Order of CCI imposing penalty upon Alkem Laboratories, set aside

Competition Appellate Tribunal (COMPAT): While rendering relief to Alkem Laboratories, its two officials, All Kerala Chemists and Druggists Association (AKCDA) and one of its officials, who were fined by CCI in a case alleging anti-competitive practices, COMPAT set aside the said judgment of CCI. The impugned judgment of CCI was passed in December, 2015, on an information filed by a distributor of medicines. The information pertained to Alkem Laboratories not supplying medicines even after agreeing to do the same. It was also alleged by the informant that Alkem Laboratories rejected the informant’s application for appointment as its stockist since he failed to obtain a “no objection certificate” from the AKCDA. Apart from imposing a fine of Rs 74.63 crore on Alkem Laboratories, two of the company’s employees were also penalized Rs 71,371 and Rs 34,248 respectively. Further CCI had imposed a fine of Rs 4.35 lakh on All Kerala Chemists and Druggists Association (AKCDA) and one of its officials had been penalised Rs 50,203 as well in the same case. Before Tribunal, three separate appeals were filed against the said order by Alkem Laboratories and its two officials. After detailed perusal of material on record including the findings of investigation by the Joint Director General, COMPAT observed that the distributor had deliberately suppressed the material facts and documents and CCI and its Joint DG, who conducted the investigation, proceeded on a wholly erroneous assumption that the distributor had been appointed as a stockist by the competent authority of Alkem Laboratories. Whereas, Alkem Laboratories “had taken a categorical stand from the day one that Shri Paul Madavana (who issued letter appointing Respondent No. 2 as a stockist) was not competent to appoint Respondent No. 2 as a stockist and this was the reason why the medicines were not supplied to him,” Tribunal noted. Tribunal further noted that no proof of any demand of ‘No Objection Certificate’ was established against Alkem Laboratories. “It is also an admitted position that after his appointment as a stockist by the competent authority i.e. Appellant No. 3, Respondent No. 2 applied for supply of medicines and the needful was done without asking for NOC from AKCDA,” observed the Tribunal. On the appeals filed by the officials of Alkem Laboratories, COMPAT held that there was a violation of the principles of natural justice by the CCI since no opportunity was extended to the office bearers to present their defense. “Once the Tribunal has come to the conclusion that the finding recorded by the Commission against Appellant No. 1(Alkem Laboratories) is legally unsustainable, the consequential penalty imposed by the Commission on Appellants Nos. 1, 2 and 3 cannot be sustained and is liable to be quashed,” Tribunal noted while allowing all the three appeals. Although the Tribunal adversely viewed the matter of suppression of material facts by the informant, it refrained from passing any adverse order against the informant on account of the apologies tendered to the Joint Director General and the CCI. [Alkem Laboratories Ltd.v. CCI, [2016] Comp AT 96, decided on May 10, 2016]

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