VOL II                                                                 ISSUE NO. 08                                                   April 10, 2017    

In This Issue

Spilling the Beans Right! The Significance of Collection of Statistics Act, 2008 and its proposed Amendment

The Collection of Statistics Act, 2008 is the principal legislation in India that empowers collection of economic, social, demographic, scientific, and environmental data

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Determination of Relevant Market Under Competition Act, 2002

The Supreme Court in the present case has made observations on issues such as the role and scope of relevant markets, definition of an ‘enterprise’ and what would constitute agreements in determining violations of Section 3 of the Competition Act, 2002.

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IBBI Notifies the Insolvency and Bankruptcy Board of India (Voluntary Liquidation) Regulations, 2017

IBBI was established under Insolvency and Bankruptcy Code, 2016. On 31st March 2017, IBBI notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation) Regulations, 2017. The Regulation provides for a complete framework for the voluntary liquidation of a corporate person.

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CCI- Chemists and Druggists Associations Warned to Refrain from Indulging into Anti-Competitive Practices

CCI directed the Karnataka Chemist Association to ‘Cease and Desist’ from indulging into the anti-competitive practice of mandating ‘No Objection Certificate’ as a prerequisite for appointment of stockist.

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Spilling the Beans Right! The Significance of Collection of Statistics Act, 2008 and its proposed Amendment

 

 

Lately many Governments and organizations across the globe have begun to realize the necessity of collecting statistics on a national and global gage[1]. It is implicit that no solid policy measure can be taken and no effective directives may be given by the Government, if there remains lacunae in the understanding of ground realities. Therefore, in India there are two principal legal Acts, viz. Census Act, 1948 and Collection of Statistics Act, 2008 (“CS Act”) under which direct data collection is conducted.

 

 The Collection of Statistics Act, 2008 is the principal legislation in India that empowers collection of economic, social, demographic, scientific, and environmental data[2]. The Government is further empowered to make rules, or pass directives or instructions under the CS Act for collection of statistics. It is understood that any newer activity, plan or policies cannot be undertaken or imposed without complete understanding of the ground reality so as to enable the policy makers to understand the issues before they act upon making relevant provisions to tackle those issues.

 

THE COLLECTION OF STATISTICS ACT, 2008

 

The CS Act, extends to the whole of India, except Jammu & Kashmir. The Act also provides for appointment of statistics officers to collect information, and contains provisions to ensure security of information.

 

 Salient Features of the CS Act  

  • The Act enhanced the scope of collection of statistics in many ways. The scope of the CS Act broadly covers collection of data from industrial/ commercial concerns, individuals, and households.

  • Furthermore, any Government department or organization at central, state or local level is empowered to appoint a statistics officer. In view thereof, it would be apposite to say that the term “appropriate government” includes any Local Government also.

  • Methods of data collection under the CS Act includes oral Interviews and filing of returns electronically. 

  • As under Section 2(c) of the CS Act an "informant" means any person, who supplies or is required to supply statistical information and includes an owner or occupier or any person in-charge or his Authorised representative in respect of persons or a company under the Companies Act, or any association recognized or registered under any law for the time being in force. Pursuant to this, any statistics officer may serve any informant with a notice asking him/ her to furnish any information to the concerned authority as required by law. 

  • The vires of Section 6 of the CS Act highlight the duty of the informants to furnish the Information called for under the provisions of the Act. The informants who are asked to furnish any information under the provisions of this Act shall be bound to furnish the information so asked in the prescribed manner to the best of knowledge or belief.

  • As under Section 8 of the CS Act, the statistics officer or any person authorised shall, for the purposes of collection of any statistics under this Act, have access to any relevant record or document in the possession of any informant required to furnish any information under this Act.

  •  In case the informant fails to furnish the requested information or neglects or refuses to supply the particulars required in any information schedule or return given or sent to him shall be punishable in the case of a company, with a fine which may extend to five thousand rupees.

Lacunae in Law  

  • Since, the CS Act does not apply to the state of Jammu & Kashmir, the Jammu & Kashmir Collection of Statistics Act, 2010 stands applicable there. However, both The Collection of Statistics Act, 2008 and Jammu & Kashmir Collection of Statistics Act, 2010 are not applicable to statistical subjects falling within the Union List as applicable to Jammu & Kashmir under the Constitution (Application to Jammu & Kashmir) Order 1954. Furthermore, The Collection of Statistics Act, 2008 is not applicable to matters specified in the Concurrent List as well leading to a legislative vacuum.

  • Another issue with the CS Act is that there is no person empowered or designated to coordinate and supervise the statistical activities to carry out the purpose of this Act.

  • Therefore, in order to resolve the above mentioned issues, The Collection of Statistics (Amendment) Bill, 2017 has been introduced[3] with an intent to amend The Collection of Statistics Act, 2008.

THE COLLECTION OF STATISTICS (AMENDMENT) BILL, 2017 

  • The Bill seeks to extend the applicability of the CS Act to Jammu & Kashmir with respect to matters falling under the Union List and the Concurrent list.

  • The Bill provides that nodal officers will be designated by the Central Government or the State government or Union Territory Administration. Such nodal officers shall coordinate and supervise statistical activities under the government by whom he/she is appointed. The powers and duties of the nodal officers shall be determined by the Central Government.

  • Further, the CS Act provided that any information provided to statistics officer or to any person/agency authorised shall be used for statistical purposes only. However, the Bill removes this provision and empowers the Central Government to make rules to determine the manner in which such information will used for statistical purposes.

COMMENT

Once the Bill crystalizes into the Act, it will strengthen the mechanism of data collection in the state as matters not previously covered as the Constitution Order, 1954 will now get coverage. The introduction of designation of nodal officers is envisaged to result in effective coordination of data collection and formulation of statistics.

 

[1] Kaye Sung Kaon & Karin Weber, CONVENTION TOURISM: INTERNATIONAL RESEARCH AND INDUSTRY PERSPECTIVES (Routledge, NY and London 2009) 107.

[2] R. K Mishra, Jayasree Raveendran, K. N Jehangir (Eds.) SOCIAL SCIENCE RESEARCH IN INDIA AND THE WORLD.

[3] Nodal officers soon to coordinate, supervise statistical activities, K.R. Srivats, The Hindu: Business Line, published on 20, 2017 available at http://www.thehindubusinessline.com/economy/policy/statistics-amendment-bill-introduced-in-lok-sabha/article9593017.ece

 

 

 

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Determination of Relevant Market under Competition Act, 2002

 

The Supreme Court vide its order dated March 7, 2017 in Competition Commission of India v. Coordination Committee of Artist and Technicians of WB Films and Television has[1] made observations on issues such as the role and scope of relevant markets, the definition of an ‘enterprise’ and what would constitute an agreement in determining violations of the provisions of Section 3 of the Competition Act, 2002 (hereinafter referred to as the “said Act”).

 

Brief Background of the Case 

 

M/s BRTV, the producer of “Mahabharata”, had entrusted the sole and exclusive rights of the serial to M/s. Magnum TV Serials to dub the Hindi version in Bangla language. M/s. Magnum TV Serials was also given the rights to exploit its Satellite, Pay TV, DTH, IPTV, Video, Cable TV and internet rights on the dubbed version till September, 2016. Thereafter, M/s. Magnum TV Services appointed M/s. Hart Video (hereinafter referred to as “Hart Video”) as the sub-assigner to dub the serial in Bangla language.

 

 For the purpose of broadcasting the dubbed series an agreement was entered into for telecasting it on two TV channels viz., ‘Channel 10’ and ‘CTVN+’. However, two associations, namely the Eastern India Motion Picture Association (hereinafter referred to as “EIMPA”) and Committee of Artists and Technicians of West Bengal Film and Television Investors (hereinafter referred to as the “Coordination Committee”), opposed the screening of the dubbed series on the grounds that it would adversely affect the artists and technicians working in West Bengal by acting as a deterrent to production of such serials in Bangla.

 

Through written letters, both EIMPA and the Coordination Committee threatened non-cooperation to ‘Channel 10’ and ‘CTVN+’, if they telecast the dubbed serial. Thereafter, Hart Video filed a complaint with the Competition Commission of India (hereinafter referred to as “CCI”), requesting the CCI to take actions against the two associations for violations of the provisions of the said Act.

 

Order of CCI

 

The CCI formed a prima facie opinion that there existed an anti-competitive concern and accordingly directed the Director General (hereinafter referred to as “DG”) to investigate the complaint. The DG during the course of investigation found that the details contained in the information supplied by Hart Video were factually correct. The DG in his report defined the relevant market as the market for ‘film and television industry of West Bengal’ and concluded that the acts of the Coordination Committee and EIMPA threatening non-cooperation in the telecast of such serial amounted to foreclosure of competition by hindering entry into the market. Therefore, the actions of the two associations amounted to an anti-competitive agreement and there was violation of Section 3(3) (b) of the Act.

 

A major contention raised by the Coordination Committee was that it comprised of artists and technicians that worked in the West Bengal Film and T.V. Industry and consisted of West Bengal Motion Picture Artists' Forum and Federation of Cine Technicians and Workers of Eastern India only and was, in fact, a trade union of the artisans and technicians under the Trade Union Act.

 

Therefore, it was argued that the Coordination Committee was neither an 'enterprise' nor was it a ‘person or ‘association of persons’ who were in the business of production, supply and distribution or providing services etc. Further, their actions would not fall under Section 3(1) of the said Act but were instead part of their constitutional right to protest.

 

The majority order of the CCI agreed with the findings of the DG and held that the association has led the TV channels not broadcasting the TV Serial and as a result violated Section 3(3) (b) of the Act. The submissions made by the Coordination Committee were accepted and the CCI held that although such associations did not fit into the definition of an ‘enterprise’ and accordingly could not be subject to claims of abuse of dominance. However, the CCI observed that they were subjected to the provisions of Section 3(3) since the Co-ordination Committee comprised of associations whose members are engaged in televisions and film industry.

 

Appeal to Competition Appellate Tribunal

 

The Coordination Committee appealed against the majority order of the CCI to the Competition Appellate Tribunal (hereinafter referred to as “COMPAT”). The COMPAT held that the CCI and DG had erred in defining the relevant market with the relevant market being ‘telecasting of dubbed serial on television in the State of West Bengal’ and not the ‘film and television industry of West Bengal’.

 

Further, the COMPAT held that the complaint could be scrutinized under Section 3 and hence there could no contravention of Section 3 of the said Act. COMPAT concluded that since the Coordination Committee was not trading in any groups, or provisions of any services, much less by the persons engaged in identical or similar trade or provisions of services, no agreement as envisaged under the provisions of Section 3 of the said Act was entered into.

 

Questions before the Supreme Court:

 

The CCI appealed the decision of COMPAT before the Supreme Court. The Supreme Court identified that there were two issues for determination:

  1. What is the exact relevant market for the purposes of inquiry into the impugned activity of the Coordinated Committee? And

  2. Whether the action and conduct of the Coordination Committee is covered by the provisions of Section 3 of the Act?

It is pertinent to note that the Supreme Court did not adjudicate on the issue whether the activities of the Coordination Committee amounted to abuse of dominant position as the majority view of the CCI had previously accepted that the impugned activities of the Coordination Committee did not amount to abuse of dominant position.

 

 Observations of the Supreme Court

  1. What is the exact relevant market for the purposes of inquiry into the impugned activity of the Coordinated Committee?  

    • The Supreme Court observed that the objective of defining a relevant market in both its product and geographic dimension was to identify those actual competitors of the undertakings involved that were capable of constraining those undertakings behaviour and of preventing them from behaving independently of effective competitive pressure.

    • The concept of relevant market implies that there could be an effective competition between the products which form part of it and this presupposes that there is a sufficient degree of interchangeability between all the products forming part of the same market insofar as specific use of such product is concerned and the CCI must look at evidence that is available and relevant to the case at hand while determining the relevant market.

    • The Supreme Court held that COMPAT had taken a myopic view of the relevant market and referring to letters written by the Coordination Committee which themselves stated that the proposed broadcast of the dubbed serial would adversely affect the 'TV and Film Industry of West Bengal', held that this would be the relevant market in which an assessment would need to be made on the question of whether competition was affected.

  1. Whether the action and conduct of the Coordination Committee is covered by the provisions of Section 3 of the Act?

    • The Supreme Court observed that the term 'enterprise' was wide in nature and may refer to any entity, regardless of its legal status or the way in which it was financed and, therefore, it may include natural as well as legal persons.

    • The agreement referred to in Section 3 of the Act has to relate to an economic activity which is generally understood to mean offering products in a market to consumers. For example, an individual acting as a final consumer would not be considered as an enterprise or a person envisaged, as he is not carrying on an economic activity.

    • The Supreme Court, therefore, found that the Coordination Committee was an 'enterprise' as it was engaging in an economic activity. Further, the Supreme Court held that the prohibition of exhibition of dubbed serial prevented competing parties pursuing their commercial activities and also hindered competition in the market. Therefore, the Supreme Court affirmed the CCI's order and set aside the COMPAT's judgment and observed that he activities of the Coordination Committee amounted to violation of Section3(3)(b) of the said Act.

Conclusion

 

This is one of the first decisions of the Supreme Court with regards to the Competition Act, 2002 and the observations made in the present case the observations made by are likely to have wide reaching implications on how investigations and assessments will be conducted by the CCI and DG in case complaints are made pertaining to violations of the provisions of Section 3 of the said Act.

 

[1] Civil Appeal No. 6691 of 2014

 

 

 

 

 

 

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IBBI Notifies the Insolvency and Bankruptcy Board of India (Voluntary Liquidation) Regulations, 2017

 

 

The Insolvency and Bankruptcy Board of India (‘IBBI’) was established under Insolvency and Bankruptcy Code, 2016 (‘Code’). On 31st March, 2017, IBBI in exercise of its powers under the said code notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation) Regulations, 2017 (‘Regulation’). It came into force with effect from 1st April, 2017. The Regulation provides for a complete framework for the voluntary liquidation of any corporate person.

 

Corporate person is defined under Section 3(7) of the Code as any company incorporated under the Companies Act and includes limited liability partnership or any other person incorporated with limited liability but does not include any financial service provider. However, the explanation attached to Regulation 3(3) of the Voluntary Liquidation Regulation specifies that the Regulation 3(1) to 3(3) applies to corporate person other than a ‘company’. The procedure for voluntary liquidation of a company has been provided under Section 59 of the Code.

 

The regulations inter alia, specify the manner and content of public announcement, receipt and verification of claims of stakeholders, reports and registers to be maintained, preserved and submitted by the liquidator, realisation of assets and distribution of proceeds to stakeholders, distribution of residual assets, and finally dissolution of corporate person.

 

Procedure for Voluntary liquidation by a Corporate Person-

  • Majority of designated partners or the persons exercising power in the corporate person give a statement of declaration in form of affidavit accompanied by audited financial statements and other such documents to the effect that-

  •  -The corporate person in question is under no debt or he will be able to pay all its debts in full from the proceeds of its assets and

    - The initiation of liquidation process is not to defraud others.

  • If the liquidator is of the opinion that the voluntary liquidation is being done to defraud others or the corporate person will not be able to pay its debt in full from the proceeds of the assets, then he shall make an application to the Adjudicating Authority to suspend the process[1].

  • Within 4 weeks of declaration of such statement, the corporate person may pass

     

  • - A resolution by special majority is to be passed validating the corporate person to be liquidated voluntarily and appointment of insolvency professional to act as liquidator; or

    - A special majority resolution may also be passed mandating the liquidation of corporate person on the happening of any event or on expiry of certain duration and appointment of insolvency professional to act as liquidator[2].

  • Further, creditors representing 2/3rd of the debts of the corporate person must approve such resolution within 7 days of its passing.

  • The process shall be deemed to commence from the date of passing of resolution. Upon the commencement of the voluntary liquidation process the corporate person shall cease to conduct any business but it will still bear all corporate powers until its dissolution is complete.

  • The liquidator shall make a public announcement according to Performa specified in Form A Schedule I to call upon the claims from the stakeholders within 5 days of his appointment. The last date for making such claim shall be within 30 days from the commencement date[3].

  • Such public announcement shall be published in the Official Gazette, in English and in a regional newspaper having wide circulation, on the website of the corporate person, if any and on any such other website provided by IBBI for this purpose.

Eligibility of Insolvency Professional to be appointed as a ‘liquidator’ under Voluntary Liquidation Regulation-

  • According to Section 3(19) of the Code ‘insolvency professional’ means a person enrolled with insolvency professional agency and registered under IBBI as an insolvency professional.

  • He must be independent of the corporate person. He would be considered as being independent when-

    - He is eligible to be appointed as an independent director under Section 149 of the Companies Act 2013.

    - He is not a related party of the corporate person.

    -He has not been an employee/proprietor or partner of the firm of auditors, Company secretaries, etc. of the corporate person or of a legal consultancy firm having transactions with the corporate person contributing to 10% or more than gross turnover of the firm in the last three financial years.[4]

Duties of Liquidator-

 

The liquidator is obliged to make continued disclosures if he gains any interests in the corporate person. The liquidator is also obliged to preserve a physical or an electronic copy of the reports, registers and books of account for at least eight years after the dissolution of the corporate person, either with himself or with an Information Utility (IU).

 

Any public company can act as an Information Utility provided it is registered under the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017. Such IU stores financial information that help to establish defaults as well as verify claims expeditiously, thereby facilitating completion of transactions under the Code in a time bound manner.

 

Procedure for making claims-

  • A person, who claims to be a stakeholder, must prove his claim for debt or dues to him, including interest, if any, as on the liquidation commencement date. Debt payable at future time can also be claimed, however if debt has not fallen due as on the date of distribution of the claims, the claimant is entitled to reduced claim.

  • The stakeholders shall include financial creditors, operational creditors, workmen & employees along with other stakeholders.

  • Financial creditor means a person against whom any financial debt is owed such as interest upon money borrowings, debentures, etc. while an operational creditor means a person against whom an operational debt is owed with respect to goods and services.

  • Operational creditors, financial creditors, workmen & employees and other stakeholders can make claim in Form B, C, D and F of Schedule I respectively[5].

  • The liquidator has the power to call for any documents and information from the claimant as he may deem necessary to substantiate the claim.

  • The claimant shall bear the costs of proving his claim, but the cost of verification and determination of claim shall form part of liquidation costs if such claim is proved.

Verification of Claims-

  • The liquidator shall verify the claims within 30 days from the last date for receipt of claims. He may either admit or reject the claim in whole or in part[6]. The liquidator shall then prepare the list of stakeholders within 45 days from the last date for receipt of claims[7].

  • In case a claim is rejected the creditor has the right to appeal to the Adjudicating Authority (‘National Company Law Tribunal-NCLT’) against the decision of the liquidator with respect to such rejection.

Completion of Liquidation proceedings-

  • The liquidator shall endeavor to wind up the affairs of the corporate person within one year from the voluntary liquidation commencement date[8].

  • When the affairs of the corporate person are fully wound up then the liquidator shall present a final report to the contributories, the Registrar of Companies, the IBBI and the NCLT showing relevant details such as audited financial reports showing receipts and payments with respect to liquidation, statement of no pending litigation, sale statement in respect of all assets, etc[9]. The corporate person shall then be dissolved accordingly by order of the NCLT.

  • A copy of the order shall be sent to the authority with which the entity is registered within 14 days of the date of such order.

  • Before the order of liquidation is passed by the Adjudicating Authority, the liquidator shall apply by application for transfer of unclaimed proceeds or undistributed assets or any balance payable to the stakeholders into the Companies Liquidation Account (Public Account of India). Any person claiming under Companies Liquidation Account may apply to the IBBI for the same. If the monies remains unclaimed thereafter for a period of fifteen years, shall be transferred to the general revenue account of the Central Government.

[1] Regulation 40

[2]Regulation 3

[3] Regulation 14

[4] Regulation 6

[5] Regulation 16-19

[6] Regulation 29

[7] Regulation 30

[8] Regulation 37

[9] Regulation 38

 

 

 

 

 

 

 

 

 

 

 

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CCI- Chemists and Druggists Associations Warned to Refrain From Indulging Into Anti-Competitive Practices

 


In 2009, the Belgaum District Chemists and Druggists Association (‘hereinafter referred as BCDA’) filed a complaint alleging that Abbott India Ltd. and Geno Pharmaceuticals had stopped the supply of essential medicines. The sole ground for refusal by the Pharma Companies was that the members of the BCDA had to first obtain ‘No objection certificate’ from the All India organization of Chemists and Druggists (‘hereinafter referred as AIOCD’) or the Karnataka Chemists and Druggists Association (‘hereinafter referred as KCDA’) for being appointed as a stockist.

 

On 2nd March, 2017, the Competition Commission of India (hereinafter referred to as ‘CCI’) directed the KCDA to ‘Cease and Desist’ from indulging into the anti-competitive practice of mandating ‘No Objection Certificate’ as a prerequisite for appointment of stockist and also refrain from fixing ‘trade margins’ for retailers and wholesalers.

 

Legal Scaffold-

 

According to Section 3 of the Competition Act, 2002 (hereinafter referred as the ‘Act’) no person shall enter into any agreement which shall have appreciable adverse effect upon competition in India and any such agreement entered into shall be held void.

 

Further, Section 3 (3) of the Act puts an embargo upon the practice of cartelisation that directly or indirectly affects purchase or sale prices, or limits demand, supply, production, development, etc. of any party to the agreement or any third party per se.

 

The CCI is empowered under Section 27 of the Act to issue any order or direction which it deems fit in cases of contravention of the provisions of Section 3. It is pertinent to note that for the purpose of determining whether an agreement is ‘anti-competitive’ the commission takes into account certain factors such as - creation of barriers to new entrants in the market; driving existing competitors out of the market; foreclosure of competition by hindering entry into the market; accrual of benefits to consumers; improvements in production or distribution of goods or provision of services; and so on.

 

Brief facts of the case-

  • The BCDA was angered by the mandatory imposition of liability upon the stockists to have No Objection Certificates (‘hereinafter referred as NOC’) from AIOCD or KCDA due to which the supply of essential medicines was getting hampered. As a result in 2009, BCDA filed a complaint with the Director General of Investigation and Registration, Monopolies and Restrictive Trade Practices Commission (MRTP commission), which was later transferred to CCI.

  • Upon investigation by the Director General it was found that there was an understanding between AIOCD, the Indian Drug Manufactures Association and the Organisation of Pharmaceuticals Producers of India through a memorandum which laid out three things-

    1. The appointment of stockist was controlled by state association under the umbrella control of AIOCD;

    • Trade margins of stockists and retailers was fixed; and

    • There was a system of paid ‘Product Information Service’ which was provided to the pharmaceutical companies for the purpose of the advertisement of any new drug before introducing the product in the territory.

  • These practices were contended to have caused ‘appreciable adverse effect’ upon competition in the pharmaceutical industry in India as the practices limited and controlled the supply and prices of pharma products in the market.

  • AIOCD argued that the provision of mandatory NOC for the appointment of stockist is to protect consumers from spurious and fake drugs. Moreover, it justified the NOC norm by stating that it acted as a benchmark to ensure adequate quantity and quality of drugs in the market.

  • Furthermore, AIOCD replied that the fixation of trade margins ensure a level playing field, and to substantiate the statement it relied on the report of Dr. Kelkar Committee (1987) which recommended the fixation of trade margin with respect to wholesalers.

Findings-

  1. The CCI opined that the respondent to the present case have acted in contravention of Section 3(3)(a) and (b) of the 2002 Act by mandating NOC as a prerequisite for appointment of any new stockist of pharmaceutical products and fixing of trade margins for non-scheduled drugs.

  2. The contention of the respondents that the NOC practice was to keep a check on spurious drugs from unauthorized sources, was refused on the ground that such practice restricted the entry of new stockists and thereby limits the supply of medicines in the market. This position related to NOC was also confirmed by the Hon’ble Competition Appellate Tribunal in the case of All Kerala Chemists and Druggists vs. Competition Commission of India and Ors . The Hon’ble Tribunal in the aforesaid case clarified that the requirement of NOC before the appointment of any stockist, not only limited the supply of drugs and medicines but also acted as an entry barrier, and therefore held the All Kerala Chemists and Druggists Association liable for default.

  3. The CCI concluded that the fixing of trade margins restricted price competition amongst wholesalers and amongst retailers in the market which in turn had adverse effect upon the consumers.

  4. With regard to the Product Information service charge levied upon the pharmaceutical companies for the introduction of a new drug in the market, there was no evidence to show that such a charge was mandatory. However, the CCI observed that imposition of a mandatory Product Information service charge would definitely be a restrictive trade practice.

Comments-

 

The Chemists and Druggists Associations have been working towards the regulation of pharmaceutical industry in India since decades. The respondents had relied on the excerpts from the report of Dr. Kelkar Committee (1987), which aimed to look into trade margin structure, that recommended that trade margins for wholesalers should be fixed after mutual discussion between trade and industry. However, the recommendations of the Dr. Kelkar Committee do not appear to be viable in view of the Competition Act coming into force. In a previous case , the AIOCD and All Kerala Chemists and Druggists were held liable by the Commission for acting in contravention of Section 3 of the Act on the similar lines. In the case, the Commission imposed penalty on both the parties under Section 27(b) of the Act and also directed them to file an undertaking that the practices carried on by it such as the grant of NOC for appointment of stockist, fixation of trade margins, collection of Product Information service charges and boycott of products of pharmaceutical companies have been discontinued.

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