Background of the case:

Pharma Bureau is an association and representative body of more than 20 multinational pharmaceutical companies. The Commission took suo motu notice and conducted an inquiry into allegations published in national dailies alleging that a number of multinational pharmaceutical companies had increased prices of a range of medicines up to 300% at the behest of the Pharma Bureau.

On the enquiry’s recommendations, a Show Cause Notice was issued to the Pharma Bureau. The enquiry concluded that Pharma Bureau and its member undertakings appeared to have been involved in sharing of strategic data and commercially sensitive information, providing continuous updates and comprehensive overview of prices, costs, profits, demands and the industry as a whole, which had been used to deliberate upon and prepare recommendations, suggestions, directions and agreements on increase in prices of various pharmaceutical products by multinational pharmaceutical companies through the forum of Pharma Bureau in violation of Section 4 of the Competition Act.

The enquiry report further found that Pharma Bureau and its member undertakings appeared to have been engaged in demanding across the board increases in prices and operating in a collusive and cooperative manner to influence the pricing policies and have also engaged in discussions on prices from time to time.

Issues:

i) Whether Pharma Bureau has violated Section.4 of the Act?

Foreign Judgment:

i) Eastern Railroad Presidents Conference et al. v. Noerr Motor Freight Inc., et al., [365 U.S. 127 (1961)]

ii) Dole Food Company Inc. v. European Commission dated 14.03.2013

iii) Dole Food Company Inc. v. European Commission dated 19.03.2015

iv) Shailesh Kumar v. M/s Tata Chemicals Limited and others dated 16.04.2013

v) T-Mobile Netherlands BV, KPN Mobile NV, Orange Nederland NV and Vodafone Libertel NV v Raad van bestuur van de Nederlandse Mededingingsautoriteit, [2009] ECR 0000

vi) Valspar Corporation and Valspar Sourcing, Inc. v. E.I. Du Pont De Nemours and Company, (873 F.3d 185)

vii) Re: Baby Food Antitrust Litigation, (166 F.3d 112)

viii) Imperial Chemical Industries Ltd v. Commission of the European Communities Case 48/69, Reported as ECR 1972 Page 00619

Order:

The Commission considered the Dole Judgments (of the Court of Justice of the European Union) while ascertaining whether any commercially sensitive information had been exchanged between the member of Pharma Bureau.

According to the Dole Judgements, the exchange of information between competitors is liable to be incompatible with competition law if it reduces the degree of uncertainty about the operation of the market in question, with the result that competition between undertakings is restricted, and that the exchange of information that is capable of removing uncertainty between participants as regards the timing, extent and details of the changes in conduct to be adopted by undertakings concerned must be regarded as pursuing an anticompetitive object.

Based on the view of evidence collected and the submissions of the Pharma Bureau, the Commission held that there was no commercially sensitive or strategic information that was shared using the platform of Pharma Bureau.

The Commission further held that the price increase was a result of conscious economic factors prevailing and not as a planned strategy involving exchange of trade secrets. Due to a lack of substantial evidence indicating collusion, the Commission was constrained to conclude that Pharma Bureau had not violated Section 4 of the Act.

The Order noted the importance of undertakings and associations remaining vigilant as to the threat of potential collusion and other anti-competitive practices.