M/s Royal Agency v. Chemists & Druggists Association, Goa & Others

CCI27 Oct 201563/2013

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The Commission considered allegations that a pharmaceutical distributor was denied supplies by a manufacturer under pressure from a Chemists Association to join the group. The majority concluded evidence was insufficient to establish a competition violation and closed the matter. A dissent finding violations by both parties. The text provided contains the dissenting order only.

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M/s Royal Agency vs. Chemists & Druggists… — Pension and Retirement Benefits | CCI (2015)

M/s Royal Agency v. Chemists & Druggists Association, Goa & Others

CCI27 Oct 201563/2013

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What the court decided

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	Sd/- (S. L. Bunker) Member
	Sd/- (Sudhir Mital) Member
	Sd/-
	(U. C. Nahta)
	Member
	Sd/-
	(M.S. Sahoo)
	Member
New Delhi
Dated: 27.10.2015

¶167

Date	Event	Remarks
10-07-2013	Agreement executed between the Informant and OP2	Informant appointed by OP2 as distributor for sale of its drugs and medicines
12-07-2013	1^storder placed by the Informant	OP2 Supplied
18-07-2013	2^ndorder placed by the Informant	OP2 Supplied
24-07-2013	3^rdorder placed by the Informant over fax	OP 2 did not supply
27-07-2013	1^streminder by the Informant to OP2	No response by OP2
29-07-2013	2^ndreminder by the Informant to OP2	No response by OP2
29-07-2013	The Informant received reply from C&F Agent requiring them to contact Head Office of OP2
30-07-2013	Reply above forwarded by the Informant to OP2 HQs to do the needful
31-07-2013	3^rdreminder of the Informant to OP2	No response by OP2
01-08-2013	4^threminder of the Informant to OP2	No response by OP2
03-08-2013	Informant brought to the notice of OP2 about the repeated reminders and the fact that there is no need for NOC from OP1, referring to the Order of CCI in this regard
08-08-2013	Information filed by the Informant with the Commission
08-08-2013	Legal notice by the Informant to CDAG to intimate (require) OP2 to resume supplies of drugs and medicines to the informant (Para 24 of the Affidavit by the Informant dated 9-12-2013)	As per the Informant CDAG did not respond to the notice. However, the representative of CDAG approached the informant to settle the matter amicably and assured the Informant that they shall request OP2 to resume supplies of drugs and medicines.
19/08/2013	Informant approaches the Commission under section 33 of the Act
03-10-2013	Section 26(1) order passed by the Commission

¶169

11/02/2014	Section 33 order by CCI	Prayer of the informant seeking interim relief rejected.
1^stweek of October , 2013	Informant alleged that CDAG began threatening the Informant to become a member	As per the Informant CDAG began threatening the Informant to become a member. As per OP1, it received a letter dated 09-10-2013 from the Informant apologizing for the mistake done by the Informant which resulted in some conflict and to rectify the same and grant membership to the informant.
14-10-2013	Informant handed over a cheque bearing no 519788 dated 14/10/2013 drawn on The Goa Urban Cooperative Bank Ltd for an amount of Rs 2500/- towards the membership fee and signed an application seeking membership
28-11-2013	The Informant approached her advocate	The Advocate addressed a legal notice to the association directing it to refrain from interfering in the dealings between the Informant and Neon Laboratories and further calling upon the Association to return the cheque forcefully obtained from the informant.
05-12-2013	Affidavit by the Informant to the Commission.Affidavit states that OP1 has not only arbitrarily directed but forced all such pharmaceutical companies establishing its industry in Goa, or interested in distributing its products in Goa, to appoint stockist/ wholesalers/distributors only from those individuals and/or firms who are members of the Association thereby restricting and prohibiting any non-member from being appointed as a

¶171

	stockist/wholesaler/distributors of these pharmaceutical companies.
13-11-2013	Affidavit by the Chairman of OP1
14-12-2013	Resumption of supply
17-07-2014	Letter from the Informant (undated) submitting that it has no grievance against OP1and requesting a closure of the case (Letter submitted by the Informant and OP2)	‘Undated letter’ could raise the presumption that it was provided based on a condition stipulated by OP2 to resume supply

¶262

Informant). It is to be noted that liability on Sh Agostinho Menezes is imputed in his dual capacity of being Wholesaler’s Chairman of OP1 Association and also as the proprietor of M/s Drogaria Menezes &Cia. I have no hesitation in accepting the finding of the DG in this regard. As a senior office bearer, and an interested party, being himself a distributor of OP2 he was in a position, and had the reason, to influence the decisions of OP1. As regards his other capacity, that of proprietor of M/s Drogaria & Cia, Sh. Menezes was the key person to influence OP2, whose distributorship his proprietary concern had for several years. As the proprietor of M/s Drogaria Menezes & Cia, he represented to the medical representatives of OP2 that his firm was not in a position to place further orders due to the entry of the Informant in the market. It was this, coupled with the clout of Sh. Menezes as Wholesaler’s Chairman in the OP1 Association and the presence of the Vice President of the Association, Sh. Ashish JN Raikar of Raikar Distributors, both of whom are distributors of OP2, and whose business interests were affected by the entry of the Informant as the new distributor of OP2, that prompted OP2 to withhold supplies to the Informant after supplying her for initial two orders, on the ground of ‘verification’ being undertaken. The supply was finally restored when the Informant approached the Commission by way of Information under section 19(1)(a) and the Commission issued order under section 26(1) requiring the DG to investigate. In his written statement dated 11/04/2015, before the Commission, Sh. Agostinho Menezes contended that there is no evidence on record to prove that just because he was an ex employer he complained about loss in his business due to the informant’s entry into the market. It was also submitted that his role as wholesaler’s Chairman of OP1 is misconstrued by the DG as a position of power and authority. His statements cannot be taken in isolation. The indirect evidence as brought out in the DG report and reiterated by me in the above paras make me convinced of the role played by Sh. Agostinho Menezes in his dual capacity, I find it fit to penalize him under section 48 of the Act.

¶284

Name of the Party	Turnover/ Receipts during the yr ended on 31^st March 2012 (Rs)	Turnover/ Receipts during the yr ended on 31^st March 2013 (Rs)	Turnover/ Receipts during the yr ended on 31^st March 2014 (Rs)	Average Turnover/ Receipts (Rs)	Percentage of turnover as penalty prescribed (%)	Amount of Penalty (Rs)
Chemist and
Druggist	2176036.82	1784978.82	5167449.08	3042821.57	10	304,282
Association of
Goa
Franco Indian Pharmaceuticals	278015446	324109350	450589793	350904863	3	105,27,146
Pvt Ltd
M/s Drogaria Menezes & Cia	54165000	55567124	52729970	54154031	3	16,24,621

¶290

Name of the	Income	Income	Income	Average	Percentage	Amount
Office Bearer	during the yr ended on 31^st	during the yr ended on 31^st	during the yr ended on 31^st	Income during for the yr ended on31^st	of turnover ordered as penalty	of Penalty (Rs)
	March 2012	March 2012	March 2012	March 2012, 2013 and 2014	(%)
	(Rs)	(Rs)	(Rs)	(Rs)
Shri Ramesh	1154138	1180157	1737574	1357290	10	1,35,729
Chaturvedi
Sh Agostinho	422586	799583	279402	500614	10	50,061
Menezes

M/s Royal Agency v. Chemists & Druggists Association, Goa & Others

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M/s Royal Agency v. Chemists & Druggists Association, Goa & Others

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