The Competition Commission of India (CCI) has concluded its investigation into alleged abuse of market dominance by 12 prominent super-speciality hospitals in the Delhi-NCR region, deciding to dismiss the charges. The inquiry centered on accusations that these hospitals charged exorbitant fees for room rent, medical tests, medical devices, consumables, and medicines.
Presided over by Chairperson Ravneet Kaur, alongside Members Anil Agrawal, Sweta Kakkad, and Deepak Anurag, the CCI found no violation of Section 4 of the Competition Act, 2002, in the operations of the hospitals involved. The original complaint was lodged in 2015 by Vivek Sharma, targeting Becton Dickinson India and Max Super Specialty Hospital in Patparganj. Sharma alleged that Becton Dickinson, in collusion with Max Patparganj, applied inflated maximum retail prices (MRP) on disposable syringes sold at the hospital’s pharmacy compared to prices in the open market.
The CCI initially ordered an investigation, which the Director General (DG) conducted. The DG’s findings showed no supporting evidence of collusion between Becton Dickinson and Max Patparganj. Consequently, the CCI expanded the investigation to examine potential ‘aftermarket abuse’ by super-speciality hospitals more broadly.
The DG’s subsequent examination of 12 hospitals concluded that they held dominant positions in their respective healthcare markets, identifying breaches of Section 4 from 2015 to 2018 on multiple fronts including room rent, medical tests, medical devices, consumables, and medicines. The hospitals under scrutiny included:
- Max Super Specialty Hospital, Patparganj
- Max Smart Super Specialty Hospital, Saket
- Max Super Specialty Hospital, Shalimar Bagh
- BLK Max Super Specialty Hospital
- Max Multi Specialty Centre, Panchsheel Park
- Max Multi Specialty Centre, Pitampura
- Fortis Flt Lt Rajan Dhall Hospital, Vasant Kunj
- Fortis Escorts Heart Institute and Research Centre
- Sir Ganga Ram Hospital
- Indraprastha Apollo Hospital
- Batra Hospital
- St Stephen’s Hospital
Despite these findings, the CCI rejected the DG’s conclusions. The Commission asserted that each hospital should not be viewed as a separate market; instead, it evaluated the broader market for healthcare services provided by super-speciality hospitals in Delhi-NCR. The CCI also clarified that patients primarily seek hospitals for treatment, not for purchasing individual goods, such as medicines or medical devices.
Regarding excessive pricing, the CCI applied a two-stage test: determining firstly whether the price was excessively high relative to cost, and secondly whether it was unfair either in itself or compared to other products. The Commission determined that this test was not met.
In addressing room rent, the Commission differentiated hospital rooms from hotel accommodations, emphasizing the provision of clinical necessities such as patient beds, trained medical staff, and emergency systems. Furthermore, it cautioned against simplistic comparisons between hospital labs and standalone diagnostic centers, citing the continuous operation and rapid service delivery of hospital labs.
On the issue of medicines and consumables, the CCI noted the insufficiency of comparing procurement prices to selling prices, as the former doesn’t account for various overheads. It also stated that selling items at MRP is not inherently illegal.
Ultimately, the CCI closed the proceedings and dismissed all pending applications related to the case. Legal representation for Max Hospitals included Senior Advocate Jayant Mehta and a team from SARVADA Legal, while Fortis hospitals were represented by Senior Advocate Rajshekhar Rao and Phoenix Legal. Indraprastha Apollo Hospital’s legal counsel comprised Senior Advocate Sajan Poovayya and Shardul Amarchand Mangaldas, among others.
