CCI Rejects Petition Against USV And Kundan Pharmacon For Resorting To Unfair Trade Practices

Mumbai, 21 Feb 2020:

The Competition Commission of India (CCI) has rejected a petition filed by Makarand Anant Mhaskar, a drug wholesaler, against USV and Kundan Pharmacon for resorting to unfair trade practices.

Makarand Anant Mhaskar had filed a case against pharmaceutical company USV Private Limited (USV) and its Carry & Forward (C&F) agent Kundan Pharmacon for resorting to unfair trade practices in contravention of the provisions of Section 4 of the Competition Commission Act (CCA).

In the petition, Mhaskar alleged that requisite documents were provided and terms of advance payment were also accepted, but drugs were not supplied by C&F agent of USV on the ground that the complainant rejected the condition which provided that he is not entitled to return any product purchased from USV for any reason whatsoever including those on account of expiry or damage.

It has been further alleged that another order was placed by Mhaskar on September 11, 2019 as per the requirements, but the same was not executed and demand draft, which was held for two months, was also returned on September 30, 2019.

Mhaskar had placed an order for purchase of drugs from USV on July 31, 2019. Kundan Pharmacon through its letter dated August 6, 2019, confirmed receipt of the said order of the informant along with documents and demand draft.

The complainant stated that the CCI should take an appropriate action against USV and Kundan Pharmacon for imposing unfair and discriminatory conditions which barred him from purchasing the products of USV from any other C&F agent and returning any product purchased from USV for any reason whatsoever including those on account of expiry or damage.

The commission has perused the information on record and material available in public domain. The commission observed that Mhaskar objected to certain terms and conditions which were imposed upon it by USV.

The commission noted that the Mhaskar has alleged contravention of the provisions of Section 4(2)(a) of the Act by USV and Kundan. However, it appears that Kundan is merely a C&F agent of USV, therefore, for the purpose of analysis under the provisions of Section 4 of the Act, USV is the relevant entity and the Commission has accordingly analysed the case from that perspective.

The document also stated that Mhaskar has not brought on record any material (except for a few emails exchanged between USV and Informant) which could throw light upon the nature of business relationship between itself and USV.

"The commission noted that the abusive conducts, as set out under section 4(2) of the Act, can fall into two broad categories such as exclusionary and exploitative practices. Exclusionary abuses are those practices adopted by dominant firm which drive competitors out of markets, or create entry barriers for its competitors. On the other hand, exploitative abuses are those practices in which dominant firm takes advantage of its market power by inter alia charging discriminating and unfair prices or imposing unfair terms and conditions on its customers," the document said.

The commission observes that in the instant matter, the primary grievance of the Mhaskar pertains to certain conditions imposed by USV. Amongst those conditions, in the opinion of the Commission, the main grievance of the Mhaskar, appears to be the condition whereby it cannot return the products to USV for any reason whatsoever, including expired products.

As per the CMIEs Prowess IQ data, accessed on January 23, 2020, sales data across pharmaceutical companies show that numerous pharmaceutical companies have sales more than that of USV and as such the USV does not seem to enjoy dominant position. Pharmabiz