CCI to probe whether drug associations restricting competition

Competition watchdog CCI has initiated a probe into the restrictive conditions imposed by chemists and druggists associations on pharmaceutical companies and retail shops on the sale and purchase of medicines.

Competition watchdog CCI has initiated a probe into the restrictive conditions imposed by chemists and druggists associations on pharmaceutical companies and retail shops on the sale and purchase of medicines.

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"The CCI is probing cartel-like behaviour of the chemists and druggist associations on the basis of complaints filed by various pharmacies. The commission has also prima facie found that associations are throttling competition by placing restrictions on different players in the drug sector," a source said.

Medicine shop-owners have complained to the Competition Commission of India (CCI) that certain terms and conditions imposed by the associations, to which they have to mandatorily subscribe, affect the pricing of drugs and also profit margins.

The All-India Organisation of Chemists and Druggists, however, denied any wrongdoing, saying over two lakh shop owners are doing business without obtaining affiliation from any association.

"We don't dictate terms. Manufacturers asks us which are the good parties, whether a particular party is genuine or not and associations just advise them," the organisation's President, J Shinde, said.

Sources said that shop-owners have alleged that the associations have placed conditions in their guidelines stipulating that only member-stockists can be appointed and no company can supply medicines directly to nursing homes. They also demand a big amount as membership fee. What is more, if the members fail to follow the guidelines, they could even be fined.

Associations even scrutinise and issue clearances for selection of stockists through tenders. They also decide if shop-owners need to change their stockists and mandate that no further appointments can be made for a year.

CCI Chairman Dhanendra Kumar declined to comment on the issue.

The complaint, sources added, was admitted under Section 3 of the Competition Act, 2002, which refer to anti-competitive agreements.

The CCI, which became fully functional in July last year, is the country's anti-competition and anti-trust body, formed under an act of Parliament.