The Competition Commission of India (CCI) has closed its long-running investigation into pricing practices of private hospitals in Delhi, ruling that no contravention of abuse of dominance provisions was established under the Competition Act. According to reports from NDTV Profit, the Commission issued final orders covering 12 super-specialty hospitals that had been under scrutiny since 2015. The probe, which began with allegations of inflated pricing of syringes at Max Patparganj in 2015, expanded to examine broader pricing practices for in-patient care before being split into separate cases. As per The Times of India, the 32-page order forms part of a wider probe involving 12 leading private hospitals in Delhi NCR. In a significant development, CCI closed the matter despite investigations by the DG concluding that there were violations of competition norms, as reported by Rediff Moneynews. This decision is not common practice, as cases with prima facie evidence of anti-competitive practices are typically referred to the DG for detailed probes.
The Commission raised significant concerns over how admitted patients are routed towards in-house pharmacies, diagnostics and consumables, with the regulator observing that patients often become 'locked-in' once admitted. As per The Times of India, the order noted that in-patients, almost always, resort to usage of the hospital's in-house pharmacy and laboratories, creating what the regulator described as a 'locked-in' effect where patients may find it difficult to explore cheaper alternatives outside the hospital ecosystem. The order specifically examined whether hospitals compel patients to buy medicines, devices and diagnostic services only from hospital-linked facilities. Reacting to the order, Dr (Prof) D S Rana, Chairman of the Board of Trustees at Sir Ganga Ram Hospital, said the institution was examining the findings carefully. "We have received the order and are studying it in detail. Prima facie, it is a welcome step by the CCI. We will get back further after studying the order," he stated. According to The Times of India, the hospital argued that revenue generated from paying patients helps subsidise treatment for economically weaker sections and that pricing reflects expenses linked to specialist doctors, advanced medical equipment, emergency preparedness and continuous hospital operations.
The probe revealed significant pricing disparities in diagnostic services, with certain imaging services priced over 50% higher than some standalone diagnostic centres during the investigation period. According to The Times of India, tests including liver function tests, renal biochemical profiles, reticulocyte counts and blood culture tests reportedly showed substantial mark-ups when compared with average market pricing. The Commission examined pricing of MRIs, X-rays and ultrasound procedures and recorded that some imaging procedures were priced over 50% higher than rates charged by standalone diagnostic centres during parts of the investigation period. However, the CCI noted that hospitals are under no legal obligation to pass procurement profits on to patients and that hospital-based diagnostics operate round the clock and involve higher staffing and infrastructure costs than standalone labs, making direct comparisons difficult.
The Director General (DG) had concluded that hospitals operated as dominant entities in a narrowly defined market of in-patient services and engaged in 'aftermarket abuse' by charging high prices for room rents, diagnostics, devices, consumables and medicines between 2015 and 2018. However, in 12 separate but similarly-worded orders, the CCI rejected these findings, stating that neither of the two tests laid down in the United Brands (Supra) stand established on any count from evidence gathered by the DG as part of its supplementary investigation. According to Rediff Moneynews, the regulator criticized the DG reports for finding contravention 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. The CCI emphasized that under Section 4 of the Competition Act, it is not simply that an excessive price is unlawful, but the price which is unfair, requiring both excessiveness and unfairness to be proven in cases of abusively high prices.
