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2014 (3) TMI 445 - COMPETITION COMMISSION OF INDIASuo-moto enquiry u/s 19(1) of the Act - Determination of sale price - Anti-competitive practice - Whether the BCDA is engaged in anti-competitive practice of directly or indirectly determining the sale price of drugs and controlling the supply of drugs in a concerted manner in violation of Section 3(3)(a) and 3(3)(b) of the Competition Act, 2002 – Held that:- BCDA being an association of its constituent enterprises, is taking decisions relating to distribution and supply of pharma products on behalf of the members who are engaged in similar or identical trade of goods and that such practices carried on, or decisions taken, by BCDA as an association of enterprises are covered within the scope of Section 3(3) of the Act - It is evident from the various minutes that BCDA and its affiliated District and Zonal Committees have taken concerted action against the retailers, largely the chain stores, who have indulged in sale of medicine below MRP by offering discounts to the customers - They had launched organizational movement with effect from 1st April, 2012 against these entities and have tried to enforce their decision regarding sale of drugs on MRP by activating Vigilance and Zonal Committees in the various Districts and Zones of Kolkata - Thus, the contention raised by BCDA that it has not taken any measures against those members who offered medicines at discounts does not appear to hold any trace of truth in it and is bound to be rejected. BCDA has not brought on record any evidence to suggest that the business of significant number of retailers was seriously affected by heavy discounts being offered by big retailers leading to closure of their business which compelled it to pass such resolutions - Even assuming without conceding that the argument put forth by BCDA is based on true facts/actual state of affairs, no such practice or decision which contravenes the law of the land in force can be allowed to continue - irrespective of the provision under which notice was issued, nonetheless an opportunity was given to Shri Tushar Chakraborty to meaningfully respond to the observations of the Commission – thus, there was no violation of principles of natural justice. The Commission holds that the BCDA and its District and Zonal Committees were engaged in anti-competitive practices of directly or indirectly determining the sale prices of drugs and controlling or limiting the supply of drugs through concerted and restrictive practices, in violation of the provisions of Section 3(3)(a) and (b) read with Section 3(1) of the Act - The plea taken by the BCDA that since it has ceased from the practices of opposing sale of drug on discounts or selling them below MRP cannot be accepted – thus, the Commission directs the BCDA and its office bearers & executive committee members to seize and desist from indulging in anticompetitive practices found to be anticompetitive in terms of the provisions of Section 3 of the Act. Penalty u/s 27 of the Act – Held that:- The anticompetitive acts and conducts require to be penalized to cause deterrence in future among the erring entities engaged in such actions - it is required that the degree of punishment is scaled to the severity of the violation - the position of BCDA to control the market of drugs and medicines in its area of operation is undoubted - the conduct of BCDA and its office bearers & executive committee members requires to be sternly dealt with - no mitigating factor is shown by the parties and none is borne out from the records – thus, the Commission decides to impose a penalty on the BCDA and its those office bearers who are directly responsible for running its affairs and play lead role in decision making @10% and on the executive committee members @7%, of their respective turnover/income/receipts based on the financial statements filed by them – Decided against the association.
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