‘Fake’ certification for dialysis machines: Rs20m penalty imposed on pharma co

ISLAMABAD: The Competition Commission of Pakistan (SECP) has referred a sensitive case to the Federal Investigation Agency (FIA) and imposed a huge penalty of Rs 20,000,000 on a pharmaceutical company for using fake certification for kidney dialysis machines for patients in Pakistan.

According to an order issued by the CCP, the CCP has referred the case to the Federal Investigation Agency (FIA) for further investigation against the said pharmaceutical company.

In respect of penalty, the CCP is cognizant of the fact that the violation period continued from 2019, when the alleged fake certificates was obtained, till March 20, 2021 when the Respondent company stopped printing the alleged mark for its product.

This translates into a period of 22 months in total, which is definitely long enough duration for the Respondent to establish a deceptive impression in the relevant market. The sales figure of the Respondent for the said period amounts to approximately Rs.20,000,000/- (Rupees twenty million), which is a monetary gain reaped by the respondent at the behest of actions which are harmful to the consumers, as well as, for the competitors in the relevant market.

Besides, the actual cost of the respondent’s competitors, who spent considerable amount of money in order to get valid certifications, is also a relevant factor. Hence, these acts of the Respondent were in violation of Section 10(1) read with Section I0 (2) (a) and 10 (2) (b) of the Act. 46.

“Moreover, the CCP Bench is also cognizant of the factor that the subject product is used for dialysis of kidney patients. Since these patients are on periodic kidney dialysis and are among one of the most vulnerable segment of the society, therefore, the Bench is of the view that the matter of any deceptive certification is highly sensitive for such consumers and the gravity of violation becomes even more severe,” CCP declared.

Accordingly, the Bench has examined the referred violations of the Competition Act committed by the Respondent and observed that the deceptive marketing claims were made regarding products, which are used for kidney patients, and being the competition regulators it is imperative to take strict action with respect to any such claims which do not exist in actual and can mislead procuring organisations rendering kidney dialysis services to the patients. Therefore, considering the seriousness of the violation, duration of the violation, the actual cost borne by the competitors in acquiring these actual certifications, unfair competition caused in the relevant market and in order to deter the respondent or any other undertakings from engaging in such like practices in future.

Though the matter of violation warrants a maximum penalty; however, keeping in view the fact that the respondent is ready to reproach, has stopped the usage of fake certificates since March 2021 and ready to comply with the Act, we are inclined to take these corrective measures into consideration also. Accordingly, given due consideration to all the aforementioned facts and circumstances, the CCP Bench hereby imposes: (a) a penalty in the amount of Rs.10,000,000/- (Rupees ten million only) for violation of Section 10(2(a) read with Section 100) of the Act; and (b) a penalty in the amount of Rs.10,000,000/- (Rupees ten million only) for violation of Section 10(2)(b) read with Section 100) of the Act. 49. The Respondent is hereby liable to deposit a cumulative penalty of Rs.20,000,000/- (Rupees twenty million only) in the designated official account for the purpose.

The company is also directed to cease and desist in future from taking part in any misleading marketing practice concerning its Product and restrain from making and/or marketing claims in a manner which may give the consumer an impression of false certification or conformity to any standards, if the facts are contrary, CCP ordered.

The CCP Bench has also duly considered the matter alleged by the complainant during the hearings with regard to import and utilization of food grade sodium bicarbonate instead of pharma grade in the manufacturing of bicarbonate haemodialysis concentrate by M/s. 3N-LifeMed Pharmaceuticals. This aspect remained non-rebutted by the respondent during the proceedings. Therefore, the Bench directs that a copy of this Order be forwarded to DRAP and FIA to investigate into the non-rebutted allegations on the Respondent and for necessary actions end, as deemed appropriate, under relevant legal/ regulatory framework as applicable, CCP order added.

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