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b)
Agreements that limit or control production, supply, market, technical development,
investment or provision of services.
c)
Agreements to share market or source of production or provision of services by way of
allocation of geographical area of market or type of goods or services, or number of customers in
the market or any other similar way.
d)
However, agreements entered into by way of joint ventures are excluded from above restriction if
such agreements increase the efficiency in production, supply, distribution, acquisition, or control
of goods or provision of services.
Under the Act, cartel includes an association of producers, sellers, distributors, traders, or
service providers who, by agreement amongst themselves, limit control or attempt to control the
production, distribution, sale or price of, or trade in goods, or provision of services.
Further, under section 19(3) of the Act, following factors are to be considered byCompetition
Commission of India (CCI) in determining whether an agreement has appreciable adverse
effect on competition:
a)
Creation of barriers to new entrants in the market.
b)
Driving existing competitors out of the market.
c)
Foreclosure of competition by hindering entry into the market.
d)
Accrual of benefits to consumers.
e)
Improvement in production or distribution of goods or provision of services.
f)
Promotion of technical, scientific and economic development by means of
production or distribution of goods or provision of services.
Referred Cases:
1. M/s Oracle Drugs and Others v Secretary, Department of Health & Family Welfare,
Government of Odisha and another, decided on 1st July, 2013
The case was filed by M/s Oracle Drugs and Others (Informants) against Department of
Health and Family Welfare, Government of Odisha and Another (Health Department)
alleging abuse of dominance.
Informants were stated to be medicine shop owners operating in the different premises of public
health facilities in the State of Odisha and their shops are governed by the guidelines formulated
by Health Department.
Informants alleged that Health Department vide its resolution dated November 17, 2012
(Resolution) issued revised guidelines for medical shop owners operating in public health
facility premises. As per the Resolution, the Informants and such other medicine shop owners
were required to provide medicines at discounted rates. The abovementioned Resolution
provides for a detailed slab of discount based on the location of medicine shops such as shops in
premises of district headquartered hospitals, shops inside the premises of medical colleges etc.
Informants submitted that the same conditions were not applicable on other day and night
medicines shops, which are operating under Public Private Partnership (PPP) model.
Informants further alleged that the said Resolution also provides for appointing at least 3
pharmacists to supervise the sale of drugs, whereas the shop owners are themselves pharmacists
and the same was commercially not viable for Informants. Aggrieved with the above conduct of
Health Department, Informants approached CCI.
On the basis of the information available on the website of the Health Department, CCI observed
that one among the many functions of the Health Department is to guarantee free treatment and
free medicines to the people of Odisha.
CCI stated that the said actions of Health Department are not economic in nature but are policy
decision for benefit of general public. CCI also stated that the shops which are operating in the
premises of public health facilities can be bound by such reasonable policy decisions. CCI
further stated that the Resolution provides for the lower limit of discount and Informants can
compete with each other by providing higher rate of discounts. CCI therefore held that the
decision of Health Department cannot be held to anti-competitive.
On the issue non-applicability of Resolution on the day and night medicines shops operating
under PPP model, CCI stated that Health Department must have provided some conditions in the
PPP agreement for such consumer benefits. However, Informants did not provide terms and
conditions of PPP model shops.
Lastly, CCI noted that requirement of pharmacists is a must for a medicine shop and the same
cannot be held as abusive in nature. CCI also pointed out the decision of Health Department
would not be disadvantageous for Informants as the large number of consumers would be
encouraged to buy medicines from Informants rather than buying from such medicines shops,
which do not provide discounts.
Based on the above analysis and observations, CCI held that no prima facie case could be
established against Health Department. Therefore, CCI ordered for closure of the case.
CCI further stated that the terms and conditions of TPA agreement are fixed by insurance
companies and in case of violation of conditions by TPA, insurance company has a right to
terminate agreement and complaint to IRDA for cancellation of registration of TPA. CCI noted
that a policy holder can also make complaint to IRDA against a TPA as the conduct of the TPA
and insurance companies are governed by IRDA.
On the basis of the above analysis and observations, CCI ordered for closure of the close.