The Hindu Business Line : MRTPC pulls up Karnataka pharma trade association

The Monopolies and Restrictive Trade Practices Commission (MRTPC) has pulled up the Karnataka Chemists and Druggists Association (KCDA) for indulging in restrictive trade practices.

While disposing a petition filed by a Mysore-based pharma dealer, the MRTPC held that circulars issued by the KCDA to boycott the applicant was against the nature of fair trade.

KCDA had banned Sri Ramakrishna Services (SRS), a distributor and stockist of Sandoz-Novartis from carrying on any business.

The association had been insisting that no drug manufacturer can appoint a person as its stockist/wholesaler without obtaining an no objection certificate (NOC) from the KCDA and had been issuing circulars to this effect. The KCDA published in its circular a list of agents affiliated to it and requested all manufactures to appoint only those as agents in the future. SRS said that KCDA practices precluded the non-members of the association from carrying out "their business fairly and thus the practice adopted by the respondent (KCDA) was unfair and restrictive."

Furthermore, KCDA had been making frequent and recurrent boycott calls of various manufacturers citing `trade' issues, without any justification.

For example, it had resolved not to purchase goods from all divisions of GlaxoSmithKline (GSK).

The Commission observed that because of the insistence on the NOC by KCDA as a pre-condition for appointment of stockists, the manufacturers were deprived of the freedom to choose their distribution partners.

SRS cited a complaint against Sandoz for not responding to their placement of an earlier order. When enquiries were made, SRS learnt that the stoppage was under instructions from the Sandoz Head Office and that the Head Office had been compelled by the KCDA to stop supplies to SRS.

According to SRS, Sandoz succumbed to the pressure exerted by the KCDA to blacklist SRS. In fact, Sandoz went on to appoint another new wholesaler in Mysore in place of SRS at the behest of KCDA.

However, during the proceedings, Sandoz claimed that the cheque issued by the complainant had bounced and so it had stopped the delivery.

The Commission in its orders stated that "any boycott of any dealer and or/association, in any manner, written or oral, shall be a restrictive trade practice and such practice shall have to be stopped by the respondent."

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