CCI Finds Anti-Competitive Practices in Pharma Distribution Network, Examines Long-Running Case Against Chemists’ Bodies and Drug Companies

June 29, 2026 : The Competition Commission of India (CCI) has delivered a significant order in one of the country’s longest-running competition law disputes involving pharmaceutical trade associations, chemists’ organisations and several leading drug manufacturers. The case, which originated in 2012, examined allegations that trade bodies and pharmaceutical companies adopted practices that restricted competition in the appointment of stockists, launch of new medicines and distribution of pharmaceutical products across India.

The proceedings began after a complaint was filed by Kailash Gupta, President of the All India Chemists and Distributors Federation (AICDF), under Section 19(1)(a) of the Competition Act, 2002. The complaint named 34 opposite parties, including the All India Organisation of Chemists and Druggists (AIOCD), pharmaceutical industry associations, regional chemists’ bodies and several leading pharmaceutical companies. The informant alleged violations of Sections 3 and 4 of the Competition Act by claiming that the respondents entered into anti-competitive arrangements affecting the pharmaceutical distribution market.

According to the complaint, the AIOCD and its affiliated associations allegedly compelled pharmaceutical manufacturers to obtain Letters of Cooperation (LOCs) or No Objection Certificates (NOCs) before appointing stockists. It was further alleged that companies were required to obtain Product Information Service (PIS) approvals before introducing new medicines and were compelled to pay PIS charges. The complaint also claimed that manufacturers risked supply disruptions and group boycotts if they failed to comply with these requirements. These practices were alleged to have restricted free trade and violated the Competition Act by limiting market access and preventing fair competition.

Finding a prima facie case in February 2012, the CCI directed its Director General (DG) to investigate the allegations under Section 26(1) of the Competition Act. However, the proceedings remained stalled for nearly a decade after the Karnataka Chemist and Druggist Association challenged the investigation before the Karnataka High Court. The stay continued until November 2022, when the High Court permitted the Commission and the DG to resume the investigation. The DG eventually submitted the investigation report in April 2024, after recording statements, collecting documentary evidence and examining the conduct of the parties.

The DG concluded that several chemists’ associations had made NOCs and LOCs a mandatory condition for appointing stockists, thereby limiting and controlling the supply of pharmaceutical products in violation of Section 3(3)(b) of the Competition Act. The investigation also found that some associations required mandatory PIS approval before new medicines could be launched, effectively restricting market access for pharmaceutical companies. According to the DG, these practices adversely affected competition by allowing trade associations to exercise influence over commercial decisions that should have remained with manufacturers.

Another important finding concerned Memorandums of Understanding (MoUs) executed between the AIOCD and pharmaceutical manufacturers’ associations. The DG concluded that these agreements required manufacturers to obtain approval from state and district chemists’ associations before appointing stockists, prescribed trade margins for wholesalers and retailers in respect of non-scheduled drugs, and imposed restrictions on direct supplies. The investigation held that these arrangements amounted to anti-competitive agreements prohibited under Section 3 of the Competition Act.

The investigation further found evidence against several pharmaceutical companies for allegedly implementing these arrangements by insisting on NOCs before appointing stockists, obtaining PIS approvals before launching products, determining trade margins in consultation with chemists’ associations and discontinuing supplies at the instance of such associations. At the same time, the DG found insufficient evidence to establish allegations of cartelisation or coercing manufacturers to provide customer data against one of the parties.

During the proceedings, the respondents strongly denied the allegations. The AIOCD argued that communications relating to NOCs and PIS were merely advisory and never mandatory. It submitted that the MoUs had already been terminated in 2011 and that, following earlier CCI decisions, it had undertaken compliance measures by issuing communications clarifying that NOCs were not compulsory, PIS charges were voluntary and pharmaceutical companies were free to appoint stockists without prior approval. The association also argued that there was no continuing anti-competitive conduct after those compliance measures were adopted.

The pharmaceutical manufacturers’ associations and several drug companies similarly argued that the Commission had already examined substantially similar issues in earlier proceedings and that no appreciable adverse effect on competition had been demonstrated. They also contended that many of the alleged practices related only to the period before 2011, when the disputed MoUs had already been discontinued. Some companies maintained that they were themselves victims of pressure from trade associations rather than participants in any anti-competitive arrangement.

The Commission noted the extensive procedural history of the matter, including multiple rounds of hearings held in April and May 2026 after circulation of the DG’s investigation report. It also recorded that while most parties participated in the proceedings and filed their submissions, the original informant neither appeared before the Commission nor submitted objections to the investigation report before the final hearing.

The case highlights the continuing scrutiny of practices within India’s pharmaceutical distribution sector under competition law. The dispute centres on whether trade associations can influence stockist appointments, product launches or commercial terms between manufacturers and distributors. The Competition Act seeks to prevent agreements that appreciably restrict competition, particularly those involving market allocation, supply restrictions or coordinated conduct that limits market access.

The Commission’s examination of NOC requirements, PIS approvals, trade margins and MoU-based arrangements is likely to have wider implications for pharmaceutical manufacturers, distributors, wholesalers and trade associations across India. The order reinforces the principle that commercial decisions such as appointment of stockists and product launches should remain market-driven and should not be controlled through collective arrangements that have the effect of restricting competition.