CCI fines Gujarat-based Chemist association for restrictive trade practices

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Based on the reports, CCI found that association was mandating imposition of NOC prior to appointment of stockists. (Representativ image)
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Fair trade regulator CCI has imposed a penalty on Gujarat-based Chemists and Druggists Association of Baroda for indulging in restrictive trade practices.

Besides, the Competition Commission directed the association to cease and desist from indulging in such activities in future.

The regulator found the association in contravention of Section 3 of Competition Act which pertains to anti-abusive agreements.

The ruling came on a complaint filed by Vadodara-based Vedanta Bio Sciences which alleged that association was insisting on NOC (No Objection Certificate) from it before any pharmaceutical company could appoint a stockist and was also engaged in fixation of trade margins.

After finding “prima-facie” violations of the Act, the regulator had directed its investigation arm, director general to conduct a probe.

Based on the reports, CCI found that association was mandating imposition of NOC prior to appointment of stockists.

The commission observed that the practices carried out by the association has resulted in limiting and controlling the supply of drugs in the market in the Baroda district which is in contravention of Section 3.

Regarding fixation of trade margins, the CCI said the fixation of wholesale and retail margins, directly or indirectly, leads to a determination of sale price of drugs and thereby violates Section 3.

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“The Commission is not averse to the formation and legitimate functioning of trade association to provide incentives and benefits of its members and also to act in protection of their interests. However, such freedom cannot be used as a cloak to curtail the free flow of goods in the market or the determination the prices/output in the
market,” CCI said in an order dated January 15.

Accordingly, the Competition Commission of India (CCI) imposed a fine of Rs 32,724 which is arrived by calculating 10 per cent of the average income of the association.

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