Wednesday, August 3, 2016

CCI slaps penalty of Rs 72 crores on Lupin for restricting supply of drugs

Competition Act, 2002: Act of restricting supply of drugs by Lupin, pharmaceutical company, due to non-compliance of condition of furnishing of NOC by ‘Chemists and Druggist association’ was anti-competitive
Facts :
a) Karnataka Chemists & Druggist Association (KCDA) restrained pharmaceutical companies from appointing new stockists in the State of Karnataka without a NOC.
b) Maruti & Co. (Informant) was appointed as a stockist for the Diabetes care division. Lupin, being a Pharmaceutical company, refused to supply drugs to informant. It had directed informant to obtain an NOC from KCDA to get supply of drugs.

The Competition Commission of India held as under:
1) KCDA indulged in the anti-competitive practice of restricting supply of drugs as it mandated obtaining of NOC prior to the appointment of new stockist.
2) Penalty of around Rs 72.96 crores was to be levied on Lupin for restraining supply of drugs. Further, monetary penalty of around Rs 8 lakhs was to be levied on KCDA. In addition to the above, penalty was also to be levied at 10 % and 1 % of the incomes of office bearers of KCDA and o􀁹icials of Lupin for refusing to supply its drugs to informant as it failed to obtain NOC from State drug association.

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