CCI Closes Abuse Of Dominance Cases Against 12 Private Delhi NCR Hospitals Over Excessive Pricing Allegations

The Competition Commission of India (CCI) has closed abuse of dominance proceedings against 12 private super-specialty hospitals in Delhi NCR, including Max Super Speciality Hospital, Fortis, Indraprastha Apollo, and St. Stephen's.

It rejected the Director General's findings that the hospitals abused their dominance by allegedly charging excessive prices for medicines, consumables, medical devices, tests, and room rents.

In a set of materially similar orders, a bench comprising CCI Chairperson Ravneet Kaur and members Anil Agrawal, Sweta Kakkad, and Deepak Anurag held that the evidence did not establish abusive or unfair pricing by the hospitals.

The proceedings originated from a 2015 complaint alleging that Max Super Speciality Hospital, Patparganj, and syringe manufacturer Becton Dickinson India Pvt. Ltd. had inflated the maximum retail price of disposable syringes sold through the hospital's in-house pharmacy.

While the CCI earlier found no evidence of collusion involving the manufacturer, it noted that the DG had found Max's conduct akin to aftermarket abuse. This prompted a wider supplementary investigation.

That probe was expanded to 12 Delhi super-specialty hospitals. The DG concluded that each hospital constituted a separate relevant market. It held that the hospitals had abused dominance in the aftermarket for admitted in-patients by charging excessive prices across five heads: room rent, medical tests, medical devices, consumables, and medicines.

The Commission disagreed with the DG's market analysis and pricing methodology.

It held that hospital treatment must be assessed as a healthcare service rather than as isolated components. It noted that patients approach hospitals for healthcare services, not merely to buy products.

“The Commission observes that patients do not come to a hospital for goods (like medicines, consumables, medical devices etc.), but for treatment, which is a healthcare service,” the CCI noted

The regulator said patients seeking elective treatment are ordinarily given cost estimates before admission. It said they are capable of comparing overall treatment costs across hospitals.

“In view of the aforesaid, the Commission is of the opinion that the patients seeking elective treatment are able to take into account the approximate overall cost of the treatment,” it noted.

The CCI also rejected the DG's comparison of hospital room rents with nearby hotels. It held that hospital rooms are clinically equipped treatment spaces supported by trained staff and emergency infrastructure. Therefore, they are fundamentally different from hotel accommodation.

Likewise, it found comparisons between hospital diagnostic pricing and standalone labs inconclusive. It noted that hospital laboratories operate round the clock and offer faster turnaround times.

On medicines and consumables, the Commission said merely comparing procurement costs with selling prices was insufficient to establish abusive pricing. It said such an analysis ignored inventory, storage, and operational costs. It also noted there was no finding that hospitals sold medicines above the MRP.

The CCI further held that the DG failed to satisfy the legal test for excessive pricing laid down in United Brands v Commission of the European Communities. The test requires showing that prices are excessive relative to cost. It also requires showing that the pricing is unfair in itself or compared to competing products.

Holding that no abuse of dominant position was made out under Section 4 of the Competition Act, the Commission closed proceedings against all 12 hospitals.