CCI Closes Case Against Fortis Vasant Kunj Hospital, Finds No Abuse of Dominant Position in In-Patient Aftermarket

The Competition Commission of India closed Case No. 77(7) of 2015 against Fortis Flt. Lt. Rajan Dhall Hospital, finding the DG's aftermarket abuse findings unsustainable on evidence.

The Competition Commission of India, in an order dated 21 May 2026, closed proceedings against Fortis Flt. Lt. Rajan Dhall Hospital, Vasant Kunj, Delhi in Case No. 77(7) of 2015. The case, which originated from a 2015 information filed by Shri Vivek Sharma alleging collusion between a syringe manufacturer and a Delhi hospital, had expanded over a decade into a wide-ranging inquiry into whether twelve private super-specialty hospitals in Delhi abused their dominant positions by compelling in-patients to purchase medicines, consumables, and medical devices exclusively from in-house pharmacies at inflated prices. After examining the Director General's supplementary investigation report and the hospital's detailed objections, the Commission found that neither of the two tests for unfair pricing established in United Brands was satisfied on the evidence gathered, and that no contravention of Section 4 of the Competition Act, 2002 was made out against the hospital.

How a Syringe Complaint Became a Twelve-Hospital Inquiry

The original information under Section 19(1)(a) of the Act was filed against Becton Dickinson India (P) Ltd., a manufacturer of disposable syringes, and Max Super Specialty Hospital, Patparganj, Delhi. The informant alleged that the two had colluded to print a higher MRP on syringes sold at the hospital's in-house pharmacy compared to the same product sold in the open market.

The Commission formed a prima facie view of a possible contravention of Section 4 and directed the DG to investigate. The DG's main investigation report, considered by the Commission in its order dated 31.08.2018, cleared Becton Dickinson and Max Patparganj of any Section 3(3) violation. However, the DG had flagged that Max Patparganj appeared to be compelling in-patients to purchase products only from its in-house pharmacy and earning significant profit margins, conduct the DG characterised as potentially amounting to aftermarket abuse under Section 4(2)(a)(ii).

The Commission found that the DG had not investigated the aftermarket dimension in sufficient depth. It directed a supplementary investigation under Regulation 20(6) of the erstwhile Competition Commission of India (General) Regulations, 2009, asking the DG to revisit the relevant market definition using the aftermarket concept and to broaden the scope to cover all aftermarket healthcare products and services provided by super-specialty hospitals across Delhi to their in-patients.

The Supplementary Investigation and the Twelve Sub-Cases

The DG submitted the supplementary investigation report (confidential version) on 24.12.2021. It identified twelve super-specialty hospitals in Delhi for investigation, framed five issues, and concluded that all twelve hospitals were enterprises under Section 2(h), were each dominant in their own separate relevant market, defined as the “market for provision of healthcare services/ facilities for in-patients admitted to the respective private super specialty hospital” with Delhi as the geographic market, and had abused that dominant position from 2015 to 2018 across five parameters: room rent, medical tests, medical devices, consumables, and medicines.

On room rent, the DG found that all twelve hospitals charged more than nearby three-star and four-star hotels. On medical tests, it compared prices for thirteen routine tests against four standalone diagnostic labs and found each hospital had charged more for one or more tests at some point between 2015 and 2018. On consumables and medicines, the DG compared procurement prices with selling prices and found significant profit margins across the board.

The Commission, on 11.01.2022, deleted Becton Dickinson from the array of opposite parties, having found no contravention against it. It impleaded the eleven other hospitals as opposite parties alongside Max Patparganj. Recognising that the investigation into each hospital was separate and independent, the Commission directed the DG to prepare twelve separate non-confidential reports, one for each hospital, with data of other hospitals redacted. The matter was formally treated as twelve separate sub-cases.

After further procedural steps, including a 2024 direction for twelve revised unredacted reports submitted by the DG on 18.09.2024, the Commission heard the parties on the supplementary investigation reports, including on quantum of penalty, across four hearing dates in August and October 2025. The present order relates to sub-case 77(7) of 2015, concerning Fortis Flt. Lt. Rajan Dhall Hospital, Vasant Kunj.

Fortis Vasant Kunj's Case: Aftermarket Does Not Exist, Methodology Flawed

Fortis Vasant Kunj, represented by Shri Rajshekhar Rao, Senior Advocate, raised several objections to the supplementary investigation report.

On jurisdiction, the hospital argued that the question of whether in-patients should be allowed to purchase medicines and consumables from outside the hospital was a legislative matter, not one suitable for competition adjudication. It pointed to the Supreme Court's judgment dated 04.03.2025 in Siddharth Dalmia and Another v. Union of India and Others (Writ Petition (C) No. 337 of 2018), where the Apex Court declined to issue directions to private hospitals and left the question of legislative action to the states.

On the aftermarket question, the hospital argued that three cumulative conditions must be satisfied for a separate aftermarket to exist: patients must be unable to carry out whole-life cost analysis at the time of choosing the primary service; switching costs after admission must be high; and the primary market must not be affected by reputational effects from supra-competitive prices in the aftermarket. The hospital submitted that patients are given comprehensive financial counselling forms before admission, covering procedure costs, room rents, consumables, and doctor fees. Insured patients obtain prior approval from insurers or third-party administrators. Patients frequently compare estimates across hospitals before deciding on admission.

On the DG's methodology, the hospital challenged the comparison of room rents with hotel rates as ignoring the healthcare services provided in a hospital room. It challenged the comparison of medical test prices with standalone diagnostic labs as ignoring the context of in-patient care and the cost structures of hospitals versus standalone labs. On consumables and medicines, it argued that computing profit margin as sale price minus procurement price ignored overhead expenses such as storage, supply chain management, operational costs, and inventory management. It also pointed out that no consumable or medicine was shown to have been sold above its MRP.

The hospital further relied on the Supreme Court's decision in Competition Commission of India v. Schott Glass India Pvt. Ltd. & Anr. (Civil Appeal No. 5843 of 2014) to argue that an effects analysis is mandatory in all abuse of dominance inquiries, and that the DG had not conducted one.

The Commission's Reasoning: Aftermarket Not Established, Pricing Comparisons Inadequate

The Commission accepted that Fortis Vasant Kunj is an enterprise under Section 2(h), being engaged in providing healthcare services in exchange for monetary consideration.

On the aftermarket question, the Commission examined whether the relevant market should be treated as a unified systems market or as two separate markets, a primary market for healthcare services and a secondary aftermarket for in-patient products and services. It observed that patients do not come to a hospital for goods such as medicines or consumables, but for treatment as a healthcare service. Before admission, patients are typically given an estimate covering the anticipated costs of treatment, including medical tests, drugs, consumables, and room rent.

The Commission noted that the DG's investigation report failed to highlight any inability on the part of patients to undertake a holistic treatment cost analysis at the time of admission. The Commission acknowledged that the final cost of treatment may vary from patient to patient depending on health conditions, number of doctor visits, tests, and complications, but found that this did not by itself establish that patients could not engage in whole-life cost analysis at the point of choosing the hospital.

On room rent, the Commission found the DG's comparison with three-star and four-star hotel rates to be an inappropriate benchmark, as it did not account for the healthcare services bundled with hospital accommodation.

On medical tests, the Commission found the comparison with a single standalone diagnostic lab for X-ray, MRI, and ultrasound procedures to be inadequate. It observed that a hospital must maintain a twenty-four-hour functional testing facility with available staff and infrastructure, and ensure faster turnaround times, which may justify higher charges. The Commission held that charges for X-ray and ultrasound procedures would qualify as unfair only where they are significantly higher than those charged by other hospitals for comparable services, a comparison the DG had not made.

On consumables and medicines, the Commission found that comparing procurement price with selling price to compute profit margin was not a relevant or appropriate methodology, as it excluded overhead expenses including storage, supply chain management, operational costs, and inventory management. It observed that prices charged by the hospital for consumables and medicines ought to have been compared with prices at other super-specialty hospitals or at least nearby pharmacies. The Commission also noted that there was no finding in the supplementary investigation report that any consumable or medicine was sold above its MRP, and that there is no legal obligation on any hospital to pass on profits earned on product sales to patients.

On medical devices, the Commission similarly found that the DG's finding of unfair pricing was not sustainable on the evidence gathered.

Having found that neither of the two United Brands tests for unfair pricing was established on any count from the evidence in the supplementary investigation, the Commission concluded that no case of abuse of dominant position in contravention of Section 4 of the Act was made out against Fortis Vasant Kunj.

Order

The Commission directed that Case No. 77(7) of 2015 be closed. All pending interlocutory applications, if any, were disposed of. Confidentiality was granted to documents, data, and information filed by the hospital under Regulation 35 of the General Regulations, 2009 (as amended), in terms of Regulation 36 of the General Regulations 2024, read with Section 57 of the Act, for a period of three years from the date of the order. The Commission clarified that nothing disclosed in the order itself is to be treated as confidential. The Secretary was directed to communicate a certified copy of the order to the opposite party.

The order was signed by Chairperson Ms. Ravneet Kaur, Mr. Anil Agrawal, Ms. Sweta Kakkad, and Mr. Deepak Anurag, from New Delhi, on 21 May 2026.