The Indian subsidiaries of two European drugmakers, GlaxoSmithKline (GSK) and Sanofi, have been fined for allegedly plotting to charge higher prices in a government tender for a meningitis vaccine, The Economic Times reports.
Investigation and Allegations
The Competition Commission of India (CCI) is tasked with enforcing The Competition Act, which "prohibits anti-competitive agreements, abuse of dominant position by enterprises," and oversees corporate mergers and acquisitions.
According to The Economic Times, a third company, Bio-Med Pvt. Ltd., made a complaint to CCI in 2013 regarding GSK and Sanofi, prompting the competition regulator to conduct an investigation of the two companies.
The investigation supposedly turned up evidence that the companies acted in tandem to acquire government tenders for a meningitis vaccine that will be administered to members of India's sizable Muslim population planning to make the annual Hajj pilgrimage to Mecca in Saudi Arabia. The investigators claim GSK and Sanofi planned to quote "significantly higher prices" to increase profits on the vaccine.
In previous years, the mass influx of travelers to Saudi Arabia for Hajj has been associated with meningitis outbreaks. As a result, Saudi Arabia requires all travelers entering the country for Hajj to prove they have received a quadrivalent vaccine for meningitis "no more than three years and no less than 10 days before arrival."
Aftermath of the Investigation
Following the investigation, CCI issued an order demanding GlaxoSmithKline Pharmaceuticals Ltd and Sanofi Pasteur India Pvt. Ltd. pay fines of Rs 600,000,000 ($9,380,000 USD) and Rs 30,000,000 ($469,000 USD), respectively.
Earlier reports mistakenly identified Sanofi India Ltd., which is listed on the Bombay Stock Exchange (BSE), as the target of the investigation. Sanofi India has since issued a statement clarifying that the fine was levied against Sanofi Pasteur Pvt. Ltd., a wholly owned subsidiary of the French parent company.
Both GSK and Sanofi have denied any wrongdoing in the case. In a response to the BSE, GSK says it "did not engage in any anti-competitive activity [and] will consider all options following the review of the order passed by CCI and take further action (for preferring an appeal) as appropriate.
The Economic Times, GSK Statement