CCI Concludes Investigation into 12 Delhi Super-Speciality Hospitals; Finds No Contravention of Section 4 on Pricing Practices

The Competition Commission of India (CCI) has ended its investigation into alleged dominance abuse by 12 super-speciality hospitals in Delhi-NCR.  

Initially sparked by claims of excessive pricing on room rent, medical tests, and more, CCI found no contravention of Section 4 of the Competition Act. 

Backdrop of the Investigation 

In 2015, Vivek Sharma raised allegations against Becton Dickinson India and Max Super Specialty Hospital, Patparganj, claiming collusion in overpriced syringes at the hospital pharmacy.  

While initial findings by the Director General (DG) showed no substantiation of collusion, a broader investigation into aftermarket abuse by super-speciality hospitals was launched. 

The DG identified contraventions of Section 4 between 2015 and 2018 across 5 parameters: room rent, medical tests, devices, consumables, and medicines.  

Hospitals examined 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; and St Stephen’s Hospital. 

Analysis and Conclusion of CCI 

Contrary to the DG's conclusion, the CCI asserted that the relevant market should be considered collectively for super-speciality hospitals in Delhi-NCR rather than individually. The Commission also noted that patients seek comprehensive treatment rather than individual goods like medicines or devices. 

The CCI applied a 2-stage test for excessive pricing. It concluded that the price was neither excessive in relation to costs nor unfair compared to similar products. Regarding room rent, it found hospital facilities cannot be directly compared to hotels, as they provide crucial medical support. 

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Final Observations 

The CCI further highlighted the inadequacy of comparing hospital labs with standalone diagnostic centres. Hospitals offer 24/7 service with faster turnaround times.  

Considerations of overheads such as inventory and operational costs were critical, showing that the procurement versus selling price analysis was insufficient. 

Conclusion 

The CCI's decision to close the proceedings against Delhi-NCR super-speciality hospitals highlights nuanced pricing practices and the broader market interpretations. The case exemplifies the comprehensive evaluations of market dynamics undertaken by competitive authorities in India. 

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