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What is the story about?
The Competition Commission has closed a more than ten-year-old case against 12 hospitals in the national capital after concluding there was no evidence of them abusing their position of dominance.
The decision came after examining the investigation as well as the supplementary investigation reports submitted by its Director General (DG), wherein various aspects, including the pricing of consumables, medicines and medical devices, were considered.
It is not so often that the Competition Commission of India (CCI) decides to close a matter despite investigations by the DG concluding that there were violations of competition norms. Cases where there is prima facie evidence of anti-competitive practices are referred to the DG for detailed probes.
The present case of alleged abuse of dominance against 12 hospitals, including Max Super Specialty Hospital, Patparganj; Max Smart Super Specialty Hospital, Saket; and Max Super Specialty Hospital, Shalimar Bagh, has been closed, according to orders passed by the CCI on Thursday.
Other hospitals are BLK Max Super Specialty Hospital, New Delhi; Max Multi Specialty Centre, Panchsheel Park; Max Multi Specialty Centre, Pitampura; Fortis Flt. Lt. Rajan Dhall Hospital, Vasant Kunj; Fortis Escorts Institute and Research Centre Ltd, New Delhi; Sir Ganga Ram Hospital, New Delhi; Indraprastha Medical Corporation Ltd. (Indraprastha Apollo Hospital); St. Stephen’s Hospital Delhi; and Batra Hospital & Medical Research Centre of Ch. Aishi Ram Batra Public Charitable Trust, New Delhi.
After receiving a complaint, CCI ordered a probe by its DG in November 2015 and later a supplementary investigation in August 2018. Later, DG submitted 12 revised unredacted supplementary investigation reports in September 2024.
In 12 separate but similarly-worded orders, the watchdog said that neither of the two tests laid down in the United Brands (Supra) stand established on any count, from the evidence gathered by the DG as part of its supplementary investigation.
DG is the investigation arm of the regulator.
About the DG reports, the regulator said the finding of contravention was solely based on the observation that the hospitals charged ‘higher prices’ and had ‘significant profit margins’, without any application of the legal standard governing excessive pricing as established by the Commission and other jurisdictions.
Under Section 4 of the Competition Act, it is not simply that an excessive price is unlawful, but the price which is unfair.
Also Read | How costlier hospital treatments are reshaping health insurance claims in India
“This means that unfairness is something beyond excessiveness, and that both have to be proven in a case of abusively high prices. In Case 27/76 United Brands v. Commission of the European Communities (‘United Brands’), a two-stage test has been set out for ascertaining whether the price charged by a dominant enterprise for a product was abusive,” the regulator said.
The first stage is the Excessive Limb, and the second stage is the Unfair Limb.
“As per the test, the issue to be determined is whether the price is ‘unfair’ in itself or when compared to competing products. However, the DG failed to apply the legal standards as laid down in United Brands (Supra) and incorrectly considered excessive pricing as unfair,” CCI said while closing the case.
The decision came after examining the investigation as well as the supplementary investigation reports submitted by its Director General (DG), wherein various aspects, including the pricing of consumables, medicines and medical devices, were considered.
It is not so often that the Competition Commission of India (CCI) decides to close a matter despite investigations by the DG concluding that there were violations of competition norms. Cases where there is prima facie evidence of anti-competitive practices are referred to the DG for detailed probes.
The present case of alleged abuse of dominance against 12 hospitals, including Max Super Specialty Hospital, Patparganj; Max Smart Super Specialty Hospital, Saket; and Max Super Specialty Hospital, Shalimar Bagh, has been closed, according to orders passed by the CCI on Thursday.
Other hospitals are BLK Max Super Specialty Hospital, New Delhi; Max Multi Specialty Centre, Panchsheel Park; Max Multi Specialty Centre, Pitampura; Fortis Flt. Lt. Rajan Dhall Hospital, Vasant Kunj; Fortis Escorts Institute and Research Centre Ltd, New Delhi; Sir Ganga Ram Hospital, New Delhi; Indraprastha Medical Corporation Ltd. (Indraprastha Apollo Hospital); St. Stephen’s Hospital Delhi; and Batra Hospital & Medical Research Centre of Ch. Aishi Ram Batra Public Charitable Trust, New Delhi.
After receiving a complaint, CCI ordered a probe by its DG in November 2015 and later a supplementary investigation in August 2018. Later, DG submitted 12 revised unredacted supplementary investigation reports in September 2024.
In 12 separate but similarly-worded orders, the watchdog said that neither of the two tests laid down in the United Brands (Supra) stand established on any count, from the evidence gathered by the DG as part of its supplementary investigation.
DG is the investigation arm of the regulator.
About the DG reports, the regulator said the finding of contravention was solely based on the observation that the hospitals charged ‘higher prices’ and had ‘significant profit margins’, without any application of the legal standard governing excessive pricing as established by the Commission and other jurisdictions.
Under Section 4 of the Competition Act, it is not simply that an excessive price is unlawful, but the price which is unfair.
Also Read | How costlier hospital treatments are reshaping health insurance claims in India
“This means that unfairness is something beyond excessiveness, and that both have to be proven in a case of abusively high prices. In Case 27/76 United Brands v. Commission of the European Communities (‘United Brands’), a two-stage test has been set out for ascertaining whether the price charged by a dominant enterprise for a product was abusive,” the regulator said.
The first stage is the Excessive Limb, and the second stage is the Unfair Limb.
“As per the test, the issue to be determined is whether the price is ‘unfair’ in itself or when compared to competing products. However, the DG failed to apply the legal standards as laid down in United Brands (Supra) and incorrectly considered excessive pricing as unfair,” CCI said while closing the case.
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