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Competition Commission of India:

GS Paper 2:

Topics Covered: Statutory organizations.

 

Competition Commission of India

Context:

Fair trade regulator CCI will identify measures to enhance competition in the country’s pharmaceutical sector for ensuring affordability of drugs after analysing findings of its market study.

 

Need for:

The study has been initiated after observing issues such as lack of “effective consumer choice”.

  • Currently, it appears that, when it comes to medicines, competition is primarily on the basis of brands and not prices. The study will identify measures to increase competition for ensuring affordability of drugs.

 

Indian Pharma Industry:

  • India enjoys an important position in the global pharmaceuticals sector, as India is the largest provider of generic drugs globally.
  • The Indian pharmaceutical industry meets over 50% of global demand for various vaccines, 40% of generic demand in the U.S. and 25% of all medicine in the U.K.
  • Presently, over 80% of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms.
  • The Indian pharmaceuticals market is the world’s third-largest in terms of volume and thirteenth-largest in terms of value. It has established itself as a global manufacturing and research hub.
  • India has one of the lowest manufacturing costs in the world – lower than that of the U.S. and almost half of the cost in Europe.

 

Challenges that need to be addressed:

Dependence: Indian pharmaceutical industry is highly dependent on China for pharmaceutical raw materials. These raw materials are called the Active Pharmaceutical Ingredients (API), also known as bulk drugs. Indian drug-makers import around 70% of their total bulk drug requirements from China.

Fake versions of high value and/or high volume brands of the pharmaceutical companies in India are adversely affecting their business performance posing another major challenge. It also creates a negative impact to the end consumer and a huge health hazard.

 

So, what India is doing?

Call for greater self-reliance: In June, the department of pharmaceuticals announced a scheme for the promotion of three bulk drug parks in the country.

  • A bulk drug park will have a designated contiguous area of land with common infrastructure facilities for the exclusive manufacture of APIs, DIs or KSMs, and also a common waste management system.
  • These parks are expected to bring down manufacturing costs of bulk drugs in the country and increase competitiveness in the domestic bulk drug industry.

 

About the Competition Commission Of India:

The Competition Commission of India (CCI) was established under the Competition Act, 2002 for the administration, implementation and enforcement of the Act, and was duly constituted in March 2009. Chairman and members are appointed by the central government.

 

Functions of the commission:

  1. It is the duty of the Commission to eliminate practices having adverse effects on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India.
  2. The Commission is also required to give opinion on competition issues on a reference received from a statutory authority established under any law and to undertake competition advocacy, create public awareness and impart training on competition issues.

 

The Competition Act:

The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) was repealed and replaced by the Competition Act, 2002, on the recommendations of the Raghavan committee.

  • The Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007, prohibits anti-competitive agreements, abuse of dominant position by enterprises and regulates combinations (acquisition, acquiring of control and M&A), which causes or likely to cause an appreciable adverse effect on competition within India.

 

Insta Curious:

Do you know about the International Competition Network?

How might cartels be worse than monopolies? Read this.

 

InstaLinks:

Prelims Link:

  1. About CCI.
  2. Highlights of the Competition Act and amendments to it.
  3. About NCLT and its jurisdiction.
  4. What is Cartelisation?

Mains Link:

Discuss the roles and functions of CCI.

Sources: the Hindu.