notes that M/s Subha Medical
Agency had stated before the DG that one of the documents submitted by it on
11.03.2016 was in fact the circulation letter from BCDA (SAI). Further, the
Commission notes that M/s Subha Medical Agency, being a third party to the
present matter, would have no reason to lie about submission of BCDA
Circulation Letter to Alkem or their insistence upon obtaining the same before
commencing supplies. Thus, it is clear that M/s Subha Medical Agency was
forced to obtain SAI from BCDA before Alkem commenced making supplies of
drugs to it. It is inconsequential that Alkem has been continuously making such
supplies to M/s Subha Medical Agency henceforth and has received no
complaints from it.
21.2 Similarly, with respect to the appointment of M/s Manorama Medical Stores as
stockist of Alkem in Murshidabad District, the DG made enquiries from M/s
Manorama Medical Stores. M/s Manorama Medical Stores was appointed as
stockist by Alkem vide OLS dated 11.09.2014. However, supplies to it
commenced only from 25.01.2016 after it first got a SAI from BCDA on
18.01.2016. M/s Manorama Medical Stores, when enquired by the DG, stated that
it had to obtain SAI from BCDA as 'necessary clearance' after paying a sum of
INR 13,000/- to get supplies from Alkem. From the same, the Commission notes
that it is again evident that M/s Manorama Medical Stores had to procure SAI
from BCDA before Alkem commenced making supplies to it. Though Alkem has
argued that delay in making supply to M/s Manorama Medical Stores was on
account of a new OLS being issued to it on 15.07.2015, the fact of the matter is
that supplies to M/s Manorama Medical Stores commenced only on 25.01.2016
after it got SAI from BCDA on 18.01.2016 (even after around 6 months of
alleged new OLS). Thus, it is clear that M/s Manorama Medical Stores was
forced to obtain SAI from BCDA before Alkem commenced making supplies of
drugs to it.
21.3 In fact, apart from the aforesaid evidences, M/s Manorama Medical Stores has
also provided to the DG a copy of a letter dated 01.09.2014 written by Alkem to
the District Secretary of Murshidabad District Committee of BCDA, the contents
whereof stated that "Please treat this application as a prayer letter for appointing
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 40
a new stock point at Murshidabad District. I shall be highly obliged for your
doing the needful." When the DG confronted Shri Sanjoy Banerjee, General
Manager of Alkem, the writer of the letter with the letter, he stated that "this
letter was written in exceptional circumstances" to use BCDA "to create
pressure" and to "send a message ... defaulting stockists". Alkem has also
argued before the Commission that the said letter was written with the strategic
intent to create pressure on the two existing stockists of Alkem who were in
default of certain payments. The Commission however, notes that the argument
put forth by Alkem has no merit. From the language of the letter, it is clear that
Alkem had written to the BCDA seeking approval for appointment of a new stock
point in the District of Murshidabad, though the same may or may not have been
M/s Manorama Medical Stores. Thus, such letter, with its clear and unambiguous
language, when seen in the light of proximity of the other evidences available on
record, is self-explanatory and the rationale projected by Alkem appears to be an
afterthought and not plausible.
21.4 Even Shri Saiful Islam Biswas, Shri Nikhilesh Mondal, and Shri Bajlur Rahaman,
erstwhile office-bearers of Murshidabad District Committee of BCDA have
categorically accepted before the DG that when approached by a stockist, the
District Executive Committee made a recommendation to the State Committee,
based on which, BCDA issued a Circulation Letter in favour of the stockist.
Apparently, such recommendation was issued by the District Committee only
after receiving a monetary consideration in the form of donation from the
stockist. Without such recommendation, no SAI was issued, and without SAI, no
supplies by Alkem were made. Thus, effectually, in order to obtain supplies from
Alkem, the stockists had to pay money to the BCDA and obtain SAI from it.
21.5 Further, with regard to grant of OLS to M/s Siddheshwari Medical Hall by
Alkem, the Commission notes that OLS was given to M/s Siddheshwari Medical
Hall on 28.02.2015 stating that "... we have no objection in giving you the
stockistship provided you get necessary clearance from the required authorities".
Thereafter, on 10.08.2015, after 6 months of issuing the OLS, Alkem changed its
stand and communicated to M/s Siddheshwari Medical Hall that "... we would
like to inform you that currently the generic products of the company are
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 41
sufficiently distributed through the existing network of distributors of Alkem
available in the region. Additional stockist in the region to which you have shown
your interest has been internally assessed and examined on commercial and
economic parameters and viability thereof and pursuant to such analysis, it
appears an unproductive proposition for Alkem to add a new stockist for the time
being. The existing network of distributors are efficiently catering to the
requirements/ needs of Alkem. We are therefore, not in the immediate need of
expanding our distributors base ...". However, supplies to M/s Siddheshwari
Medical Hall were started by Alkem from 27.01.2016.
21.6 In this regard, the DG recorded the statement of Shri Kausihik Mallick, Proprietor
of M/s Siddheshwari Medical Hall. He stated that he had submitted all the
requisite documents to Alkem on 08.06.2015. However, 'necessary clearance' in
the letter of Alkem, as per practice, meant NOC/ Approval from BCDA. Thus, he
had to apply for such NOC to the Burdwan District Committee of BCDA.
However, the Burdwan District Committee refused to accept such letter from Shri
Mallick so he had to make a request in this regard to them verbally. He stated that
though he had submitted all the other requisite documents to Alkem, since he
could not arrange a positive response from BCDA, Alkem cancelled its
stockistship on the pretext of adequate dealer network. Further, as per IP-2, later,
when M/s Siddheshwari Medical Hall escalated the issue before various
authorities, only then Alkem started supplies to M/s Siddheshwari Medical Hall
on 27.01.2016. In their cross-examinations by Alkem, Shri Kausihik Mallick and
IP-2 have stood by their statements though Alkem argued that there have been a
few minor contradictions in their stories.
21.7 Though Alkem suggested that M/s Siddheshwari Medical Hall had, in its letter
dated 19.01.2016, addressed to Alkem acknowledged that its previous order be
cancelled on account of not being able to submit FSSAI License etc., the
Commission notes that M/s Siddheshwari Medical Hall, when asked about such
letter by the DG, had replied that such letter was submitted as per demand of
Alkem only. Further, the Commission notes that despite issuing such letter by
M/s Siddheshwari Medical Hall, since in the meanwhile IP-2 had raised the
grievance of M/s Siddheshwari Medical Hall before various authorities like
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 42
NPPA and the Competition Commission, Alkem started supplies to M/s
Siddheshwari Medical Hall from 27.01.2016 without the requirement of FSSAI
License. Be that as it may, the supplies to be made to Alkem were of
pharmaceutical drugs and not of food products. Thus, non-submission of FSSAI
License by it may have been of no consequence. Further, though Alkem has
averred that since it received no communication from M/s Siddheshwari Medical
Hall for 3 months' post issuance of OLS, it cancelled their appointment on
08.06.2015 itself (when Shri Kaushik Mallick had allegedly given documents to
Alkem) and thereafter, it only reiterated such cancellation on 10.08.2015, the
Commission observes that once cancellation was done by Alkem vide letter dated
08.06.2015 allegedly, there arose no reason for Alkem to reiterate such
cancellation vide another communication dated 10.08.2015.
21.8 The Commission also takes note of the fact that the DG has observed that during
the same period when Alkem cancelled the stockistship of M/s Siddheshwari
Medical Hall on account of adequate dealer network in the region, it had
appointed one other M/s Dutta Syndicate as its stockist in the region. This M/s
Dutta Syndicate had a letter in its favour issued from BCDA. In this regard,
Alkem has argued before the Commission that M/s Dutta Syndicate was
appointed as a stockist by Alkem for a region (Kalna) other than that for which
M/s Siddheshwari Medical Hall had applied. In view of the Commission, even if
such argument proposed by Alkem is taken to be true at its face value, yet the
same does not explain the fact as to why Alkem, issued cancellation letters to M/s
Siddheshwari Medical Hall, one after the other or as to why Alkem eventually
started making supplies to M/s Siddheshwari Medical Hall w.e.f. 27.01.2016
though it had no requirement of an additional stockist in the region for which M/s
Siddheshwari Medical Hall had applied.
21.9 Therefore, in light of such evidences, the Commission is of the view that Alkem
was forcing M/s Siddheshwari Medical Hall to obtain SAI from BCDA before
Alkem commenced making supplies of drugs to it. However, since in the
meanwhile M/s Siddheshwari Medical Hall requested another Chemists and
Druggists Association in the State of West Bengal viz. PTAB on 14.05.2015 for
issuance of such SAI, which in turn raised the issue before legal authorities like
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 43
the Competition Commission, Alkem, without insisting for SAI, started making
supplies to M/s Siddheshwari Medical Hall from 27.01.2016.
21.10 Apart from the above three specific instances, the DG has also collected details
regarding appointment of all other new stockists by Alkem in 2014-15 (till July
2015 when the practice of issuing OLS was discontinued by Alkem). The
information collected by the DG regarding the dates on which OLSs were issued
by Alkem to the stockists, the dates on which they obtained circulation letters
from BCDA and the dates on which Alkem commenced supplies commenced to
them, are tabulated as follows:
S. Date of Date of Circulation Date of Invoice
Name of Stockist
No. OLS Letter by BCDA of first supply
1. M/s Subha Medical Agency 11.09.2014 09.02.2016 18.03.2016
2. M/s Manorama Medical Stores 11.09.2014 18.01.2016 25.01.2016
3. M/s Dutta Syndicate 14.02.2015 01.12.2015 05.12.2015
4. M/s Anima Enterprise 04.05.2015 01.06.2016 09.06.2016
5. M/s Ghosh Drug Agency 04.02.2015 22.02.2015 04.03.2015
6. M/s S.P Medicine 08.01.2015 10.02.2015 02.04.2015
7. N.R Pharmaceuticals Pvt. Ltd. 04.03.2015 13.04.2015 06.05.2015
8. M/s Dokania Medicine 06.05.2015 24.06.2015 21.08.2015
21.11 From the above, it can be seen that not only in the case of M/s Siddheshwari
Medical Hall, but rather in cases of all new stockists appointed in 2014-15,
Alkem started its first supply to its new stockists only after BCDA issued the
circulation letter to them declaring that they have been appointed as a stockist of
Alkem. The obvious implication drawn is that the phrase 'necessary clearance' in
the OLSs issued by Alkem meant NOC from BCDA.
21.12 It has also come out in the investigation that BCDA obtained no verification from
Alkem regarding appointment of such stockists before issuing such circulation
letters to them. The circulation letters of BCDA simply stated that "to enable to
publish your appointment as ALKEM LABORATORIES LTD. stockist in the
OUSHADH-O-PRASADHANI/ Journal of BCDA, please deposit a sum of Rs.
100/- as circulation charges". Moreover, it has come out in the investigation that
Alkem, despite knowing that BCDA was issuing such circulation letters and
thereafter publishing such appointment in their journal, never objected to the
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 44
BCDA for publishing such information without prior verification. Shri Hitesh
Mehta, Regional Distribution Manager of Alkem, in his statement on oath before
the DG has accepted that "we receive the Journal from the BCDA and verify the
correctness of contents related to our company". It is not the case of Alkem or
even argued by BCDA that while applying for such circulation letter/ SAI from
BCDA, the stockist(s) used to give a copy of the OLS issued by the
pharmaceutical company to BCDA and therefore, no verification in this regard
was required. In view of the Commission, since it is not the case of the parties
that the circulation letters were issued by BCDA on the basis of OLS granted by
pharmaceutical company to the stockist(s), and since Alkem despite having
knowledge that such publication of names of new stockists takes place in the
BCDA journal without any prior verification from Alkem never objected to the
same, the only inference that can be drawn is such verification was not done
because both Alkem and BCDA were aware that such circulation letters issued by
BCDA to the stockist(s) which were to be given to Alkem by the stockist
alongwith other requisite documents and thereafter publication in Ousadh-O-
Prasadhani/ Journal of BCDA was a camouflaged NOC for starting the supplies
and this camouflaged practice was to avoid the ire of regulatory bodies such as
the Commission.
21.13 Such practice being in vogue has even been accepted by the office bearers Shri
Saiful Islam Biswas, Shri Bajlur Rahaman and Shri Nikhilesh Mondal of
Murshidabad District Committee of BCDA. Though Alkem has argued that
statements of these office bearers should not be given much weightage as they are
erstwhile office bearers of Murshidabad District Committee of BCDA, the
Commission does not find much merit in such argument put forth by Alkem in
light of the other factual documentary evidences gathered during the course of
investigation.
21.14 Though Alkem has raised several other arguments imputing mala fide conduct by
IP-2, the Commission is of the view that an Informant is only an information
provider and a challenge to his credibility, does not have much bearing on the
merits of a case, especially when the DG during investigation has been able to
collect sufficient evidences against the contravening party.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 45
21.15 Consequently, in light of the above evidences, the Commission finds that Alkem,
after issuing OLS to prospective stockists, in agreement with BCDA, was
indulging in the practice of demanding SAI/ NOC/ Approval Letter/ Circulation
Letter from BCDA before commencing supplies. This constitutes an anti-
competitive agreement between Alkem and BCDA. AAEC as a result of such
NOC/ SAI practice has already been noted by the Commission in the earlier part
of the present order. Absence of any 'economic motive' on part of Alkem to enter
into such agreement does not afford an adequate defence to Alkem for engaging
in such anti-competitive conduct. Thus, for indulging into such agreement, the
Commission holds Alkem guilty of contravention of the provisions of Section 3
(1) of the Act.
21.16 The Commission observes that Section 3 (1) is the main provision and can be
applied independently of Section 3 (3) or Section 3 (4) of the Act. It prohibits all
kinds of 'anti-competitive agreements' and is not limited to or exhausted by
Section 3 (3) or Section 3 (4) of the Act. Section 3 (1) of the Act states that no
enterprise or association of enterprises or person or association of persons shall
enter into any agreement in respect of production, supply, distribution, storage,
acquisition or control of goods or provision of services, which causes or is likely
to cause an AAEC within India. Section 3 (2) declares any agreement entered into
in contravention of the provisions contained in sub-section (1) as void.
21.17 Section 3 (3) states that any agreement entered into between enterprises or
associations of enterprises or persons or associations of persons or between any
person and enterprise or practice carried on, or decision taken by, any association
of enterprises or association of persons, including cartels, engaged in identical or
similar trade of goods or provision of services, which (a) directly or indirectly
determines purchase or sale prices; (b) limits or controls production, supply,
markets, technical development, investment or provision of services; (c) shares
the market or source of production or provision of services by way of allocation
of geographical area of market, or type of goods or services, or number of
customers in the market or any other similar way; (d) directly or indirectly results
in bid rigging or collusive bidding shall be presumed to have an AAEC. It is
further provided in this sub-section that an agreement entered into by way of joint
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 46
ventures if such agreement increases efficiency in production, supply,
distribution, storage, acquisition or control of goods or provision of services is
exempted from the applicability of this sub-section.
21.18 Further, Section 3 (4) states that any agreement amongst enterprises or persons at
different stages or levels of the production chain in different markets, in respect
of production, supply, distribution, storage, sale or price of, or trade in goods or
provision of services, including (a) tie-in arrangement; (b) exclusive supply
agreement; (c) exclusive distribution agreement; (d) refusal to deal and (e) resale
price maintenance, shall be an agreement in contravention of Sub-Section (1) if
such agreement causes or is likely to cause an AAEC in India.
21.19 Thus, from a conjoint reading of the aforesaid provisions of Section 3 of the Act,
it is evident that Section 3 (1) is the genus and Section 3 (3) and 3 (4) are species
thereof. Therefore, Section 3 (1) can be applied independently of Section 3 (3) or
Section 3 (4) of the Act.
21.20 Further, in light of the judgments of the Hon'ble Delhi High Court in Cadila
Healthcare Limited and Another v. Competition Commission of India and Others,
252 (2018) DLT 647 and Pran Mehra v. Competition Commission of India and
Another, W.P. (C) Nos. 6258, 6259 and 6669 of 2014 decided on 26.02.2015, the
argument of Alkem regarding the proceedings against its individuals being
premature, does not hold good.
21.21 The DG has found Shri B.N. Singh, Executive Chairman of Alkem, liable for the
contravening conduct of Alkem, in terms of Section 48 (1) of the Act. However,
Alkem has argued that such contravention, if any, was committed by the company
without the knowledge of Shri B.N. Singh as he was neither involved in the
stockist appointment process of Alkem nor involved in the day to day field work
of the company. In light of such contention, the Commission does not find Shri
B.N. Singh to have contravened the provisions of the Act.
21.22 Further, the DG has found Shri Sanjoy Banerjee, Senior General Manager of
Alkem, Shri Hitesh Mehta, Regional Distribution Manager of Alkem, and Shri
Kaushik Deb, Zonal Sales Manager of Alkem liable in terms of Section 48 (2) of
the Act. It has come out in the investigation that Shri Sanjoy Banerjee was the
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 47
one who has signed the OLSs issued on behalf of Alkem issued to M/s Subha
Medical Agency, M/s Manorama Medical Stores and he was the one who had
written the letter dated 01.09.2014 on behalf of Alkem to the District Secretary of
Murshidabad District Committee of BCDA. Though Alkem has argued that Shri
Banerjee was not involved in the process of appointment of stockists by Alkem,
the Commission has evidence indicating otherwise. With regard to the role of
Shri Hitesh Mehta, the investigation has found that M/s Subha Medical Agency
had submitted the SAI/ NOC obtained from BCDA to him, that he had issued
OLS to M/s Siddheshwari Medical Hall and that he was the one who had issued
the cancellation letter to M/s Siddheshwari Medical Hall. With regard to the role
of Shri Kaushik Deb, the investigation has found that he was the one who had
verbally assured M/s Siddheshwari Medical Hall, Burdwan that an additional
stockist in Burdwan was required by Alkem. Further, investigation has also found
that they both infact had also insisted that M/s Siddheshwari Medical Hall
procures a SAI/ NOC from BCDA for commencing supplies by Alkem.
Therefore, in terms of Section 48 (2) of the Act, the Commission finds Shri
Sanjoy Banerjee, Shri Hitesh Mehta, and Shri Kaushik Deb, liable for
contravention of the provisions of the Act by their company Alkem.
22. Macleods and its officials Shri Rajendra Agarwal, Shri Rajeev Mishra, Shri
Subrata Sadhukhan, and Shri Pradipta Dhar
22.1 With regard to the appointment of stockists by Macleods, the DG first of all
examined IP-3 on oath. IP-3 stated that it was issued OLS by Macleods on
07.04.2014 which stated that "You are requested to fulfil the formalities and
tender the same to us for speedy execution". As per prevalent practice, IP-3 had
to procure the usual SAI/ NOC/ approval from BCDA to fulfil the 'formalities'.
Though IP-3 tried to get the SAI/ NOC from BCDA, it could not get the same and
accordingly, its OLS was cancelled by Macleods vide letter dated 16.08.2014.
However, IP-3 continued its efforts to obtain SAI/ NOC.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 48
22.2 On 28.03.2016, IP-3 contacted Shri Subodh Kumar Ghosh, General Secretary of
BCDA over telephone regarding the same (relevant extracts reproduced above at
Para 20.5) and thereafter, Shri Ghosh issued SAI/ NOC to IP-3 on 29.03.2016.
22.3 On 30.03.2016, IP-3 gave this information to Shri Pradipta Dhar and Shri Subrata
Sadhukan of Macleods over telephone. The audio recordings and transcripts of
such phone calls were also submitted by IP-3. The relevant extracts of such
telephonic conversations are as follows:
IP-3 and Shri Pradipta Dhar
"Pradipta Dhar: Have you got the SAI?
IP-3: Yes. We got it yesterday.
Pradipta Dhar: Oh, yesterday. So, you will get it. I shall send it by
Sumanta what you require for a new stockist appointment. He will
return tomorrow.
IP-3: that's not an urgent issue. I just ask.
Pradipta Dhar: I was with the papers. I also asked Sumanta about
that. He said negative. I had to come yesterday for today's meeting.
IP-3: Shall I start my business with SAI copy and other papers?
Pradipta Dhar: Yes. Definitely and the requirements are given
therein. I have made it ready. No problem.
...
IP-3: You are bound to do the cancellation.
Pradipta Dhar: That's not at all a problem. You have already got
SAI?
IP-3: Yes. The previous offer letter was cancelled and afterwards
got SAI. So, I was puzzled and thoughtful."
IP-3 and Shri Subrata Sadhukan
"IP-3: Yes. Joydev da speaking. We went to the State Office
yesterday.
Subrata Sadhukan: Yes.
IP-3: Paper are given by them. I mean SAI.
Subrata Sadhukan: Oh.
IP-3: What is the next processing dada?
...
Subrata Sadhukan: I shall return tomorrow morning. Do you
know Liton?
IP-3: Yes, I know Liton.
Subrata Sadhukan: I shall give the format to you by this Liton's
hand. You return this by one or two days after making ready the
papers. All system shall start within 7 days.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 49
IP-3: What else documents I have to give except SAI?
Subrata Sadhukan: Bio Data Format etc. Name of the firm
IP-3: Drug License, Trade License I know that.
Subrata Sadhukan: Yes. Yes. And a signature.
IP-3: What signature?
Subrata Sadhukan: You shall get a format from me. For the easy
process of bank. I shall send you a specimen copy for your benefit.
IP-3: Do the SAI need?
Subrata Sadhukan: You can give me the photocopy of this or the
original.
IP-3: We have got one copy only. Probably Subodh da shall give
another copy to you.
Subrata Sadhukan: Ok. I shall talk to Subodh da later on. You
shall give me the photocopy."
22.4 Accordingly, SAI/ NOC alongwith other required documents were collected by
Shri Liton Das of Macleods from IP-3 on 02.04.2016. At the time of collecting
the documents, Shri Liton Das gave a 'format'/ checklist to IP-3 which was
signed by him in acknowledgement. The contents of the same are reproduced
below:
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 50
22.5 Thereafter, supplies from Macleods commenced in favour of IP-3 from
22.04.2016.
22.6 In support of the telephonic conversations and their transcripts given by IP-3, he
also submitted Certificates in terms of Section 65B of the Indian Evidence Act,
1872. Though Macleods has challenged the veracity of these telephonic
conversations submitted by IP-3, the Commission is of the view that in light of
the statements on oath given by the concerned persons admitting their voices on
the recordings and in the absence of any specific denial by them that these
conversations did not ever take place, there seems to be no legal hurdle to the
admissibility of these telephonic conversations as evidence. The transcripts of the
documents are also supported by a Certificate in terms of Section 65B of the
Indian Evidence Act, 1872, of IP-3.
22.7 Further, the Commission notes that in his cross-examination, IP-3 has firmly
stood his ground and Macleods could not disprove his veracity or credibility.
Though Macleods has alleged mala fide on part of IP-3 by stating that his filing
of information against Macleods was an act of revenge, the Commission, after
perusing the statement and cross-examination statement of IP-3 does not find
merit on this count.
22.8 The Commission also notes that though the list given by Shri Liton Das to IP-3
may not be on the letterhead of Macleods, it has been signed by Shri Liton Das,
an employee of Macleods. In view of the Commission, it is highly unlikely that
Macleods would be propagating such an illegal practice of SAI/ NOC against
specific orders of the Commission in the past, on its official letterhead.
22.9 Thus, it stands established from the evidence on record that at the time of issuing
OLS to IP-3 by Macleods, it was asked to 'fulfil the formalities' which included
obtaining NOC/ SAI from BCDA. To procure such SAI, IP-3 contacted Shri
Subodh Kumar Ghosh, General Secretary of BCDA. After procurement of SAI
from him, IP-3 informed about the same to Shri Pradipta Dhar and Shri Subrata
Sadhukan of Macleods via telephone. To receive the SAI and other documents
from IP-3, Shri Subrata Sadhukan sent one Shri Liton Das/ Liton Saha to collect
the documents (including SAI) from IP-3 who, in lieu of collecting the documents
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 51
from IP-3, gave him a checklist, item no. 4 of which is "NOC from the
association" against which a tick mark has been put. Only thereafter, Macleods
commenced supplies of pharmaceuticals to IP-3 from 22.04.2016.
22.10 Apart from the above, the DG also collected details regarding appointment of
other new stockists by Macleods in 2014-15. The information collected by the
DG regarding the dates on which OLSs were issued by Macleods to the stockists,
the dates on which they obtained circulation letters from BCDA and the dates on
which Macleods commenced supplies commenced to them, are tabulated as
follows:
S. Date of Date of Circulation Date of Invoice
Name of Stockist
No. OLS Letter by BCDA of first supply
1. M/s. Konar's Medical Stores 20.12.2014 29.01.2015 13.02.2015
2. M/s. Vivekanand Agency 31.12.2014 29.01.2015 13.02.2015
3. M/s. Medicine Centre Agency 23.12.2014 29.01.2015 13.02.2015
4. M/s. Paul Brothers 03.04.2015 13.04.2015 30.05.2015
5. M/s. A.C Distributors 11.08.2014 12.05.2015 27.11.2014
6. M./s. Reliable Pharmaceuticals 07.04.2015 16.04.2015 30.05.2015
7. M/s. Satabdi Pharma 28.01.2015 24.03.2015 30.05.2015
NU Sri Shyam Pharmaceuticals
8. 16.05.2015 05.06.2015 31.07.2015
Pvt. Ltd.
9. M/s. Disa Enterprise 16.05.2015 30.05.2015 31.07.2015
10. M/s. Rajasthan Drug House 26.05.2015 14.09..2015 23.11.2015
22.11 From the above, it can be seen that not only in the case of IP-3, but rather in cases
many other new stockists appointed in 2014-15 in various Districts, Macleods
started its first supply to its new stockists only when BCDA issued the circulation
letter to them declaring that they have been appointed as a stockist of Macleods.
The obvious implication drawn is that the phrase 'fulfil the formalities' in the
OLSs issued by Macleods meant SAI from BCDA.
22.12 It has also come out in the investigation that BCDA obtained no verification from
Macleods regarding appointment of such stockists before issuing such circulation
letters to them. The circulation letters of BCDA simply stated that "to enable to
publish your appointment as MACLEODS PHARMACEUTICALS LTD. stockist
in the OUSHADH-O-PRASADHANI/ Journal of BCDA, please deposit a sum of
Rs. 100/- as circulation charges". Moreover, it has come out in the investigation
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 52
that Macleods, despite knowing that BCDA is issuing such circulation letters and
thereafter publishing such appointment in their journal, never objected to the
BCDA for publishing such information without prior verification. This is clear
from the statement of Shri Rajeev Mishra, Senior Vice-President of Macleods
recorded before the DG. It is not the case of Macleods or even argued by BCDA
that while applying for such circulation letter/ SAI from BCDA, the stockist(s)
used to give a copy of the OLS issued by the pharmaceutical company to BCDA
and therefore, no verification in this regard was required. In view of the
Commission, since it is not the case of the parties that the circulation letters were
issued by BCDA on the basis of OLS granted by pharmaceutical company to the
stockist(s), and since Macleods despite having knowledge that such publication of
names of new stockists takes place in the BCDA journal without any prior
verification from Macleods never objected to the same, the only inference that
can be drawn is that such verification was not done because both Macleods and
BCDA were aware that the circulation letters issued by BCDA to the stockists
which were to be given to Macleods by the stockist alongwith other requisite
documents and thereafter publication in Ousadh-O-Prasadhani/ Journal of BCDA
was a camouflaged NOC for starting the supplies and this camouflaged practice
was to avoid the ire of regulatory bodies such as the Commission.
22.13 Further, Macleods has argued that while NOC/ SAI may have been submitted by
a few stockists to it before commencement of supplies to them, it had appointed a
very large number of stockists in the State of West Bengal without them having
any NOC/ SAI in their favour as well. The Commission however, is of the view
that a few instances of demanding SAI/ NOC by Macleods by themselves, are
sufficient to conclude that Macleods was engaging into such practice.
22.14 As stated above, such practice being in vogue has also been accepted by the
office bearers Shri Saiful Islam Biswas, Shri Bajlur Rahaman and Shri Nikhilesh
Mondal of Murshidabad District Committee of BCDA. It has even come out in
the investigation that as a result of such practice, people of rural areas were
getting affected. They were inconvenienced as supply of medicines to them was
affected. In such light, the arguments put forth by Macleods with regard to no
such practice being prevalent stands negated.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 53
22.15 Consequently, in light of the above evidences, the Commission finds that
Macleods, after issuing OLS to prospective stockists, in agreement with BCDA,
was indulging in the practice of demanding SAI/ NOC/ Approval Letter/
Circulation Letter from BCDA before commencing supplies. This constitutes an
anti-competitive agreement between Macleods and BCDA. AAEC as a result of
such NOC/ SAI practice prevailing in the pharmaceutical market in the State of
West Bengal has already been noted by the Commission in the earlier part of the
present order. Absence of any 'economic motive' on part of Macleods to enter
into such agreement does not afford adequate defence to Macleods for engaging
in such anti-competitive conduct. Thus, for indulging into such agreement, the
Commission holds Macleods guilty of contravention of Section 3 (1) of the Act.
22.16 Though Macleods has tried to set up a case that such unauthorised acts by its
junior employees, if any, were without the permission of the company and against
the company's directives, such argument cannot be given much weightage as it is
highly unlikely that junior employees may have carried on such practice of
demanding NOC/ SAI for almost an year, without knowledge of the company.
22.17 With regard to such individuals of Macleods, the DG has found Shri Pradipta
Dhar, Zonal Sales Manager and Shri Subrata Sadhukan, Deputy Sales Manager,
alongwith Shri Rajeev Mishra, Senior Vice-President, Field Operations and Sales
Administration of Macleods, liable in terms of Section 48 (2) of the Act. It has
come out in the investigation that Shri Pradipta Dhar and Shri Subrata Sadhukan
had telephonic conversations with IP-3 regarding submission of SAI. Shri Subrata
Sadhukan also sent a letter dated 16.08.2014 to IP-3 stating that its OLS would
soon be treated as cancelled. Though it has been argued that these two individuals
are junior officers in Macleods and not Director, Secretary or other officer within
the meaning of Section 48 (2) of the Act, the Commission, in light of their
specific roles being proved in the anti-competitive conduct of Macleods, holds
them guilty in terms of Section 48 (2) of the Act. Further, the Commission notes
that the OLS dated 07.04.2014 was issued to IP-3 by Shri Rajeev Mishra and he
had a direct role in the stockist appointment process. Further, from his statement
recorded by the DG, it can be inferred that he was aware of the NOC/ SAI policy
of BCDA being indulged into by Macleods. Therefore, the Commission also finds
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 54
Shri Rajeev Mishra liable in terms of Section 48 (2) of the Act for the
contravention of the provisions of the Act committed by Macleods.
22.18 Further, the Commission notes that the DG has found Shri Rajendra Agarwal,
Managing Director of Macleods, liable for the contravening conduct of Alkem, in
terms of Section 48 (1) of the Act. In the absence of any specific rebuttal on this
count emerging from Macleods or Shri Agarwal and material demonstrating to
the contrary, the Commission holds Shri Agarwal guilty of contravention of the
provisions of the Act in terms of Section 48 (1) of the Act.
Conclusion:
23. In view of the above detailed analysis, the Commission holds BCDA and its District
Committees of Murshidabad and Burdwan guilty of contravention of the provisions of
Section 3 (3) (b) read with Section 3 (1) of the Act. Further, in view of the aforesaid
analysis, the Commission also holds the pharmaceutical companies Alkem and
Macleods to be guilty of contravention of the provisions of Section 3 (1) of the Act.
Lastly, the Commission holds the following persons of BCDA, Alkem and Macleods
liable in terms of Section 48 of the Act:
OP PERSON
Shri Subodh Kumar Ghosh, General Secretary
Shri Saiful Islam, District Secretary of Murshidabad District Committee of
BCDA
BCDA
Shri Nikhilesh Mondal, Treasurer of Murshidabad District Committee of BCDA
Shri Bajlur Rahaman, Organising Secretary of Murshidabad District Committee
of BCDA
Shri Sanjoy Banerjee, Senior General Manager
Alkem Shri Hitesh Mehta, Regional Distribution Manager
Shri Kaushik Deb, Zonal Sales Manager
Shri Rajendra Agarwal, Managing Director
Shri Rajeev Mishra, Senior Vice-President, Field Operations and Sales
Macleods Administration
Shri Subrata Sadhukhan, Deputy Sales Manager, West Bengal
Shri Pradipta Dhar, Zonal Sales Manager
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 55
ORDER
24. The Commission, in terms of Section 27 (a) of the Act, directs the Opposite Parties BCDA, its District Committees of Murshidabad and Burdwan, their office bearers, pharmaceutical companies viz. Alkem and Macleods, and their respective officials who have been held liable in terms of the provisions of Section 48 of the Act, to cease and desist in future from indulging in practices which have been found in the present order to be in contravention of the provisions of Section 3 of the Act, as detailed in the earlier part of the present order.
25. Regarding penalty, the Commission notes that BCDA has been able to show that post the decision of the Commission in Santuka Associates Pvt. Ltd. v. AIOCD and Others, 2013 Comp.L.R. 223 (CCI), it has taken several steps in the direction of ending the practice of requiring NOC/ SAI. In view of the Commission, taking of such steps by BCDA in the right direction, although not adequate, constitutes a mitigating factor against BCDA. Therefore, no penalty in terms of Section 27 (b) of the Act is being imposed on BCDA.
26. Further, though Alkem and Macleods have taken the plea before the Commission that they were indulging in the impugned conduct under threat/ duress/ directions from BCDA, in view of the Commission, this may not afford Alkem and Macleods an adequate defence for escaping the rigours of the competition law. However, keeping in mind such plea taken by Alkem and Macleods, the Commission decides not to impose any monetary penalty on Alkem and Macleods also.
27. However, in terms of Section 27 (g) of the Act, the Commission directs BCDA to conduct advocacy events by way of outreach activities with its District Committees/ Zone Committees and their office bearers, to impress upon them the need to comply with the provisions of the Act in letter and in spirit. Needless to add, the Commission would consider deputing its resource persons for such programmes, if any request in this regard is made by BCDA.
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 5628. The Secretary is directed to inform the parties accordingly.
Sd/-
(Ashok Kumar Gupta) Chairperson Sd/-
(Sangeeta Verma) Member Sd/-
New Delhi (Bhagwant Singh Bishnoi)
Date: 12.03.2020 Member
Case Nos. 36 of 2015, 31 of 2016 and 58 of 2016 57