2015 (4) TMI 343 - Commission - Indian Laws

Revision of package rates applicable under Central Government Health Scheme (CGHS) - Different rates of reimbursement to the private hospitals based on their accreditation with National Accreditation Board for Hospitals (NABH) - Indulging in unfair trade practice - Contravention of provisions of Section 3 and 4 of Competition Act ,2002 - Held that - The activities performed by the above said entities cannot be covered under the definition of enterprises in terms of Section 2(h) of the Act as they are not engaged in any commercial or economic activities and as such provisions of Section 4 of the Act are not attracted against them. Therefore no, prima facie, case is made out under the provisions of Section 4 of the Act in the matter.The different rates prescribed by DGHS for NABH accredited hospitals cannot be considered as anti-competitive in any manner, rather it would act as an incentive to non-accredited hospitals to secure such accreditation and provide quality health care services, which will ultimately benefit the patients. As regards the allegations of violation of Section 3 of the Act, the Informant has not submitted any cogent evidence stating existence of any agreement, in any manner, between the Opposite Parties in the matter. Thus, prima facie, no case in terms of Section 3 of the Act is made out against the Opposite Parties. In view of the aforesaid, the Commission holds that no prima facie case is made out against the Opposite Parties either under the provisions of Section 3 or Section 4 of the Act for making a reference to the Director General for conducting investigation into the matter. - Order to close the proceedings.

Summary

Issues: Alleged contravention of provisions of Section 3 and Section 4 of the Competition Act, 2002 by Opposite Parties.

The judgment pertains to an information filed against several parties alleging contravention of provisions of the Competition Act, 2002. The Informant alleged that the office memorandum issued by the Director General of Health Services (DGHS) prescribing different rates of reimbursement to private hospitals based on their accreditation with NABH was unfair and lacked rationale. The Informant contended that this categorization led to wasteful expenditure of public money and favored select urban hospitals. The Informant further accused DGHS of abusing its dominance in empaneling private hospitals for healthcare services and colluding with other parties to benefit hospitals with NABH accreditation. The Informant claimed that this conduct amounted to creating a cartel and engaging in unfair trade practices, thus violating Sections 3 and 4 of the Act.

The Commission analyzed the information and material on record, along with the arguments presented by the Informant's advocate. It noted that for Section 4 to apply, the entities in question must qualify as enterprises engaged in economic activities. In this case, DGHS, ECHS, and other parties were found not to meet the definition of enterprises as they were primarily involved in regulatory and healthcare activities without direct commercial engagement. Therefore, the provisions of Section 4 were deemed inapplicable to them. Additionally, the Commission highlighted the role of Quality Council of India and NABH in promoting quality healthcare services through accreditation, emphasizing the importance of accreditation in improving the quality of hospitals and incentivizing non-accredited hospitals to enhance their services.

Regarding the allegations of violation of Section 3, the Commission found that the Informant failed to provide concrete evidence of any agreement between the Opposite Parties. As a result, no prima facie case was established under Section 3 of the Act. Consequently, the Commission concluded that no prima facie case existed against the Opposite Parties under either Section 3 or Section 4 of the Act, warranting a reference to the Director General for investigation. Therefore, the Commission decided to close the proceedings under Section 26(2) of the Act and directed the Secretary to communicate this decision to the parties involved.