Competition LawALL INDIA ORGANISATION OF CHEMISTS AND DRUGGISTS VS CCI

2FACTSCase : 1

1. Case no.: 20/2011 Santuka associates PVT LTD Cuttack filed an information under section 19 of competition act 2002 alleging abuse of dominant position by the appellant by limiting and restricting supply of pharmaceutical drugs in India.

2. Commission- ordered on 10th May 2011 under section 26(1)- DG to conduct investigation and submit a report.

3. DG- initiated process of investigation -issued notice on 28th June 2011 to appellant- under section 41 read with section 36(2)- to furnish information and documents.

3Case : 21. Case no. : 30/2011 Peeveera medical agency,

Palakkad, Kerala filed an information with substantially same allegations. Commission ordered investigation under section 26(1) of the act.

2. The DG- issued notice dated 19th july 2011 under section 41 read with section 36(2)- called appellant to furnish information in respect of various items identical to those enumerated in notice 28 june 2011.

3. Information and documents submitted in 3 dates 18/10/11, 7/11/11 and 28/11/11.

4Case : 31. Case no.: 41/2011 Sandhya drug agency,

Barpeta with allegations similar to those made by previous two cases. Commission ordered investigation under section 26(1).

2. The DG- issued notice under section 41 read with section 36 (2) and directed the appellant to supply information and documents similar to those in previous two cases.

5Issueo Although appellant supplied information in case 30

but its ommission to do so in case 20 of 2011 prompted the DG to issue show cause notice dated 4th October 2011 for imposition of penalty under section 43 of the act.

o Appellants reply- 10th October 2011- non supply of information was inconsequential because the required information and documents had already been furnished in case 30 of 2011 and the investigation was conducted by DG in simultaneously three cases on same allegations.

6Reply of Comission

Commission was dissatisfied with reply of appellant - passed order on 25th October 2011-imposing penalty of Rs. 25000 per day from 2nd September 2011- with direction that penalty will continue to be levied till information is not submitted.

7Course of Proceedings

During proceedings- DG received letter on 18th August, 2011 by advocates of appellant seeking extension till 27th September, 2011 to file reply on ground that their client was busy due to upcoming elections.

8o Later on 13th December 2011 the commission

decided that an action be initiated for recovery of penalty amounting to Rs. 25,75,000 for the period from 2/9/2011- 13/12/2011

o Party failed to pay fine- demand notice on 29th December 2011 to pay cumulative fine of aggregate 1 Crore for continued non compliance of order.

9Reports by DGo DG submitted 3 reports in quick succession with the

finding that the appellant was in dominant position and it had abused that position.

1. 1st report -22/12/2011 on case no.: 20/20112. 2nd report- 27/12/2011 on case no.: 41/20113. 3rd report – 29/12/2011 on case no.: 30/2011 For reports- DG adopted identical methodology. Examining reports of DG- commission did not

ordain further investigation or inquiry in any of the three cases.

Commission rather acted on findings of DG.

10Later by Appellant

o The appellant filed submission on 3/3/2014

o The impugned order was passed by body of chairperson and five members, Two of whom namely Shri Sudhir Mittal and Shri Augustin Peter had not even joined the commission till 27/2/2014: the date on which the arguments were heard. Both joined on 11/4/2014

11Contentions by appellant

1. Commission could not have decided the prayer in apparent mistake in orders dated 25/10/2011 and 13/12/2011 because 2 of them did not hear arguments.

2. With the submission of final report on case no 20 on 22/12/2011 the direction for supply of information became redundant so no penalty be imposed.

3. Non supply of information and documents was inconsequential as the requirements were submitted in case no 30 and DG prepared reports on available informations.

12 Instant case: S.C in Gullapali Nageswara Rao

versus Andhra pradesh state road transport corporation held that:

“……if one person hears and another decides, then personal hearing becomes an empty formality”

Principle of natural justice is violated.

13Conclusion till now…

In result appeal is allowed. The impugned order is set aside Penalty imposed under section 43 became

inoperative from the date of submission of report of DG i.e 22/12/2011.

Appellant shall be entitled to get refund of penalty imposed in excess of what was payable till the date of submission of report by the DG i.e 22/12/2011