Competition Commission of India
Varca Druggist & Chemist & Ors vs Chemists And Druggists Association, ... on 11 June, 2012
CQ¥\iiF'E"}"§"§"§C}N C€3§'h'§?::'§iS$§QN OF iflflifis Re: MET? Clasa MG. {E-"§ ..'{?'!2Qfi§fSG§R4i28 X 1'_':~m~--§-<":*_.. i\_ r $3 ' 1°} (QM.
infarmant: \fz.-area Crruggim & Cfihémisi anti 0t'n:3rs .
6;.*21::<:2.{:~:iie'T'E3"-'*a3a'r1:§ri Chsmists and Druggisis !Xssoc;§atEm'i, 6:':-zsa Gmer: Menjhar {$22 Geaia Gmzrifi 'E. The Cammiségécm rgzzeivaeci an Enfarmafiatrm fiietfi by Varca Brugs & Chemists 3:
Gthers, Gaza: traneferrad frczm Mmnapofiies and Restrictive Trade Practi:'.:es Cmnamissian +{§\J'£RTPC} under Sectécfi. SW3} of the iiemgsetiiian Act, 2{}{}2.The aiiegafirms §C}£i*i'*£§§E'§ in cafiain restrictive trade gsraciices adapted by Gharnisis and Brtzggists Assaciatimn, €3a3a, {'nereinaf'Eer referred ':9 as 'C'rL)A{2»'}. \f\ih§§e the arigmai infarmatian was mad befara MRTPC. The substarzca mi' aiiegafian shaii be anaiysed an the 'gzaaais 0'? the prcmésicmg :35' the Campetitian Act.
:2. Awarding ta ihe infmrmani, CDAG 33 an association, framed various gs.:%dei'sne~s, meant in benefit its members in carrying out 'aheér business 9'? stacking, whoiesaiing and reiaiiing cf maarmaseuiicaéi gfiroduct. However, as per tha am-ssgatisns, «aver the years due to the unfair pracfices of same :2'? the memberéfmf its Executive Committee, the CDAG hés became a mcanapcsiisaiiiz body and has started induigéng in cartain rastrictéve 'iraizie practiczavs, naaw deemexzi an':i~c:om;:setitive. TheV_',a§¥£2»gatigg:3 of the infarmant centred an iha selenium' ;3f0ce$$ and "-.§\§<ists by A1068 {natimnai Eevai ' 3) CEBAC5 and its abuse, Resulting QEAG and the manufacturers, assc:c;:aiion cf w'r}c3ieesalerj§1é_§§d 2' {mm existing guideiknes a§s3§ §z§oU )\.
5*' , The Enfarmant, in his submission to the Sam During 'the course of énvastigatéen, DE': mated severai anti«{:nmp%etitive cscmdiiians emanating from these very guidelines. The Ccsmmissim mdered fm'ih%er enquiry mm the {inks tseiween CDAG and AKJCD and the anti« competitive practices mmjxtianed in the invesfigation repori of BS by issmng a sazmiiemeniary Tfirder dated {December 2, 2310. Since the facts of these case have been dataiied in the majoriiy Order, omy a brief summary 077 the aifiegaiians are set cut basmw.
misséon, has drawn atierziicn to the mfaihsaci and pracaw of apgminting stmckisflwhmiasaiers and §*'esir'§x:tEng Efiéir nlmber in the state 3? Gaza which, in his; a;3in§:m, {,'.¥'8£:"i32aS entry barrier and hence is antbcomgrseiiiive. Tha crux 0? the aiéegaiions fies §r: the issue «:1? 'am obfacfizzn certificate' {meg by cam far 5'at{3C¥{§$t$fW§"lC§§€S3i&FS. Further, no siac¥<'istiwho§esa§er can be agxmintecé witémui an NSC fmm QEQG. This 'right' which ncsrmaiiy rassts with manufacturers has been trans"f»erred to AEQCED and GDEXG threzzugh the NECEU signed with the §3+hVarmaceui§ca§ ccampanfiea. Add§E%c3na§§y, the WEB mandates aii "wanna companies it': apgoini sioc§<§s'£s!reta§¥e:'$ in the Siam of Goa cmiy frcnrn the: memhers :24' C338, The 'righf cf agpafnfmenf' sf steakisi iranséaies inta:
i. .Resiricti:::ns an tfiwa number of st0ck§s'cs' En tha staie;
ii. Qmnditiens fer permitting apgmintment czf additionai smckési.
Limiteai nufifaber ca'? Sicsckéstzs 5:: appainied cenirai 'the sugmiy <31' mugs in the markets in Goa.
a.
appaintment :1? A C. 'Forcing bicis far governmeni tanders to be rizxiiteci cmiy ihi'i:rugii iiia 'aiiihczriziaci siockisi', ci. Mai is aiiow credit is retailer, ccntrary in the industry praciice (if aiiowing a cradit cf 2% days its awe month'
7. Restrictions have aiao been impaseti by QDAQ on pharnwa cempisnies as . Limier: V a. Pharma companies are not permitted to make diraci supgiiies is ciactors, nursing hcimes. ciiemiisis aim. and instead mute iihe game through the aisthmized $3tGC§§i$'i$ eriigi, drugs is reiaiiars Wm are mi the niambars sf Ci}AG.
8c The BS, during the muise mi irwesiigaiian, has brcmgiii nut eariain adiiiiionai ani:i--ccimpiaiii:ive practices {heraafter referreti in as 'abaemed' aiiagaiimsji of QEW3 whici'z inciustiead
3) Fixaiian ti'? iracig margins is whnieaaiers and ieiaiiars; in} Na': permitting iiiscciiinis in reiaii mnsuiners in the name: 3'? preventing imheaitiiy cempeiiiicm; _ C) Cappisig cm' cash ciiisimuni avaiiaizzie ii) ieiaiier;
d) issue {if PBS by the Asseciaiiansi ifiiieihafimicsgy cf Ai*iaiy$is £38 and iieiajariiy Orcier:
Q. The apprmaciz 01' BS pertaining ii) the aiiggaiians hath iiied and absiarva-:.i was is examine ihesa as an iniegiai part {if assmiaiiuri functioning. This can be abserved 'Tram the finding mi {M3, Tn queieg "Evidences caiiecied in course' of pmceedings am siaiemenis sf §3E:fSQfiS recorded éiafmria this affine are iiifiicative of ihe fact' iiiai Ehe assiziciafians, net' eniy iimif aiici .ci:mfroi siippfy Sf cirugs in the marizef ihmugh a system of MS approvais, but aim iimii am'? icisrifmz' flier nurnber of piaygrs by ins.isiing an mead of 3'\iO{3 of associaficnzs far a,c3§2;f';' -:$C§3K\SfOi3§{i8fS in their areas :29' ° ' {he assmiaiiens fhrciijgii iiiagjgiiigs far fiie ¥:i'i'3{3ieS8f8f'3 arid 4 »~\\ apiaraiians. if has e§isz§iQ;k:>@a iiieir gi:ii:i~s.ine:s giijnni i~"'-'narma ccsmpariies and W§"i€)iS$8i€§f'S are restricted ficzm ¢'i?;s'i§3§3§\j'.i'fi.. » retai!er's, which has me effect of ¢:§ei§3r'mfnafic.:n G2' Safe Vprices sf drugs in fha rnarkei, ?'"i7e:_~?e.= pracfica=s and conduct of CDAG are w'aiai'ivs= of gzmbvisions of secztfrsn 3{3){.aj anai 3(3) (£1) :3? fine Compefféion Ar::£', 2082" (£36 supplementary' repon' dated Marzaf:
'F8, 237 T}.
'3C}.Th§s apgamach, whiia it m=;-ay have its mariis can iead {G situatiuns wher:*'~:.:ihe positive aciivéties «sf an assaciatian tend is get biurred by the undasirabfie mutcomes, iksmre ségnificantiy, it prevents idsantifizzzaticm 5%' the precise ar2t%« campeétifzve effects which as per {K3 are in buéit int<.:> we guiciaiinas and MCKJ, Maremreig {K3, by iimiting investigaticm its CB3§G§ was Lmabie to czamura what he mantimns in his report itseif-..iha linkages betwaen assaciaiimjs, both horizontal afid véhicai. Further, he has mi been abhe ta czapmre the d3;nar§}§c3 sf an induatry where: assaciatians have been in existence for war fear decades and 'the presenéguideziines are a resuit of mag term negeiiatisns beiween the industry péayers, whizzh might have mntributed is the overaii stabiiizaiisn mi' the industry, thus mutuaiiy benefiting afii the fiartécipants. Téae mafiority czmrier has aisc fmiiuxrgaci the same approach andlmncmcied ihafi ims: ass<3<::§at§::m{s), not srfiy ¥§m§t ami c0mtr0§ sup;:*>iy czf érugs in the markei thmugh a system an' PES agzprmrais, but gist: iimii and conircsi the number cf piayers by insisting an NBC fa: appointment of stockists. it was Taliso ccrzciuciéd that assevziaéions, thmugh their guideéines and ncarms, fix margms fur whaiasaéier and retaiiers, xwhich has the effect <3'? deiemxinaiian cf saie ;:2%ri::e :3"? drugs in the mérkei. The {)8 and the majcsriiy Cirder found 'afi these activities is be in comtraventian Cr'? Seciian 3(3){a) and 3{3)(%:3) :3? the Act.
Appmach cf the present' Order":
"$1.2 prefer to Zéak at each cs'? the fefiowing aiiega*ti::ms f practices saparatew §<':':r ar:~:i«::om;:at§i§ve conduct as these require separate examination frcm the Ems;
cf mmpetitimn assessment-(35 aésascz foiiawefigjz thee Qrdar emf Member (R)):
{i} Réquirernent cf nc:--c3bje::t'son certificate (NSC): fmm CHAS befarez-3 the appointmam'. :3'? stoakéstgidistributoé §ea~::fs to reduczfmn of suppiy in the {ii} Q31} issue 0%' z'ast:'Ect§on an discounts in be aiiowed by tha whc:»§esaiar '£0 retailer, and by retaimr '(<3 and cmnsunwer. T {mg Fixing an' EMS charges leaciérag tn) the fixing af pricea sf drugs in véoiatirm of Section 3{3}(a} csf the ACE.
'E2.§n the fight df'Fr3?=3 apprsach takan in this Order bbriefiy amine the structure Of pharmaceuiicai meter in indie and the roie of assaeiations.
Pharmaaem":icaE industry am Asssciatians 'i3,Am0z'3g; oihers, the industry is characterised by two main features----{i)»s=>:§stence uf as_:*:'c;cx§at§ona at Eevei of the vaiue chain viz. manufacturzs«:a§'a::;d wmiestaéersfretaiéarsg 6%} high ciegrea mi' regguiaikxn. Theme faaiurea are etabmatad 'an the faiiowing paragraphs.
"24.The indéan Drug» Manufacturers Associaiian CEBPJR) and Qrganizatian mt?
Pharmaceuiicaé Pruducars {sf Emjia (GPPQ are the gar: inziéa aaaeciatians :3'? drug manufacturers, whareaa NEECD is the apex asaasiatien dz' whaieaaiers andrataiiers :::f~drugs at aii irsdia Eeveai The incmstry norms raiaténg in various mmmerciai aspects gei c§e':arm§ne~::3 caéiaciéveiy thrmsgh contfinuaus irztaractien batwezera these apex assosiaiians.
"ififha industry is highty re%guEaiad by 2:: has'; {sf gmvernmemt raguiatians which have avaived over the years its address ezencems reiaiing in drug safety, quaéity st:-mcéarci, IPR pra';act%c>n%, afi'mdAabi%ity and aacessibiiity. . The p'narmaceuti::;a§ industry in india is reguiateé by the mugs and Cmsméiics Act 1943 {SSA} and the {Mugs and Cosmetics Ruies (Q8132) made thereuncier. Under the provisions of QCA, the office <3? the {Brag Qantroiier cf §m:iia {DER} is raspcmssibie far enforcing the pmvésirzms of the §aw. A': the fzekfi ievei, anfczrcemefzi is done by the State g0'»-emmenis through their Face? and iilsmg iiadministratisn officas. Matters «:2? product ap;:»rova_§ and standardg, ciénicai triais, introducfion of new d+ru'g;s3_k...\a*r_1g§\ 'ampvzzrt Eicenaes for new drugs; are handied by the DB3, whe§.ef°i"' e' .j' ~'b'\_ faciiitéesa, and obtaining §iE§e3'?;'§§»f\3S +1" \+. . 3 ?_=a»}?p£§;:§:§E$ 'fer setting up manufacmrzng .,. '
-29;
J 'gtnck drugs are pmvidad by the State Gztwernments. The §§®'e§%\se \\ xx":
(.3 rE§:e~Ned pericadirzafly.
':5. it may be pertinem to mention here that tha pricing of cimgs are aistza xmguiated by tha Natinnai Pharmacsauticzais Pricing Autheréty {NPPA}. NPPA, ihrmugh the Brag Pricing and Centre'; Drdars, prcavides mat oniy the price farmma but aisa the margins for whaiesafiar and reztesiier in case crf sczheduied drugs. The Pharmaceutical Peiicgr, $1032 pravides detaiiad pflczing framework s;3eci'i'ica%iy fecussifig an Maximum Aékawabie postwianufasturing Exmznsas {MAF"E), margin far importeaé fomiuiations, pricing :1? fczrmuéatiozia, ceiking pric:e$ and momtoréng the-reef ¥€: aése menitors the pricing of nan-scheéuieci fc:2r:'m,:£ai:i%0ns, 31.5 $333" mess r»:~.>§&.2a§e Caz' Press Trust €37? india dated May '$5, 2812, prices :3'? 95 packs Gf namsczheduied Hdmkgss wen:-2 radutzed fcxéém-";i:-tag; *?:he3§ntarvenii0~r2 cf NPPA. Thus the task <3'? prica setting, margin reasmrzabianess eta. Ea being iaoked mm by the NPWX and this shauid aisc he a faciar in anaiysis «sf V aiiegatécans. ' ....§.
';".Tha §§"iZ3\:'§S§£'}F'§S 0%' Gampetificm Act, ZSQE, with 3:3 distinct fmjsus can preventészsrz csf anti~compeiitMiv€s practices, ucmpéeméenis aii diversa set :3'? Laws, p£:¥ice.~s and reguiation guverning the pharmaaeutkxai SEECEQY.
'ififiaving gone thraugh the §n:£ustry pecaziiariiies, it is nesw impartani mat the assessment of the crzmduszti and practices 9*? CSAG a3 paintad out by the egrepasite party, be czentextuaiised wfih respect in the meraié structure $1' the pharmaceuiécai industry in Endia, inckzding the grharmacaufiticai vaiue chain, the reguiaiory framework and the mie sf and §%s':§<.ag.}<=33M between the variszus industry asacaciaiéans.
'§9.The spread 0%' As:-mciatimns inter§in§»:efi hnrizfentaiiy and veriicafiy in a reguiaieesi sectsr tends ta obfuscate the bsundaries :3?" raguiatzsr arxfi ihe 'regulated. it i§""Era thia framemark {that each of the aaiiegatieris are mw examined:
(E) fswe of reaq:.:irEemenf czar' m)--<:r§g,t' T"
{he appeirifnnamf Q2' $f:3ckis_;".§:>'§§;;j$iA :' Gzga ieads 'fa limiting sasppiy in
-T 3j;{{b;'pfr:za Act.
.\. .
the market, in cor2fraven'fi:§s§-cgifé sec;
'.
Z€3.{3n this issue, E agree with the mam cwder, but detaiied axaminatian cf the facts and avid:-ances brought an racorezi makes it clear that the aforemezxtianad Guidaiines enfarced by the assaciatian emanaie fmm ihe varéau;«:- verticat agraementfi and MUUS erzteretfi into betweer': A§QCD,¥DFqLflu and CBPPL CQAQ and: an ether state a::.soéE:§tions ans: enforcing such ag;-eementg in their respective stateg. Whi%e~ thi$ cariainiy doaa net pmsiude the Siabiviity of GRASS in this specific case, at the sanm tinwe it warrants an in death inquiry intcs the .
rifle and functémn cf the parent associaiimns {A§OC1"3, §G§\fiA, GPPE) whc have been setting the terms «:3? business between the piayers at the varhrms ¥eve£8 Q? the suppiy chain ova: €.:'§.;2= years-..7E"he attaniian in this case was on the aiiegaticsns i«:we§2e:i against CDAG and therefsre the practicas cf CDAG ifiave been the mag! mint cf invesfigatian in the majsrity order. Hawevesrg the cufipabikity Q? the parent assaciatémns cams? be everruied. in arctier ii} :::§'ea'r§y ' bring taut the facts, saparaie invasstigation an the reoée Q? the §iIa'§'éi"éf' assc>e3§ati0nsA§€3{:F.3~, DPPE and §£}M:'-'K needs; to be §n%tia<:ad in arzaiysse the nexus am' agzapéérsaiien :22'? the prcgviaions cf the 33.22%.-
(ii) Fixing of ira::.«'e=. margins far stc:«?k5sfsx'wf?0iesaiers and reiaiiars :?.'£.flG has c:um:§ud5e:j that margin fixamrn by A3888 2' CDAG ai dfifemnr: ievei :2'? V Vsuppw chain amounts in viaiatian of Sectim": 3(3)(a) (sf 'me Act. This has been accepted msbsequeniiy in the majority Order.
;';Z2.NF'P..&; raguiates the margins §c>r%w%m§esa§er and retaiéer afi 5°16 and 'Efi°,»'£;, respectéveiy. These rezguiatiens are far Scheduied drugs anfi are effected through {Brag F-'ri<::ing and Ccmtrai Qrders. The industry natwmis as stated by the infcarmant are 18% and 29% far whoiesaéer and retaiier respectiveiy far nan~ scheciuied drugs, 3? is absa-wefi that ihese margins are ia:'ge*.~.=¥y inmfine with the margins reguiated by NPPA far seheduied ciruga ;?.3.Tha criticai aspect of margin y" 4 éfmnpeiitive in the Main order was that 'SE was wading its firitfg fgiizja ' I' Esggayd, it is §rr2;;::s:'§;mi '(:3 'r::)i§a ,; x s._. .. t that the margins are aiinwed p MRP, but determination a"?
\ _§._\ V_ V\.
MR?' 13 vesied with the manufacturing cenmpany, and net the Ass.<:sr:iatiQn. A330. in any product where MR?' Es L2 be indicated, the margins "far the:
intaermedfiate piayers are csnsidered by 'me manufacturer and these are iargeiy based on industry practices and dz') nut f¥uctL:ah:- much over a fjariad {sf time. Even in ihés case, the margins for schecfiuied drugs are same since 138$. Thus, it is stataci that ma:v_jei.n féxaiian is: more a quesiien of distribution cf 'iatai margin' amang the intermediaries rather than a cguesiicara of retaii price fixation. This caufd aisso have been Soaked mic: is? being ami«c:ompeiitive, had the aama mat been in fine with the NPPA prescribed margins. Uncfier the
-- circumstances, iha margin fi:»<at§on seems is wcyrk in the ciiracticsn cs'? achieving the, wise confirm aver ricmficheduiegfi dfggs on the ~$E:m":s;i- fines as the sahefiuieci cimgs.
;»'.4.Hav§ng said mat the sysiam cf margin fixation is ccncemu:-3§§y Qiffararzt and dues nut impéy price fixatien, siiii, {K3, cm the Essaue «:2? n'zarg;§n~mis::e nexus comm! have baked irate the price fixatmn fcsrmuia csf pharma manufacturers far the nc3n--$r;:ha:ciuEed zzaiegary, whéch has mt bean mama inta. {JG hag piacseci same evidence in the 'form a? mmutes :3'? the meetings of SEAS ta suggest that thefe was atterfi1;3tiefixAend prices am, but the aviéence is érzazsncéusive.
;?.5.The Easue 3*? margin fixation has aisa bean Eaaked inta, frcam the perspactive cf {ha em ctmsumar, 3n ihis cmnnemian, we may mate the cebsematien inf WH€.'}i'Hf=».! as brought ms? in their vmrking paper tiiieci "The Ffieguiaficzn of Mari»:
Ups in Phamaceuficai Sugspfix Chain" pubiishad in May 2€)'H. Acasréing is the r'epm'£. amund 8{3% cf haw inmme ceumréas reguiate whcziesaie or retaii mark ups in the pubiic er private sectm, which suggests that W3 is a gicsbai inciustry praszztice. The reepcert. notes: "Ragu£a£ion :39' mark ups as par? :3?' comprésfmsnsfva mice regulaficsn sfrafegy gnubabiy we?! fast? #0 rmiucad n:~9di;:jne prices. f-:'ewes;r's'3r, regufafian cf mar£»:~u;3s Wffhfliif rsaguiafion .sf'aifher the mamzfaciurem seifing price or fhe refafi .seI§:'ng; price is zznfikeiy is 5332:' 12:: reduced mecficine prices". in india, as aifeacig; sitate-Hi, NPPA raguiatess the gzrirsing sf scheduéed drugs and: ';§§\é*;;§§cing of r2«3n--schedL2iaci drugs, 5 7%: j$}»§;r'se effeci (if any) :3'? margin _\ J.
which prntects; the and consgf fixation in thé industry.
'\ I :. >"~$ \ f $3 25 2?'.
{:55}
28.There are we déscmmis is be examined in this afiegaiian, They are: i) sash .Thus_. it can be czmwciuded that white margin fixaticn in (1352 of praduct such as drugs and pharmacautécais, has the mark of intmciucing transparency and siabiiity in the indu3tr:¢ aparatiens, the adverse impad: cm prices and and czcmsumer remains éncanciusive, On that mute. it is heéd that margin fixation has not girgtsducead any ant£»Gomp€-mtéve e7§'5f§Ei%'hSn the scrnsmnar, as far him, 'aha affective price is MR9, which has to be paéd and the invemgatéen has mzst been able to estabiish the adverse impact cf margins cm ,Dr§c:.s:$. There §s he agrsprecéabie adverse effect on campetitian and an ;2erc;ei'v€«zd czcznwrner harm.
The suppiementary order of {R} aim empfxasiaas the View that margin fixaiicsn carzéncst be presumed té be ar:tE--mmpet§t§ve activity. The fact that margins p_resm'ibed by aastzzciation are in iirze wfith the margins prescribed by NPW, fr}: srzhaduied mugs and are 'mus ms': unreaac>r1ab§e is be viawaci as anticompetétéve. Margin ;;:r%ceTnaV:>:u°s lha-as; aise raci been astabfiishezfi by SS.
i.s:sue cf capping :3?' cash dismum' ai 3% by whmesaier to rafaiier ants' new aiiawance :22' any discmmf by reteaiier is and ccmsumer.
disrsozmi between whmiasaiar' is neiaééer and ii') any discauni csffmeci by '(he retaiiar to 'ma emf ccmsumer. it is» impmiant to mate that tbs assaciatéon guideiines prcvides fer Cash Discount aszd my? trade :;isc0Lm'L The purpose of cash discount is tcs encourage quicker reaiizaiisn anti the Saki guideéines is appiécabie in 3%! retaiiers wha pay within stipuiated iéme. Gash disceunts are aimed ta 'fa.-miéitate quicéser czonvamizzns mf receivabies. in cash so as :9 reduce the overaii mngth cf the operating cycie. The quantum :32' cash disceunt is) be aficxweci by 3 nwasket gzsiayer is based an the oppariunity cast cf funds.
fisfiawance f)'r"'non--aiiowanca €23!" capping of cash discount hcwever, doag not ' rafiss: competitian cancarns. Further. there is uniform appiiizaiierz anti ms:
discrimination can aiso be a§¥ege:§ _":s'j:e resiriction humrever, cf" the \, discounts in: consumers is .. \ .,\ \ . r*gf'ir*\§cie and devaéafi cansazmers; ' ' _{;'v} issue of WS 2§.Thé main order an the suhjem of 'HS cmneiucies that P35': aggreval is functioning like NOS, without whfich the p_harma companies wiii he? he in a pos%tacm in suppiy grugs, The syflem sf MES appravai far irwtraducrtéen of tzirugs in a particufar ierritmry and aczezaptance 0? MS meney re$'cr§c:ts the supmy and avaéiabiiity sf drugs in szcmiraventian of Sectéen 3{3}{b) af the Act.
38. P18 as the name suggests; is the Fkzbiic Enformafian System and géays 3 vary imgortant {gig §s'S3.»~§€JfiC§i§'Eg transgarsncy is whoiesaiers, r§iai%er$ and paiientsv" "
on the cezsrzsiiiuents af c§ifier'en': drugs. The E3PC£?2% directives require the: drug scmgaanies is give infmmaiésn abczué; the new drugs io ihewhoéesaiers, retaiiers anti' cmnsumars.
3'%.Based on the avaiiabéa facfi and evétziencm, it is met imminenfly ciear as is Emmi the P38 system by itsafif resmcts the suppty of drugs or creatasemry barr§er :35' M8 Charges head is price fixing. 2n View of the perrssibiiifiy that such servfica may he deemed hene:fic§aE.and a c:.>st~effective way of cziissaminaiing infermaticsn by the manufacturers, a cmmaiuaécm on the effaczt (sf PES canned he arrived at without a smmpkete anaiysis cf the merits and demerits {if the system and the manufaciu%rer$' perspective an the same. "me evaiuatiefl of the passibie mionaée far having such a system in piace agsumea aii the mare importance given that the practice has' evoived and has Seen standardised Vihrmzzgh a prcscésa cf mutuai understanding between the drug manufacturers and the distribLz'zm's' assaciaiions. (Im the basis 03' avaiiabie facis, it 33 an efficientésysiem far 'énf:2rmaiion disseminatian made avaiiabie at 3 mminm cos': chargefl by the Assec§atEa:1(s} as painted mm by Member (R). The negirigibie 393% is immatariai in me eventuai {fast and [prices 63*? the prmiuct, and the efficiencies of the Enfsrmafinn are cieariy mare than prsmzriimsatss in the mS§1"iG't§Di'33 it Empcssas. in fact, Eniemationaily there is a mime far greaier "-.
informaiécm 'Ehrczugh MS and sirengffi"
aspeciaiiy far enabiéng mare detagfi;
gmgmicais between branded generic. and generic. and aiao strengthening the pubiir: informaiien sysxicem where aimpie drugs are $~:n«::>wn 'ac; cgngumars, 32_Tma, it is abundanfly dear that ihe sysstesam of P253 is indisgensabia to the pharma industry. This being 33, it czammt be termed as anti--compeffi-iive by any stretch caf imagination. The {mag companies ha'v'ém§'5a$aed an this taak :3 the A3030, who pubfisheas the same in their infarmatimz buiia-fin_ As, ragams cost :3? F13, it is a mama! understanding between 'me drug mmpanieg and the asscar3Ea':iana% 3 am of the view that a mnetéme paymcaentaf Rs.;?.{3GD!- in N083 and Rs.5{}C3f« Wham a new drug is inirodueed is negiigibée, given the tctriai cost . / csf pr::st§uctisnimar'kaz'.Eng aver the eniirs:.*-"""2.:€.i: life cycie.
'3.-'5 ta-«:3 33,Therefc:'e this sysiem Canmi be famed far priécze fixatim arr for restristitan of supmy anti hence sauna: be tamed as anti~<:;a:npeiitive as per pravfiaicns :2'? 'me As?
Canciusiam 3-Mn this ctsréeri hava Vanaiyseci in depth the acztiwties :3?' GDAG which are afleged in cmtravene the pmvisinns if the Ciompatifion Act" Efiash aiiegaiiszm has been examined se.-gsarateiy' in the scntext mi' ihe wig mayed by QBAQ and Qther Associatians in the: Pha:'n§aceLs'2i::a§ inziusizry. Thaugh it §s czbsewad that Assc;3cEati0n<s in ibis industry have hair: beriefitxiai impasi, but aver {ha years {ha I-'>.ssasiat§0n$ have crossed the 'Rubicon' of puraiy Assosiatisn aatéviiias denying benefits of campetiiion ta cansumers.
{Eider This order finds contravention by CDAG an we mounts;
a, in the appaintmen': cf stackists by way a? isaue of '§\£{",i{§' and regulating the rzumbar cf stockists in ::ontrava~nt%on mf Sectirzm 3{3}{b} sf 'the Ccam§>e*t.Ei§:;m I-\::'»;,"
RG82 in praventmg and restricting the rataiiggrs fram atkvwing dismunts to the sanrsuémers in comraxrantinn of :5" he Csnxpatiiian Act, 2003 \ AS meniiansgd eariier a sum ngs 'i \. ' beiween associatiwns bath hasifiirsfiiai ,:erti«:§§i'*fE§r as csbserved most 0f the :3: '~'\ 3
13.
- \ gs initiated Ems the -na>:u3,..
practices have eavaixxeci met several decades. in tact, aasscciation in time pharma industry assmciaiians have: impacted on saverai mtivitias aicmg iiwa vaiue chair:
The amount (if gzenaity' may be in iine with the majority ciidei'. {:E3.A{3 ta mase and desist {mm the felicswing activities wiiiiin 66 days from the date mi reaeivirig this circier anti ta "furnish an undertaking ii) this efiact: a. Limiting and wntraiiing the number of stucktsts by doing away with the "regtriciiva ciauses ciztritaineti in guideiines as the same is in cantravantiori ai Settzticzan 3(3'}{i>). -V V . V _' b. niiieynirestriciiait: mi extending any discmini to the wnsunier by this raiatiier which is in cantraveniioin sf Sectiars 3{3}{a). _ <:::. The restrictive mnditicms ieiated ta inaistence cm routing this bids '€§"ii'C'.iU§i't autharized sicackists, nc:m~aiicwance at campanies and wtiaiasaiers is cteai with reiaileis wim are mt the mambers at CDAG witiisit are in itatttraventicm at Seciiari E'>(3}{b}.
The Secretary is directed to iniarm tifza parties accmciingiy.12