Case No. 20 of 2014. Case: Biswanath Prasad Singh Vs Director General of Health Services (DGHS), Ministry of Health and Family Welfare and Ors.. Competition Commision of India

Case NumberCase No. 20 of 2014
CounselFor Appellant: Party-in-Person and A.K. Dubey, Advocate
JudgesG.P. Mittal, J. (Member), Devender Kumar Sikri, Chairperson, S.L. Bunker, Sudhir Mital, Augustine Peter and U.C. Nahta, Members
IssueCompetition Act, 2002 - Sections 19 (1)(a), 2(h), 2(r), 2(t), 26(1), 26(2), 3, 3(3), 4, 53B
Judgement DateMarch 14, 2017
CourtCompetition Commision of India


Order under Section 26(2) of the Competition Act, 2002

  1. Subsequent to the order passed by the Hon'ble Competition Appellate Tribunal (hereinafter, the " Hon'ble COMPAT") vide its order dated 1st March, 2016 in Appeal No. 63/2014, the proceedings in the present matter were re-initiated by the Competition Commission of India (hereinafter, the "Commission").

  2. The information in the present matter was filed by Wing Commander (Retd.) Dr. Biswanath Prasad Singh (hereinafter, the "Informant") under Section 19 (1)(a) of the Competition Act, 2002 (hereinafter, the "Act") against Director General of Health Services (hereinafter, "OP-1"/"DGHS"), Managing Director of Ex-Servicemen Contributory Health Scheme (hereinafter, "OP-2"/"ECHS"), Secretary General of Quality Council of India (hereinafter, "OP-3") and 239 National Accreditation Board for Hospitals and Healthcare Providers (hereinafter, "NABH") Accredited Hospitals and Small Healthcare Hospitals (hereinafter, "OP-4") alleging contravention of the provisions of Section 3 of the Act. [OP-1 to OP-4 are collectively, hereinafter, referred to as the "Opposite Parties"/"OPs"]

  3. As per the information, OP-1 vide its Office Memorandum No. S. 11011/23/2009-CGHS D.II/Hospital Cell (Part I) dated 17th August, 2010 notified for fresh empanelment of private hospitals and revision of package rates applicable under Central Government Health Scheme (hereinafter referred to as "CGHS") in Delhi NCR (including areas of Delhi, Faridabad, Gurgaon, Ghaziabad and NOIDA) wherein, it prescribed differential rates of reimbursement to private hospitals based on their accreditation with NABH. The Ex-Servicemen Contributory Health Scheme (ECHS) also adopted the said Office Memorandum.

  4. The Informant has submitted the comparative rate list of healthcare services provided by NABH accredited and non-accredited hospitals. It is alleged by the Informant that NABH accredited private hospitals are paid an extra 15% amount. On the other hand, hospitals which are not NABH accredited are to be reimbursed without this extra 15% amount.

  5. The Informant has alleged that the said Office Memorandum of OP-1 does not spell out any rationale or logic behind the differential rates of payment for treatment of a disease or medical condition as there is no relationship between NABH accreditation and efficacy of the treatment offered by a hospital. Such a categorisation of hospitals is based on wrong presumption of efficacy of NABH accreditation which is without any scientific basis. As per the Informant, this causes a wasteful expenditure of public money and favours select group of urban based hospitals. It is also alleged that if quality certification is the only criteria for higher payment, then International Standardisation Organization (ISO) certified hospitals should also get higher rate of payment at par with NABH accredited hospitals. ISO also provides certification of quality practice for hospitals. ISO is stated to be much acclaimed and universally accepted scientific body.

  6. It is the case of the Informant that OP-1 is abusing its dominance for empanelment of private hospitals for the purpose of healthcare and medical services to CGHS beneficiaries in Delhi. Further, it is also alleged that OP-1 has colluded with the other OPs to give benefit to a selected few hospitals having NABH accreditation and reimburse them with payments at higher rates compared to other hospitals without NABH accreditation.

  7. Based on the above, the Informant has alleged that OPs, by creating a cartel to hike up rates for a selected few hospitals and indulging in unfair trade practice, have contravened the provisions of Section 3 of the Act. The Informant has prayed that the said Office Memorandum of DGHS be declared null and void.

  8. The Commission has perused the Order of Hon'ble COMPAT, the information, and the material available on record. At the outset, it is noted that, in the instant matter, the Commission had earlier passed an order, dated 23rd June, 2014 under Section 26(2) of the Act, stating that OP-1, OP-2, OP-3 and NABH are not enterprises within the prescribed definition under Section 2(h) of the Act. Aggrieved by the order of the Commission, the Informant preferred an appeal under Section 53B of the Act before the Hon'ble COMPAT. After hearing the parties and considering the provisions of the Act and case-laws, the Hon'ble COMPAT held that the activities carried out by the OPs can be covered under the definition of the enterprise and OPs are thus, subject to the jurisdiction of the Commission. The Hon'ble COMPAT allowed the appeal and set aside the order of the Commission and remitted the matter for reconsideration. The relevant extract of the Order of the Hon'ble COMPAT is reproduced below:

    In the result, this appeal succeeds. The order of the...

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