The CCI found no evidence of an anticompetitive arrangement involving pharmaceutical manufacturers and industry trade associations.
Leading pharmaceutical manufacturers including Cipla, Sun Pharmaceutical Industries, Dr. Reddy's Laboratories, Pfizer, GlaxoSmithKline Pharmaceuticals and Torrent Pharmaceuticals have been cleared of long-running antitrust allegations after India's competition watchdog closed a 14-year-old case challenging pharmaceutical distribution practices.
In an order released on Monday, the Competition Commission of India, or CCI, found no violation of Section 3 of the Competition Act, 2002, by the manufacturers, the All India Organisation of Chemists & Druggists, or AIOCD, two pharmaceutical manufacturers' associations and the remaining parties to the case, rejecting key findings by its Director General, or DG, for lack of contemporary and conclusive evidence.
The case arose from a complaint filed in January 2012 by the All India Chemists and Distributors Federation, which alleged that the AIOCD and affiliated trade bodies imposed anticompetitive restrictions across the pharmaceutical supply chain through mandatory no-objection certificates, or NOCs, compulsory Product Information Service, or PIS, charges, fixed trade margins and coordinated market boycotts.
The DG submitted its investigation report in April 2024 after the probe was delayed for years following petitions filed to the Karnataka High Court. It concluded that the AIOCD, several regional chemists' associations and 15 pharmaceutical manufacturers had contravened the Competition Act by restricting access to pharmaceutical distribution channels.
The commission, however, said the DG's findings relied largely on historical material from 2009 to 2012 and did not adequately account for subsequent changes in industry practice.
The CCI noted that the evidence substantially predated compliance undertakings adopted by the trade associations in 2014, including an affidavit stating that NOC requirements and fixed trade margins had been discontinued. It also observed that memorandums of understanding between the trade bodies had been terminated by 2011.
"The material...does not conclusively establish" that NOC and Letter of Cooperation, or LOC, requirements and PIS approvals "were mandatory or uniformly enforced," t
he commission said.
According to the 47-page order, several pharmaceutical manufacturers demonstrated that they had appointed hundreds of stockists without obtaining trade association clearances. The commission also noted that no stockists were examined during the investigation to establish that business had been denied because association approval was not obtained.
The commission further found that the PIS functioned primarily as a product information and advertising mechanism rather than as a mandatory prerequisite for launching medicines.
Addressing allegations of coordinated boycotts, the CCI said isolated commercial disputes did not establish an industry-wide exclusionary arrangement. The evidence also failed to establish "any consistent or systematic boycott mechanism" against companies that did not obtain NOCs or LOCs or pay PIS charges, it said.
The commission likewise rejected the DG's findings against the manufacturers, saying it was "unable to sustain" those conclusions because there was no "cogent evidence" of their active participation in the alleged conduct. Instead, the record suggested that manufacturers were often the targets of pressure from local trade associations rather than participants in an anticompetitive arrangement.
The ruling brings to a close proceedings that began more than a decade ago. In December 2013, the CCI issued interim cease-and-desist directions against the parties while the investigation continued. In its final order, however, the commission found "no case of contravention" under the Competition Act and closed the proceedings.
Source: MLex
