No Abuse of Dominance Established as Hospital Did Not Sell Medicines Above MRP: CCI

Vivek Sharma Vs Max Multi Specialty Centre Pitampura (Competition Commission of India)

The matter arose from information filed before the Competition Commission of India alleging that disposable syringes manufactured by Becton Dickinson India (P) Ltd. and sold through the in-house pharmacy of Max Super Specialty Hospital, Patparganj carried a higher Maximum Retail Price (MRP) than the same products sold in the open market. The allegation was that the manufacturer and the hospital acted in collusion and violated Sections 3 and 4 of the Competition Act, 2002.

After a preliminary examination, the Commission directed the Director General (DG) to investigate the matter. The DG initially concluded that no exclusive agreement existed between Becton Dickinson and the hospital, and therefore no contravention of Section 3(3) of the Act was established. However, the DG found that Max Patparganj allegedly abused its dominant position by compelling in-patients to purchase products only from its in-house pharmacy and by earning substantial profit margins on syringes and other products.

The Commission later ordered a supplementary investigation focusing on possible “aftermarket abuse” by private super-specialty hospitals in Delhi. The DG investigated 12 hospitals and framed issues relating to enterprise status, relevant market definition, dominance, abuse of dominance, and liability of individuals under Section 48 of the Act. The DG concluded that each hospital constituted an independent relevant market because most hospitals did not allow patients to purchase medicines, consumables, devices, or tests from outside sources. The DG further concluded that all investigated hospitals abused their dominant position between 2015 and 2018 through higher room rents, medical test charges, medical device pricing, and significant margins on medicines and consumables.