CCI Imposes Rs 64 Cr Fine on GlaxoSmithKline, Sanofi

New Delhi: The Competition Commission of India (CCI) has slapped a penalty of Rs 64 crore on drug makers GlaxoSmithKline Pharmaceuticals and Sanofi for collusive bidding in supply of a meningitis vaccine to the government for Haj pilgrims.

The matter relates to supply of polysaccharide Quadrivalent Meningococcal Meningitis (QMMV) vaccines and the complaint was filed by Bio-Med Pvt Ltd, which also makes this drug. The complaint was also filed against the Health and Family Welfare Ministry.

Every year, the government invites tenders for purchase of meningitis vaccine that is required to be administered upon Haj pilgrims.

Apart from imposing penalties, the competition watchdog has directed GlaxoSmithKline and Sanofi to "cease and desist" from anti-competitive practices.

A fine of Rs 60.45 crore has been slapped on GlaxoSmithKline and Rs 3.04 crore on Sanofi, CCI said.

The penalties amount to three per cent of their three-year average turnover. In this case, turnovers of the two companies for the financial years 2008, 2009 and 2010 have been taken into account.

Noting that existence of anti-competitive agreement between GlaxoSmithKline and Sanofi is "clearly made out", the commission said both parties failed to establish independent business decision-making.

"Additionally, the peculiar market conditions, including, the presence of only three suppliers of the QMMV vaccines together with the tendering process initiated by the opposite party 1 make the market conducive to collusion," said the order dated June 4 and made public on Friday.

This is because the product is homogeneous, there is a fixed demand in the market and suppliers are repetitive, it added.

"They have not produced any evidence either before the DG or before the Commission to substantiate their claims. In the absence of any evidence, the Commission notes that the assertions made by opposite party 2 (GlaxoSmithKline) and opposite party 2 (Sanofi) are merely bald statements and also appear to be an afterthought to justify their illegal, collusive conduct," the order said.

CCI's investigation arm - Director General (DG) - had submitted its detailed probe report in November 2014.

It was also alleged that the government indulged in anti-competitive practice by changing the criteria for bidding to supply the particular vaccine.

The DG found that the changes in the conditions stipulated in the tenders issued by the government were brought about pursuant to the decisions taken at the ministerial level, the order said.

When contacted, a Sanofi spokesperson said the company is in the process of evaluating the CCI order.

"We strongly disagree with the CCI's findings in this case and are in consultation with our legal advisors to file an appeal against the order," it said in a statement.

Sanofi Pasteur is a global organisation which adheres to and abides by all the laws and regulations that apply in each country in which it operates (including those relating to fair competition), it added.

"We have extended our full support to the investigation process of the CCI in this case. Since this is an on-going matter, we cannot comment any further," the statement said.

However, queries sent to GlaxoSmithKline did not elicit any immediate response.