Competition Commission has found AIOCD, an all India grouping of chemists and druggists, guilty of indulging in unfair trade practices that influenced the prices of medicines and restricted supplies into the market.
Besides slapping a penalty of Rs 47.41 lakh on All India Organisation of Chemists & Druggists (AIOCD), the Commission has directed AIOCD members to "cease and desist from indulging in and following the practices which have been found anti-competitive".
"It is evident that AIOCD because of its position is able to continuously engage in limiting and controlling the supply and market and influencing the prices of the drugs and pharmaceutical products by insisting upon No Objection Certificate (NOC) for appointment of stockists, fixation of trade margins etc," the Commission said in a order.
The Competition Commission of India (CCI), which keeps tab on anti-competitive practices across sectors, has directed AIOCD to pay the penalty within 60 days from receiving the copy of the order dated February 19.
According to the fair trade regulator, AIOCD has full control over the stockists of drugs and medicines across the country and the membership is now open only to the State Chemists & Druggists Associations.
The Commission has asked AIOCD to discontinue the practice of granting No Objection Certificate for appointment of stockists, fixation of trade margins besides doing away with boycott of products of pharmaceutical companies.
"It (AIOCD) shall also inform all Chemists & Druggists and all its members and associations by sending a circular/letter that they were free to give discounts to the customers," the order said.
As per its website, AIOCD represents nearly seven and half lakh chemists.
The regulator has also directed AIOCD to issue a circular that Product Information Service (PIS) charges were not mandatory and that the same could be availed by manufacturers/pharmaceuticals firms on voluntary basis.
CCI's penalty of Rs 47.41 lakh amounts to 10 per cent of the average of the receipts on AIOCD for three financial years 2008-09, 2009-10 and 2010-11.
The complaint, filed by Odisha-based Santuka Associates, had alleged that AIOCD was abusing its dominant position by limiting and restricting supply of pharmaceutical drugs.
It was also alleged that AIOCD was regularly involved directly in influencing the purchase and sale price of the drugs and pharmaceutical products throughout India.
Santuka Associates is a clearing and forwarding agent in medicines of various pharmaceutical companies. Its sister concern Santuka Agencies was the sole distributor of medicines of U S Vitamins Ltd (USV) for Odisha since 1977.