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COMPETITION APPELLATE TRIBUNAL, NEW DELHI
G.S. Singhvi, Chairman
All India Organization Of Chemists And Druggists—Appellant
Versus
Competition Commission Of India—Respondent
Appeal No. 56/2014 with I.A. No. 97/2014, I.A. No. 86/21014 and I.A. No. 05/2015
Decided On : 27-04-2015
For the Appellant :Mr. Ramji Srinivasan, Senior Advocate assisted by Dr. Vijay Kumar Aggarwal and Mr. Ankush Walia, Advocates.
For the Respondent:Mr. Avinash Sharma, Advocate.
The impugned order was vitiated due to violation of the principles of natural justice and the lack of justification for continuing the penalty beyond the date of submission of the report by the DG.
Headnote:
Competition Commission of India - Refusal to Correct Error - Competition Act, 2002, Section 19, 26(1), 27, 41, 36(2), 43, 45 - The court considered whether the Commission committed an error by refusing to correct a mistake apparent on the face of record in passing orders dated 25.10.2011 and 13.12.2011 in Case No. 20 of 2011. The appellant alleged abuse of dominant position by the respondent by limiting and restricting supply of pharmaceutical drugs in India. The Commission ordered an investigation and directed the appellant to furnish information. The appellant failed to comply, leading to the imposition of a penalty. The Commission decided that an action be initiated for recovery of the penalty amounting to Rs. 25,75,000. The appellant's prayer for rectification of the apparent mistake in the orders was considered by the Commission, which ultimately passed an order. The appellant challenged the order on several grounds, including the violation of the principles of natural justice and the lack of justification for continuing the penalty beyond the date of submission of the report by the DG. The Tribunal found that the impugned order was vitiated due to violation of the principles of natural justice and set it aside, declaring that the penalty imposed by the Commission under Section 43 of the Act became inoperative from the date of submission of the report by the DG and that the appellant shall be entitled to a refund of the penalty imposed in excess of what was payable till the date of submission of the report by the DG.
Fact of the Case:
The appellant alleged abuse of dominant position by the respondent by limiting and restricting the supply of pharmaceutical drugs in India. The Commission ordered an investigation and directed the appellant to furnish information. The appellant failed to comply, leading to the imposition of a penalty. The Commission decided that an action be initiated for recovery of the penalty amounting to Rs. 25,75,000. The appellant challenged the order on several grounds, including the violation of the principles of natural justice and the lack of justification for continuing the penalty beyond the date of submission of the report by the DG.
Finding of the Court:
The impugned order was vitiated due to violation of the principles of natural justice and was set aside. The Tribunal found that the penalty imposed by the Commission under Section 43 of the Act became inoperative from the date of submission of the report by the DG and that the appellant shall be entitled to a refund of the penalty imposed in excess of what was payable till the date of submission of the report by the DG.
Issues: Violation of the principles of natural justice, lack of justification for continuing the penalty beyond the date of submission of the report by the DG.
Ratio Decidendi: The impugned order was vitiated due to violation of the principles of natural justice and the lack of justification for continuing the penalty beyond the date of submission of the report by the DG.
Final Decision: The appeal was allowed, the impugned order was set aside, and it was declared that the penalty imposed by the Commission under Section 43 of the Act became inoperative from the date of submission of the report by the DG. The appellant shall be entitled to a refund of the penalty imposed in excess of what was payable till the date of submission of the report by the DG.
ORDER :
G.S. Singhvi, Chairman
Whether the Competition Commission of India (for short, ‘the Commission’) committed an error by refusing to correct, what the appellant perceived as a mistake apparent on the face of record in passing orders dated 25.10.2011 and 13.12.2011 in Case No. 20 of 2011, Santuka Associates Pvt. Ltd. Cuttack v. All India Organization of Chemists and Druggists, Mumbai, is the question which arises for consideration in this appeal filed against order dated 3.7.2014 passed by the Commission.
Background Facts
2. M/s. Santuka Associates Private Limited, Cuttack, filed an information under Section 19 of the Competition Act, 2002 (for short, ‘the Act’) alleging abuse of dominant position by the appellant by limiting and restricting supply of pharmaceutical drugs in India. The Commission considered the allegations contained in the information and pass order dated 10.5.2011 under Section 26(1) of the Act whereby the Director General (DG) was asked to conduct investigation and submit a report.
3. In compliance of the directive given by the Commission, the DG initiated the process of investigation and issued notice dated 28.6.2011 to the appellant under Section 41 read with Section 36(2) of the Act requiring it to furnish the following information:
| 1. | Your reply/comments on each of the allegations as mentioned above. |
| 2. | Names, addresses, telephone and fax numbers of all the Committee of your organi-zation for the last three years. |
| 3. | Names and Addresses of members of your organization. |
| 4. | A copy of Memorandum of Association and Articles of Association. |
| 5. | Copies of all the Memorandum of Understandings and agreements, effective on date, signed by AIOCD with representative associations/organizations of drug manufacturers like IDMA, OPPI, PAMDAL or individual drug manufacturers, if any. |
| 6. | Copies of agreement on Product Information System (PIS) made with representative associations/organizations of drug manufacturers like IDMA, OPPI, PAMDAL or with individual drug manufacturers, if any. |
| 7. | Minutes/resolutions of all meetings of your organization including those of Executive Committee for the last three years. |
| 8. | Copies of annual reports of your Organization for the last three years. |
| 9. | Copies of all directions/instructions/circulars issued to State/District associations affiliated to your organization since 2009 which are in force as on date. |
| 10. | Copies of norms and guidelines issued for appointment/ter-mination of stockists/wholesalers/distributors, col-lection of PIS charges and for prescribing the price margins for wholesalers and retailers on sale of drugs, if any. |
| 11. | Copies of instructions/circulars or any other communication issued to sales—Marketing/distribution—Logistics/Supply Chain Heads of Pharma Companies, their C & F/C and A Agents/Distributors on the issue of appointment of stockists/distributors, price margins, and collection of PIS charges, since 2009, if any. |
| 12. | Copies of communications made by your organization to Pharma Companies of State/District associations affiliated to you, asking them not to deal and boycott certain dealers or suppliers on any matter, if any, since 2009. |
| 13. | Copies of communications made by your organization to state/District associations affiliated to you, asking them not to deal with and boycott (stopping of sale and purchase) certain Pharma companies on any matter, if any, since 2009. |
| 14. | Copies of communications made by your organization to State/District associations affiliated to you regarding price structure, trade margins policy, stockist policy, collection of Product by Pharmaceutical |
