19 July, 2015
On June 4, 2015 CCI found GlaxoSmithKline Pharmaceuticals Limited (‘GSK India’) and Sanofi Pasteur India Private Limited (‘Sanofi’) contravened Section 3(3) of the Competition Act. Nota- bly no adverse findings were made against the Director-General (Stores); Medical Store Depot, Ministry of Health and Family Welfare (‘DADG’).
Bio-Med (P) Ltd. (‘Biomed’), a manufacturer of vaccines, filed a complaint making two substantive allegations. Firstly, that GSK India and Sanofi: (a) collusively allocated markets in terms of geography; and (b) rotated bids for the supply of Quadrivalent Meningococcal Menin- gitis Vaccine (‘QMMV’) in the annual tenders issued by DADG from 2002 till 2012. Secondly, that DADG was dominant in the market for the procurement of QMMV and was abusing its dominant position by repeatedly revising the qualification criteria under the tenders floated by it in collu- sion with GSK India and Sanofi. This resulted in Biomed being disqualified from participating in the tenders.
As DADG was part of a Ministry and performing its statutory functions, CCI determined it was not an ‘enterprise’, within the meaning of Section 2(h) of the Competition Act. Therefore, DADG was not subject to Section 3 of the Competition Act and no adverse findings were made against DADG.
In respect of the tender for QMMV in 2011, CCI observed that the quantity and prices quoted by GSK India and Sanofi were clearly indicative of the absence of a competitive bidding pro- cess. Both GSK India and Sanofi quoted for roughly half the tender quantity, and there was an increase in price to close to ¤3,000 (approximately US$47) per 10 doses, from the 2010, winning bid of ¤1,999 (approximately US$ 31) per 10 doses.
CCI concluded that GSK India and Sanofi had contravened the provisions of Section 3(3)(d) of the Competition Act on account of (i) GSK India and Sanofi not being able to satisfactorily explain why they failed to quote for the entire bid quantity of 1,82,500 doses of QMMV as re- quired by DADG in the 2011 tender for QMMV; and (ii) GSK India and Sanofi could not satisfacto- rily explain the rationale for quoting prices that were significantly higher in 2011 than what was quoted in the 2010 tender.
Taking into account the (a) size of the tender; (b) nature of contravention; and (c) the rev- enues generated from QMMV sales, CCI imposed a penalty equivalent to 3% of the average turn- over of GSK India and Sanofi for the three financial years prior to 2011 amounting to ¤604.8 million (approximately US$9.5 million) and ¤30.4 (approximately US$ 479,000) on GSK India and Sanofi respectively.
For further information, please contact:
Zia Mody, Partner, AZB & Partners
zia.mody@azbpartners.com
Shuva Mandal, Partner, AZB & Partners
shuva.mandal@azbpartners.com
