Pharmaceutical manufacturers that voluntarily pay product information services (PIS) charges do not constitute a restrictive trade practice but, if this is compulsory, they are anti-competitive, the Competition Commission (CCI) of India says.
In a case that began in January 2012 and concluded on 26 June 2026, the CCI deliberated on various allegations, including the trade practice where chemist or druggist organisations levy PIS charges to introduce a new product in pharmaceutical company bulletins/newsletters for circulation among dealers and distributors.
In 2012, Kailash Gupta, president of the All India Chemist and Distributors Federation (AICDF), presented information to the CCI, accusing 34 pharmaceutical manufacturers and organisations of allegedly conducting practices, including restrictive contract clauses and disrupting free trade, which violates anti-competitive laws.
The AICDF safeguards and promotes the interests of wholesale pharmaceutical distributors in India. The 34 opposing parties (OPs) in the case comprised 22 pharmaceutical companies, 10 chemist and druggist organisations, and two pharmaceutical manufacturers’ associations.
In the CCI case, Gupta said the All India Organisation of Chemist & Druggist (AIOCD) compelled manufacturers’ associations to sign a memorandum of understanding (MoU) that included unreasonable conditions of letters of co-operation (LOCs) leveraging its position to benefit itself and its office bearers.
Gupta also alleged the AIOCD and other OPs collected PIS charges from drug manufacturers under the pretext of disseminating product information. This compelled the manufacturers to comply over fears of adverse market consequences and business disruptions.
Gupta said this practice was restrictive as it amounted to concerted and conspiratorial refusal to deal, and a group boycott of the AICDF and its members.
The CCI ordered the director general (DG) to investigate and submit a report, which was submitted in April 2024. Some of the findings found that:
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- Several of the OPs required LOCs as a mandatory condition prior to the appointment of stockists, resulting in controlling product supplies in the market, violating competition law provisions that prohibit restrictive contracts limiting markets;
- PIS approval was mandatory and companies could not launch new products without it, violating the limiting markets provision;
- The MoU required companies to seek approval from AIOCD-affiliated organisations before appointing stockists and advertising new products, prescribed trade margins for wholesalers and retailers for non-scheduled drugs that had to be followed by the pharmaceutical companies, and restricted direct supplies by pharmaceutical companies. These collectively showed that these MoU provisions were anti-competitive; and
- Supplies to stockists had been halted at the behest of the AIOCD and/or affiliated organisations.
However, the DG did not find sufficient evidence of cartelisation and compelling manufacturers to share customer data. Of the 34 OPs, 24 were found to have engaged in anti-competitive practices in violation of the competition law. The DG also named several individuals that were deemed responsible parties.
The CCI sought replies from the OPs and individuals identified in the findings, as well as financial statements, including income tax returns.
The OPs submitted that the DG failed to establish coercive measures or compulsive requirements for averments mentioned for stockists, LOCs and PIS charges. The provisions referred to were only advisory and suggestive, and intended to improve market efficiency and were not mandatory, the OPs added.
The AIOCD submitted that the MoU the DG had relied on was old and had been terminated in 2011. The PIS charges were voluntary, imposed to improve product awareness, ensured availability and were not mandatory, it said.
On alleged boycotts and refusal to deal, it said no evidence had shown this. As it was a non-profit organisation, the AIOCD said it stood to gain no financial benefit from the alleged NOC, PIS charges and boycott practices. It added that its officers could not be held liable as no evidence had shown their consent, connivance or involvement.
Several pharmaceutical companies had submitted evidence of stockists appointments without LOCs, while other OPs said PIS charges were a precautionary measure, or a practice for product awareness and advertisement rather than a compulsory levy.
The CCI said mandatory PIS charges constituted an anti-competitive practice. However, when they were voluntarily paid without compulsion, or fear of adverse consequences, the arrangement was not anti-competitive, it added.
On 26 June 2026, the CCI closed the matter, saying that no cogent evidence establishing the alleged anti-competitive practices had been brought on record.
