In ancient times, healthcare service was a noble profession and profiteering was considered to be a sin. This is no longer true. In last thirty years, India has witnessed emergence of commercial healthcare services. A large number of multi-speciality hospitals have been established across the country in private sector. Their motto isservice for profit as against conventional not for profit hospitals. The new generation hospitals operate like business firms and provide comprehensive medical services involving complicated combination of physical facilities, advanced technologies and specialised human force for a price which a small percentage of countrys population can afford.
2. The last century has also witnessed several innovations in the field of medical science and what was not even imagined till 19th Century has become a reality.The continued research undertaken across the globe has given new advantages to the consumers of medical services. One of the recent developments is collection of stem cells from the umbilical cord and placenta of the newly-born child, which can be used for treating over 75 diseases including serious ailments like cancer, genetic disorders such as thalassemia and sickle-cell anaemia. The umbilical cord blood and cord tissue can be easily collected, processed and preserved through the innovative concept of stem cell banking for future use.
3. In India, cord blood banking was started in 2002 by Reliance Life Sciences. As on today, several stem cell banks are operating in different parts of the country, the details of which are given below : # Company Technology Launch Operation Partner Year Base
1. Life Cell International CryoCell International 2004 Chennai
2. CryoBanks India CryoBanks International, 2006 Gurgaon
3. Reliance Life Sciences In-house 2002 Mumbai
4. CryoSave.India CryoSave International, Belgium 2007 Bangalore
5. CordLife India CordLife Intenrnational, Singapore 2008 Kolkata
6. Jeevan Cord BloodBank In-house 2008 Chennai
7. Rotary Narayana Cord Blook Bank Narayana Hridhalaya 2008 Bangalore
8. Regenerative Medicine Sciences Korea 2009 Lonavala
9. Chaitanya Cord Blood Bank Nanog Italy 2007 Pune
10. PathCare Labs In-house 2010 Hyderabad
11. Unistem Biosciences Bieke Bitech, China 2012 Delhi
12. Reelabs In-house 2009 Mumbai
13. Fortis Totipotent Totipotent, 2011 Delhi
14. Stemcyte India Stemcyte, 2008 Ahmedabad
4. Appellant, Dr. L.H. Hiranandani Hospital (for short, the appellant) is a public charitable hospital established at Powai (Mumbai). It provides various healthcare services including Obstetrics and Gynaecology/Maternity, Oncology, Paediatrics, ENT, Ophthalmology, Dermatology, Dentistry, Anaesthesiology etc.
5. In June, 2009, the appellant made a comparative evaluation of some stem cell banks for providing services in the hospital and selected LifeCell International Private Limited (for short LifeCell), which has operational base at Chennai. The appellant and LifeCell executed agreement dated 21.07.2009, which envisaged that the parties will jointly promote the Umbilical Cord Stem Cell Banking concept amongst the customers of the appellant. The tenure of agreement was one year and LifeCell was given exclusive right to collect stem cells from those desirous of availing the benefits of stem cell banking. The identified roles of the parties to the agreement were: Role of LifeCell : Will be responsible for the delivery of the core benefit For organizing the collection of the blood from the hospital. For processing the blood and harvesting of the stem cells and performing the necessary tests on the blood. Storage for the specified period as per the standards. Delivering the stem cells as and when the need arises Customer Care Enrollment Documentation Role of DR. L.H. HIRANANDANI : Introducing this concept to all the expectant parent. Will spread the service awareness of cord blood banking. Handing over all the promotional material and counselling and converting them. Collection of the blood during the delivery as per the guidelines.
6. At the end of one year, the appellant and LifeCell executed another agreement for one year commencing from September, 2010 with the understanding that the latter would exclusively provide its umbilical cord stem cell banking services to the maternity patients of the Hospital till 31.08.2011.
7. Before the expiry of the second term of the agreement with LifeCell, the appellant repeated the exercise for selection of stem cell bank. It claims to have made comparative evaluation of various factors and found that Cryobanks was using the best technology. Accordingly, Cryobanks was chosen for providing stem cell banking services in the Hospital for a period of one year commencing from 01.09.2011. The comparison of the technology available with various stem cell banks has been produced before the Tribunal in the form of a chart, which isreproduced below : Cord Bank Company Company profile Indian Market Additional features Enrollment fees
1. LifeCell, Based in Chennai Associated with CRYO- CELL, USA, worlds first & biggest cord blood bank; Exclusive technology tie- Indias first & largest private stem cell bank; Started its operations in 2004; First Stem Associated with LHHH for past 2 years; dedicated team; LifeCell was recognized at the 9th position by Rs. 10,000/- Revised Rs. 12,000/- up Cell Bank in India to be accredited by AABB; Close to 32000 clients India. Today for bringing the revolutionary concept of Stem Cell Banking to India under the headline Future Perfect; Frost & Sullivan and Infomedia (TV18) Group jointly conferred LifeCell with Excellence Award for performance in Marketing Campaigns
2. CryoBanks Based in Gurgaon JV between CryoBanks, USA & RJ Corp; World leader in stem cell banking; Technology from Da Vinci Biosciences Started operation in 2006; Accredited by AABB; Approved by DGCI, ISO 9012 certified; Public banking license from DGCI, Only cord bank facility to be recognized by World Confedera- tion of Businesses; Awarded the most prestigious business award of the word THE BIZZ 2010; Stored 15000 cords Use RBC depletion technique Bangs are heparin free Rs. 13,000/- Revised Rs.18,000/-
3. Cryo-Save Based in Bangalore Europes largest adult stem cell bank, ISO 9001: 2008 certified -- Rs. 15,000/- headquartered in the Netherlands
4. ReilCord, based in Navi Mumbai Reliance Life Sciences, incorporated in 2001, is in initiative of Reliance Group Only public- cum-private cord blood bank tobe AABB accredited; First cord blood bank in India to receive FDA license Claim to have done Indias first successful cord blood stem cell transplant Rs. 10,000/-
5. Tran-Scell, Based in Hyederabad JV between scientists & clinical group; into research since 2001; Banking since 2009
500 cords at their centre Target 500 samples in 8 months; propose to have dedicated team for LHHH Rs. 15000/-
6. StemCyte, Based in Ahmedabad JV between StemCyte Inc. (USA), Apollo Hospital & Cadila Pharma; Claims to be only bank with Hybrid model i.e. public & private bank -- Claim to provide additional cord stem cell unit to patient free of cost Not given
7. Babycell, based in Lonavala RMS is ISO 13485:2003 certified -- -- Upto us
8. It is the case of the appellant that Cryo-Save based in Bangalore and Babycell based in Lonavala were prepared to pay higher amount per case, it chose Cryobanksbecause of better technology. The relevant portions of the agreement entered into between the appellant and Cryobanks to which reference has been made in the majority order of the Commission read as under : Operational Issues : l All Gynaecologists on Dr. L.H. HIRANANDANI HOSPITAL will be informed of the Cryobanks International India DR. L.H. HIRANANDANI HOSPITAL tie up for providing the Stem cell bank services to its patients. l Dr. L.H. HIRANANDANI HOSPITAL will offer exclusively Cryobanks International India stem cell banking services for its patients for a period for one year. l At no point during the time of agreement period with Cryobank International India recommend any other Hospital to DR L.H. HIRANANDANI HOSPITAL clients patients and DR. L.H. HIRANANDANI HOSPITAL will not recommend any other stem cell banking service to its patients. l Data for the obstetrics patients will be provided by DR
L.H. HIRANANDANI HOSPITAL administration to Cryobanks International India. l A suitable place/room for the counseling of DR L.H. HIRANANDANI HOSPITAL patients will be provided by DR
L.H. HIRANANDANI HOSPITAL. l Support fee to be paid in favour of DR L.H. HIRANANDANI HOSPITAL. l This Agreement will be with effect from 1st September, 2011. Financial terms: l For enrollments generated and completed by Dr. L.H. HIRANANDANI an enrollment support fee as per the details given below for all those which are banked will be paid. l DR. L.H. HIRANANDANI will send the invoice once a month for all the collections done for the month and Life Cell to send the cheque within 7 working days. l In case, after the collection the sample is rejected and is not banked then a debit note will be raised for refund of the payment made for such a collection. Enrollments Per Month: Rs.18,000/- (10% tax will be deducted) per enrollment (including Cord Blood and Cord Tissue).
8. Smt. Manju Jain wife of Shri Saurabh Kumar, who was pregnant with her second child entered into an agreement with LifeCell to obtain its umbilical cord stem cell banking services.(Though a mention of this agreement has been made in the information filed by Respondent No. 2, the investigation report prepared by the Director General (for short, the DG)and the order passed by the Commission, but the date of agreement has not been disclosed in any of the documents). Smt. Jain visited the appellant Hospital on 17.10.2011 to consult Dr. Vinita Raut (Gynaecologist) working in the Hospital. At that time, she neither disclosed that she had entered into an agreement with LifeCell for obtaining stem cells form her umbilical cord nor got herself registered with the appellant. After about five and half months, she again visited Dr. Vinita Raut for consultation. This time, Smt. Manju Jain disclosed that she had entered into an agreement with LifeCell for stem cell banking. Thereupon, Dr. Vinita Raut told her that the appellant had an arrangement with Cryobanks and LifeCell cannot be permitted to provide its services. Shri Saurabh Kumar (husband of Smt. Manju Jain) sent ane-mail dated 04.06.2012 to the appellant to allow LifeCell to provide its services at the Hospital but the latter declined on the ground that it had an exclusive agreement with Cryobanks. Thereafter, Smt. Manju Jain contacted Seven Hills Multi Super-Speciality Hospital (which was about 500 yards away from her residence) and delivered her child in that hospital.
9. Though, Smt. Manju Jain did not file any case/complaint before any judicial/quasi-judicial forum including the Commission with the allegation that the appellants refusal to allow LifeCell to provide stem cell banking services had forced her to avail maternity services in another hospital at the eleventh hour, Respondent No. 2, Shri Ramakant Kini, who claims to be a lawyer by profession and is also a qualified practicing Chartered Accountant and Company Secretary, but is not shown to be a relative or an aquaintant of Smt. Manju Jain, got in touch with a firm of lawyers, namely, Dhall Law Chambers, B-88, First Floor, Sector 51, Noida, and got drafted and filed an information under Section 19(1)(a) of the Competition Act, 2002 (hereinafter referred to as the Act)about alleged abuse of dominant position by the appellant and anti-competitive agreement entered into between the appellantand Cryobanks and prayed that an investigation may be conducted under the Act and the appellant be penalised for abuse of its dominant position and violation of free and fair competition.Respondent No.
2 also prayed that the appellant be directed to cease and desist from entering into exclusive agreement, which restricts the choice to the end- consumers and prevent other players from participating in the relevant market.
10. In paragraphs 2 to 4 of the information, Respondent No. 2 highlighted the nature of services provided by the appellant Hospital and its position among top healthcare service providers in Western India. In paragraphs 6 to 21, he gave details of stem cell banking in India and the procedure adopted for collection of umbilical cord blood. In paragraphs 23 and 24, he narrated the facts relating to Smt. Manju Jain and in paragraphs 26 and 27, he made statements, which unequivocally suggest that he was espousing the cause of LifeCell. In paragraphs 31 to 40, reference has been made to the provisions of the Act, referred to cases and other material, which couldnot possibly be in his knowledge and made the prayers to which reference has already been made. He verified the contents of the information be to true and correct to his knowledge and based on information received and believed to be correct, but did not disclose the source of information.Paragraphs 23 to 30, which will have some bearing on the merits of the case are reproduced below :
23. The Informant humbly submits that one Mrs. Manju Jain (hereinafter referred to as Patient) had entered into an agreement with LifeCell India Private Limited (hereinafter referred to as LifeCell), which is a leading stem cell banking company in the country providing umbilical cord stem-cell banking services. The Informant submits that the Patient decided to use the maternity services of the Respondent, as the Respondent is known as one of the best high-end multi-speciality hospitals in country.
24. It is submitted that the Patient independently had signed up for the services of LifeCell and the Respondent respectively as these companies are well-reputed and respected in their specified areas of service/operation. It is pertinent to note that the Patient who is a customer of the Hospital for maternity services is also the customer of LifeCell for umbilical cord stem cell banking service.
25. As stated above, the cord blood has to be collected from the umbilical cord immediately after a babys birth, ideally within 10 minutes. Therefore, the same has to be collected by the obstetrician or by the hospital staff. Alternatively, a paramedic of the concerned stem cell banking company can collect the sample with the permission of the hospital or the nursing home, where the customer is delivering the baby. Therefore, it requires a great amount of coordination and cooperation between the hospital and stem cell bank for efficiently servicing the requirements of the consumer.
26. In the present case, Patient contacted LifeCell for using their stem cell banking services. To the surprise of the Patient, LifeCell informed their inability to provide services as they have been directed by the Respondent not enrol any Patient of the Respondent, as CryoBanks is their cord blood banker with effect from 1 September, 2011 and the Patients are not allowed to use the services of any third party stem cell banker. The email communication between the Patients Husband and the Respondent is marked and annexed herewith as Annexure III.
27. Surprised by this, Patient requested the Respondents to allow them to engage LifeCell in relation to collection of cord blood samples. The Informant submits that the Respondents not only refused to deal with LifeCell also unduly pressurised the Patient to terminate the existing agreement for umbilical cord stem cell banking services and also the Patient was coerced to avail the services of CryoBanks, a competing stem cell bank with which the Respondents had an exclusive tie-up.
28. It is humbly submitted to the Honble Commission that the Respondent (through an employee Dr. Shashikant Pawar, Senior Manager Operations) responded to the email communication sent by Patients husband stating the following (the same is marked and annexed herewith as Annexure IV) Dear Saurabh Kumar
1) We have exclusive tie-up with Cryo Banks for the cord blood collection at this hospital;
2) We do not allow any other company to do collection in the hospital
3) It was also indicated verbally by the treating doctor (Dr. Vinita Raut) to the patient Ms. Manju Jain that we have exclusive tie-up with CRYOBANKS for the cord blood collection at this hospital.
29. Pursuant to the Respondents refusal to deal with LifeCell, the Patient had to either sign up for the services of stem cell banking services of Cryobanks or chose another hospital for giving birth to her child. It is submitted that Patient refused to succumb to the undue pressure exercised by the Hospital. Therefore, the Patient opted for another high end multi speciality hospital for the maternity services.
30. In light of the above, it is most respectfully submitted that Respondent in order to garner more commission/profits from Cryobanks :
a) Refused to deal with LifeCell;
b) Imposed conditions that are related to the contract/ nature of relationship with Patient forced the Patient to use the services of Cryobanks.
11. After 15 days, Respondent No. 2 filed additional information dated 25.07.2012 through Dhall Law Chambers incorporating the time taken by the patients for reaching various hospitals, namely, appellant, Kokilaben Dah Mumbai, Breach Candy, Mumbai, Apollo Cradle, New Delhi, Cloudnine, Bangalore.
12. By letter dated 27.07.2012, the Competition Commission of India (for short the Commission) directed Respondent No. 2 to appear for preliminary submissions. Respondent No. 2 availed that opportunity and also filed additional information dated 29.08.2012 reiterating his assertion that the appellant is guilty of abuse of its dominant position in the relevant market.
13. By an order dated 19.09.2012 passed under Section 26(1) of the Act, majority of the Commission directed the DG to cause detailed investigation into the matter. One of the Members, Shri M.L. Tayal, passed a dissenting order and held that no prima facie case is made out for investigation under Section 26(1) of the Act.
14. At this stage, I deem it necessary to mention that even before the investigation could commence, the Commission gave publicity to order dated19.09.2012 in its quarterly Newsletter Fair Play (Volume 3 : October December 2012), the relevant portions of which are extracted below : INVESTIGATION INITIATED__________________________ Alleged Abuse of Dominant Position by Vertical Agreement between the Hospital and Cord Stem Cell Bank Service Provider Stem cell therapy has revolutionised the practice of regenerative medicine. Given its commercial viability, competitive concerns are emerging in the business model of cord stem cell banking in India. There are companies like LifeCell, Cryo-Cell etc., which provide various services relating to collection and preservation of the cord blood and cord tissue. CCI received information against Dr. L.H. Hiranandani Hospital, Mumbai. The informant stated that while availing maternity services of the hospital, he was not allowed to avail LifeCell's 'umbilical cord stem cell banking services'. The said hospital, instead, insisted to have the services from Cryobanks, with which the hospital had an exclusive tie-up. An allegation of tie-in arrangement as well as abuse of dominant position was made by the informant. After considering the matter, CCI found that the patients were forced to take services of Cryobanks, if they wanted to preserve the stem cells of their new born babies. The consumers were left with no other choice for availing the stem cell services, while hospitalised in the said hospital. Prima facie, the agreement between the hospital and Cryobanks was found to be exclusive in nature and in violation of Section 3(4), requiring further investigation by Further, the hospital is found to be dominant in the relevant market based on (a) a market share of 75 per cent that it commands in the market of providing maternity services in high-end multi-speciality hospitals in the wards of S, L, N and K/E of Mumbai; (b) distinct brand value and reputation in the relevant market; and (c) a National Accreditation Board for Hospitals & Healthcare Providers (NABH) rating amongst the top 10 hospitals in western India. Accordingly, the condition imposed by the said hospital to avail the stem cell banking services of Cryobanks only, appears to be an unfair condition and a prima facie violation of Section 4 i.e. abuse of dominant position, requiring further investigation by DG. Thus, CCI found prima facie evidence that the hospital may have abused its dominant position under the Competition Act, 2002 and directed the DG to investigate the matter. [Underlining is mine]
15. The appellant protested against this publication and sent letter dated 05.02.2013 through its advocate, the relevant portions of which are reproduced below : Given that the matter is currently under investigation, H Hospital was shocked to see that the Honble Commissions recently published quarterly newsletter Fair Play (Volume III, October December, 2012) (Newsletter), discusses this case extensively (See Annexure 1).H Hospital was astounded to note that an article in the Newsletter refers to the Honble Commissions findings in a majority prima facie order (which is not in the public domain) in great detail, without even mentioning that there was a dissenting prima facie order or that the prima facie order was passed ex parte. This therefore suggests to ordinary readers (who are not well versed with the Honble Commissions procedures) that the Honble Commission has applied its mind to the facts and found H Hospital to have (albeit prima facie) abused its dominant position. Such detailed disclosure about this case in the Newsletter has attracted much media attention and has been extensively covered in articles carried by leading newspapers which quote heavily from the Newsletter. H Hospital submits that, as the national competition authority responsible for deciding competition law matters, it is incumbent upon the Honble Commission to exercise extreme care and caution to ensure that no information which could cause harm to a party under investigation is made public during the pendency of proceedings. It is precisely for this reason that Regulation
47 of the Competition Commission of India (General) Regulations, 2009, provides that proceedings before the Honble Commission are not to be open to the public. In H Hospitals opinion, it is unbecoming for a statutory body exercising adjudicatory functions to (a) publish sensitive and confidential details of cases which are sub-judice, and (b) cherry pick and highlight only those cases which appear to be interesting or newsworthy. Further, without prejudice to the contention that such disclosure of information should not have taken place at all, H Hospital submits that reporting of matters which are sub- judice prejudices the mind of the public and has the effect of transferring the trial by the Honble Commission into a trial by the media. Accordingly, incomplete and misleading disclosure by the Honble Commission to the public about the preliminary stages of this case through its Newsletter, prior to the completion of the DGs investigation, has compromised H Hospitals right to a fair hearing in-keeping with the principles of natural justice which are required to be followed under the provisions of the Competition Act. This is especially so because H Hospital was not heard at the prima facie stage and an ex-parte order was passed by the Honble Commission directing the DG to investigate, without giving any opportunity to H Hospital to present its position before the Honble Commission. H Hospital also submits that the disclosure of information in relation to this case has tarnished its reputation and brand value in the healthcare services sector, where reputation and trust are of utmost importance, causing it grave prejudice. H Hospital would therefore like to register its protest and requests that, in the interests of preservation of its rights of natural justice and due process, the Honble Commission (including its officers) not publish or disclose, any further information about this case until proceedings are complete and a final order has been issued by the Honble Commission.
16. Ordinarily, one may not take any exception to publication of the news about an order passed by the competent judicial/quasi-judicial forum, but if the news-item incorporates incorrect facts or does not disclose full facts, then a doubt arises about the bonafides of the author of the news-item. In the new-item in question, it was erroneously mentioned that the informant was not allowed to avail LifeCells umbilical cord stem cell banking services. This is so because the informant, who is a male, could not have availed any such services at any hospital and it was not even alleged by him that the appellant had denied him such services. The statement in the news-item that the patients were forced to take services of Cryobanks if they wanted to preserve the stem cells of their new-born babies is misleading and conveys a totally wrong impression that the appellant was compelling the patients to avail stem cell banking services of Cryobanks as a condition for providing maternity services to them. Not only this, the news-item conveys an impression that the appellant was already found to be in a dominant position in the market of providing maternity services in high-end multi- speciality hospitals in the particular area. The worst was that the news- item did not make a mention of the dissenting order passed by one of the Members of the Commission. Such type of misleading news-items definitely cast a shadow on the fairness on the totality of the procedure adopted by the Commission.
17. The Joint Director General (for short, Jt. DG), to whom the investigation appears to have been entrusted by the DG, issued notice to the appellant under Section 41(2) read with Section 36(2) of the Act requiring it to furnish specified information and documents. The appellant complied with the same. The Jt. DG also sought information from Respondent No. 2, recorded statement of Dr.Sujit Chatterjee, CEO of the appellant, discussed the definition of the relevant market and analysed the datas collected in the context of distance of 0-12 Km from the appellant hospital covering S, L, N, K/E, T, P/S wards of Greater Mumbai and concluded that the appellant was in a dominant position in the relevant market and had abused that position by entering into an agreement with Cryobanks for providing stem cell banking services. He further concluded that the agreement entered into between the appellant and Cryobanks was contrary to Section 3(4) of the Act and it had appreciable adverse effect on competition. The conclusion recorded by the Jt. DG in Chapter -5 of his report are reproduced below: CHAPTER -5 Conclusion 5.1 The Relevant Market in the present case is the provisions of maternity services by Super Speciality Hospitals within a distance of 0-12 K.M. from the Hiranandani Hospital covering S, L, N, K/E, T and P/S wards of Municipal Corporation of Greater Mumbai. 5.2 Investigation has established that M/s. L.H. Hiranandani Hospital has a dominant position in the relevant market on the basis of several factors mentioned in section 19(4) of the Act. 5.3 It is further established that M/s. L.H. Hiranandani Hospital is abusing its dominant position in the relevant market. It has imposed unfair conditions and indulged in unfair practices on the consumers and competitors. 5.4 It is held that OP has imposed unfair condition on the consumer (patient) and therefore its action is violative of provisions of section 4(2)(a)(i) of the Act. 5.5 It is further held that OP has indulged in practice resulting in denial of market access and therefore its action is violative of section 4(2)(c) of the Act. 5.6 The tie-in arrangement between Hiranandani Hospital and M/s. Cryobanks is an agreement in contravention of section 3(1) read with section 3(4) of the Act. 5.7 In view of the above, the allegations levelled by the informant against M/s. L.H. Hiranandani Hospital are found to be correct. The investigation has established that the conduct of M/s. L.H. Hiranandani Hospital is in contravention of the provisions of section 4(1) read with 4(2)(a)(i), 4(2(c) and section 3(4) of the Act. 5.8 Confidentiality as per regulation 35 of the CCI (General) Regulations, 2009 was sought on behalf of the OP vide letter dated 22.3.2013 and 09.04.2013. Confidentiality granted vide order dated 03.05.2013. A copy of the order is enclosed as Annexure-12 of the report. The report may kindly be placed before the Competition Commission of India for consideration. (Sunil Kumar) Dated : 09.05.2013 Joint Director General
18. The Commission examined the report of the Jt. DG in its meeting held on 11.06.2013 and passed an order under Section 26(8) for further investigation. That order reads as under : The Commission examined the DGs report in this case and noted that the definition of the market, both in terms of product and geography, required further data analysis. From the report/annexures, it appears that DG had collected extensive data in respect of use of maternity/delivery facility by persons who are / were inclined to use stem cell bank services. The report is being sent back to DG under section 26(8) for further investigation. The DG is hereby directed to provide within
30 days the following information :-
1) Market shares of all stem cell banks in Mumbai who provide their facilities/services for stem cell preservation to maternity homes/hospitals etc.
2) Distribution of the clients of stem cell banks by category
a) Super Speciality Hospital;
b) Nursing Homes (Multi facility)
c) Stand alone Maternity Homes
d) other hospitals.
3) Data on the distance travelled by seekers of Maternity Services a random sample across Mumbai for patients of some (i) Super Speciality Hospitals, (ii) Nursing Homes, (iii) Stand along (alone (sic)) Maternity homes and
(iv) other Hospitals patients.
19. In furtherance of the direction given by the Commission, the Jt. DG again analysed the material collected by him and submitted supplementary report dated 04.09.2013, paragraphs 3 and 4 whereof are extracted below : 3.0 Distribution of the clients of stem cell banks by category. 3.1 As regards to the information on Distribution of the clients of Stem Cell Banks by following categories : (a)Super Speciality Hospital; (b)Nursing Homes (Multi facility) (c)Stand alone Maternity Homes (d) other hospitals Informant, Opposite Party and Stem Cell Banks were asked to classify the Hospitals (where the maternity patients were admitted) under these categories. Relevant extracts of their replies are as below : Reply of the OP (Para 9, 10 & 11 of the submission dated 19.08.2013) For the purpose of answering this query, the DGs Notice has provided H Hospital with lists of hospitals submitted by four umbilical cord stem cell agencies, viz. M/s. StemCyte India, M/s. Cordlife Science India Pt. Ltd., M/s. Reelabs and M/s. Cryo save India requesting H Hospital to, classify such clients/hospitals into the categories of Super Speciality Hospitals, Nursing Home (Multi-facility), Stand-alone Nursing Homes, and other hospitals, as listed in the Honble Commissions order directing further investigation.
10. At the outset H Hospital submits that the purported classification of medical establishments into the categories specified in the Honble Commissions order directing further investigation, being Super Speciality Hospitals, Nursing Home (Multi-facility), Stand-alone Nursing Homes, and other Hospitals is devoid of any commonly accepted definitional basis and would therefore be wholly subjective. In the absence of clear and established parameters in respect of each of these purported categories, classification of the medical establishments contained in the lists provided by the Honble DG would be arbitrary and therefore cannot be relied upon in any meaningful way.
11. In any event, without prejudice to the above, H. Hospital submits that the purposes of the present competition law analysis (i.e. for determining whether the relevant product market of maternity services), the relevant question for defining the product market in the instant case is the maternity services involved and not the kind of medical establishment that the maternity services are provided in,
i.e. the relevant product/ service is maternity services and not the medical establishment in which it is provided. A patient cannot substitute child-birth for an appendectomy, even if both services can be provided at either a nursing home or super-speciality hospital, as has been detailed in the H Hospital Legal Submissions to the DG on 3 April, 2013. Thus, substitutability or inter- changeability must be determined in relation to the services provided, i.e. maternity services, and whether maternity services at a super-speciality hospital are inter- changeable or substitutable for maternity services at a nursing home or other general hospital ? Replyof the Informant 3.2 Regarding market share of Stem Cell Banking Companies, it is submitted as we are unable to provide the market share details of Stem Cell Bankers providing services in Mumbai. 3.3 In regard to the segregation of Hospitals, it is replied as We are unable to provided information in this regard. Reply from third parties. 3.4 Stem Cell bank service providers were also asked to segregate the Hospitals in to four required categories. Two of them, StemCyte Therapeutics India Ltd. and Cord Life Sciences India Pvt. Ltd. have sent the list segregating the Hospitals into Super Speciality Hospitals, Stand Alone Maternity Homes, Nursing Homes (Multi facility) and other Hospitals. Replies are enclosed as Annexure E of the report. Analysis 3.5 As it is seen from the replies of the Informant, OP and Third Parties that the classification of Hospitals into four categories was not possible by OP and Informant. Even the data supplied by Stem Cell service providers are not sufficient. The segregation done by only two stem cell banking provider is only limited to about 288 samples. Discussion in following paragraphs is about the limitation of such classification of Hospitals into two category i.e. Super Speciality Hospital and other Hospitals. 3.6 It is gathered from the information available in public domain that all the Hospitals in Mumbai are registered under The Bombay Nursing Homes Registration Act, 1949. Section 2 of the Act, defines Maternity Home and Nursing Home as (3) maternity home means any premises used, or intended to be used, for the reception of pregnant women or of women in or immediately after child birth; (4) nursing home means any premises used, or intended to be used, for the receipt of persons suffering from any sickness, injury or infirmity and the providing of treatment and nursing for them, and includes a maternity home; and the expression to carry on a nursing home means to receive persons in a nursing home for any of the aforesaid purposes and to provided treatment or nursing for them; 3.7 None of the other category of Hospitals i.e. Super Speciality, Multi Facility or Standalone Maternity Homes etc. is defined in the said Act. Plain reading of these two definitions suggests that Nursing Home includes every kind of premise used for the persons suffering from any sickness, injury or infirmity. As per the definition, Nursing Home includes Maternity Home also. 3.8 Similar provisions are enacted for the Registration of Hospitals in Delhi in the Delhi Nursing Homes Registration Act, 1953. The definition of Maternity Home and Nursing Home is similar to the definition as provided in The Bombay Nursing Homes Registration Act, 1949 and no other category of Hospitals are defined in this Act also. 3.9 To overcome the limitations of the above Acts, Government of India notified another Act as The Clinical Establishments (Registration and Regulation) Act, 2010 on 18.08.2010. The application of the Act in a particular State of India is subject to its adoption by that State. It is gathered from the information available in public domain that Govt. of Maharashtra has tabled a Bill in March, 2012 to adopt this Act in its State. 3.10 In this Act so many other kind of medical premises have been included under the word clinical Establishment. As per Section 2(c) of the Act, the Clinical Establishment means
(i) a hospital, maternity home, nursing home, dispensary, clinic, sanatorium or an institution, by whatever name called that offers services, services, facilities requiring diagnosis, treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicine established any administered or maintained by any person or body of persons, whether incorporated or not; or
(ii) a place established as an independent entity or part of an establishment referred to in sub-clause (i) in connection with the diagnosis or treatment of diseases where pathological, bacteriological, genetic, radiological, chemical, biological investigations or other diagnostic or investigative services with the aid of laboratory or other medical equipment, are usually carried on, established and administered or maintained by any person or body of persons, whether incorporation or not. 3.11 It is seen therefore, that the word Hospital,Dispensary, Clinic, Sanatorium have been included in this Act and recognized as separate entity other than Maternity Home and Nursing Home. Further classifications of Establishments with respect to diagnosis and diseased have also been made in the definition. It has gone further to identify the nature of ownership, control and management over the establishment i.e. whether it is a Government Institution, Trust (Public or Private), Corporation, Local Authority or run by a single Doctor. But again, this new Act has not defined / classify the nature of clinical establishments into Super Speciality, Nursing Home (Multi Facility) or Standalone Maternity Home. 3.12 In view of the above, it is therefore, difficult to classify the Hospitals into four categories as asked at point 2 of the order under Section 26(8) of the Act. However, in the following paragraphs, it is tried to ascertain the nature of Super-Speciality hospital as below : 3.13 National Accreditation Board for Hospitals and Healthcare Providers (NABH) is a constituent board of Quality Council of India, set up to establish and operate accreditation programme for healthcare organisations. International Society for Quality in Health Care (ISQua) is an international body which grants approval to Accreditation Bodies in the area of healthcare as mark of equivalence of accreditation program of member countries. 3.14 Accreditation is a public recognition of the achievement of accreditation standards by a healthcare organisation, demonstrated through an independent external peer assessment of that organisations level of performance in relation to the standards. 3.15 As per the guidelines of NABH, Super Speciality centres are the centres which provide the following services : Cardiology, Clinical Haematology, Clinical Pharmacology, Endocrinology, Immunology, Medical Gastroenterology, Medical Genetics, Medical Oncology, Neonatology, Nephrology, Neurology, Neuro-radiology, Rheumatology, Cardiac Anaesthesia, Child & adolescent psychiatry, Paediatrics, Gastroenterology, Paediatrics Cardiology, Hepatology, Cardio-vascular & Thoracic Surgery, Paediatrics Cardio-Thoracic Vascular Surgery, Urology, Neuro-surgery, Paediatrics Surgery, Plastic & Reconstructive Surgery, Surgical Gastroenterology, Surgical Oncology, Gynaecological Oncology, Endocrine Surgery, Vascular Surgery, Hepato-Pancreato- Biliary Surgery. 3.16 It was also discussed in the original investigation report that Super Speciality Hospital is normally known as the Hospitals having following facilities under its roof LDRP Suite NICU & OT on same floor 4D Ultrasound Scan In House Blood Bank In House NICU etc. 3.17 Normally, a maternity home does not have all such facilities. As per the definition of the Bombay Nursing Homes Registration Act the maternity home is a premise used to receive pregnant woman only and therefore all such facilities are not supposed to be there in maternity homes. All other category of Hospitals, having any of all the facilities mentioned above, are registered as nursing homes. 3.18 Therefore, in view of the guidelines of NABH and as per the information available on the website and other electronic and print media platforms, it is possible to categories all the Hospitals of Mumbai into Super Speciality Hospitals and other Hospitals only. Since, the relevant product market has been defined in the original Investigation Report as provision of maternity services by Super Speciality Hospitals the distribution of clients (availing maternity and stem cell services both) between Super Speciality Hospitals and other Hospitals is sufficient to examine the competition issues relevant to this case. 3.19 On the basis of the discussion above following Hospitals in Mumbai can be considered as Super Speciality Hospitals. Table-2 S.No. Name of Hospital Area
1. Bombay Hospital Marine Lines
2. Jaslok Hospital Pedder Road
3. Breach Candy Hospital Warden Raod
4. Hinduja Hospital Mahim
5. Lilavati Hospital Bandra
6. Nanavati Hospital Santacruz
7. KokilabenDhirubhai Ambani Hospital Andheri
8. Sevenhills Hospital Marol, Andheri
9. Godrej Memorial Hospital Vikhroli
10. Fortis Hospital Mulund
11 Kohinoor Hospital Kurla
12. Dr. L.H. Hirnandani Hospital 3.20 On analysis of these data of maternity patients, who had also availed Stem Cell Services in different Hospitals of Mumbai, the number and percentage of maternity patients in the Super Speciality Hospitals (12 in No. as per Table -2 above) are as below :- S.No. Name of Hospital Area No. of Patients availed Stem Cell Services
1. Bombay Hospital Marine Lines 17
2. Jaslok Hospital Pedder Road 26
3. Breach Candy Hospital Warden Raod 465
4. Hinduja Hospital Mahim 17
5. Lilavati Hospital Bandra 153
6. Nanavati Hospital Santacruz 43
7. KokilabenDhirubhai Ambani Hospital Andheri 127
8. Sevenhills Hospital Marol, Andheri 8
9. Godrej Memorial Hospital Vikhroli 8
10. Fortis Hospital Mulund 101
11 Kohinoor Hospital Kurla 3
12. Dr. L.H. Hirnandani Hospital 144 Total 1112 3.21 It is seen therefore, that out of 3291 maternity patients, 1112 had preferred Super Speciality hospitals for availing the services of Stem Cell banking. Hence, the patients going to Super Speciality hospital is about 33.78% and rest 66.22% maternity patients had gone to maternity homes, standalone nursing homes and all other remaining hospitals. 3.22 Further, data from the Website of Municipal Corporation of Greater Mumbai (MCGM) is obtained in regard to no. of hospitals registered with the Corporation. A copy of the information on Hospitals of all the wards and its summary are enclosed as Annexure F of the report. 3.23 It is seen that corporation has put clinical establishment in following five categories.
i. Municipal Hospitals
ii. Municipal Maternity Home
iii. Municipal Dispensaries
iv. Municipal Health Posts
v. Private Hospitals and Nursing Home 3.24 It is therefore clear that establishments of MCGM are not categorized into either of the categories mentioned in the order u/s 26(8). Total no. of establishments registered with MCGM (all categories) are 1808. It is also evident that the 12 Super Speciality Hospitals (as per Table-2), Nursing Home (Multi facility) and Stand-alone maternity homes are registered as Private Hospitals and Nursing Home. Total number of Private Hospitals and Nursing Home registered with MCGM are 1443. Total number of Municipal Hospitals and Municipal Maternity Homes are
50 only which is falling under the category of Other Hospitals. If we keep 12 Super Speciality Hospitals out of this number, 1431 Private Hospitals & Nursing Homes and 50 other Hospitals are left for other maternity patients availing stem cell banking services. 3.25 Hence, 2179 (3291-1112) patients are going to 1431 Private Hospitals & Nursing Homes and 50 other Hospitals (including Municipal Hospitals and Maternity Homes). Average of such patients comes to 1.5 per Hospital (2179/1481) whereas an average of 92 patients per hospital (1112/12) comes for the Super Speciality Hospitals. 4.0 Data on the distance travelled by seekers of maternity services a random sample across Mumbai for patients of some (i) Super Speciality Hospitals (ii) Nursing Home (Multi facility) (iii) Stand-alone maternity homes and
(iv)other hospitals patients. 4.1 For analysis on the distance travelled by seekers of maternity services, location of the maternity patients and the Hospitals both are required. All stem cell providers have not provided the address of the hospitals and the patients both. Only following stem cell service provider has furnished details containing location of the Hospital and patients. Since data provided by these three parties is available for more than one year all the sample has been taken for the purpose of such analysis. Details of the samples from Mumbai are as below : Table -4 S.No. Name of the Bank Number of Samples
1. Cryo-save (India) Pvt. Ltd. 862
2. CordLife Sciences India Pvt. Ltd. 533
3. Ree Laboratories Pvt. Ltd. 450 Total Samples 1845 4.2 Total number of samples available for determination of the distance travelled by seekers of maternity services in Super Speciality Hospitals (ii) Nursing Home (Multi facility)
(iii) Stand-alone maternity homes and (iv) other hospitals patients of Mumbai is 1845 only. This sample includes all the patients seeking maternity services at all categories of Hospitals in Mumbai. A random sample of such patients data base would include Super Speciality Hospitals, Nursing Home, Multi Facility Hospital, Stand-alone Maternity Homes and other Hospitals. Therefore, segregation of patients detail under each category of Hospital is not required at all. Rather randomness of the data base would be high if we keep the sequence of the data base unchanged and pick up a random sample with certain logic. For example, if we pick up every 5th patient from unchanged sequence of the data of patients provided by a particular stem cell provider, probability of randomness of the nature of the Hospital in that number and every multiple of that number would not be compromised in any manner. 4.3 In view of this a random number 1 is chosen and every next 5th sample i.e. Hospital appearing at number 6, 11,
16 and so and so forth are considered for calculating the distance travelled by the maternity patients to the Hospital. If the Hospital appears in the series is located at places other than Mumbai, the same is ignored and Hospital appearing at next number has been considered. Further sequence has been maintained. Detail working sheets (along with 3 sample snap shots) of the calculation of distance travelled by the patients are enclosed as Annexure G of the report. Summary of the Distance travelled by patients is tabulated as below : TABLE - 5 Distance Travelled (Km.) Number of Patients 0-5 212 6-10 80 11-12 8 13-15 22 16-20 27 More than 20 15 Total 364 4.4 It is seen therefore that out of total 364 patients, 82.41%
i.e. 300 patients are travelling a distance of 0-12 Km. only from their Home to the Hospitals where maternity services and stem cell banking services were availed by them. 4.5 Information as sought vide order u/s 26(8) dated 11.06.2013 is submitted as above.
20. The copies of the main as well as supplementary investigation reports were made available to the parties to enable them to file their response/objections. The appellant availed that opportunity and filed detailed written submissions to contest the findings recorded by the Jt. DG on the issues of relevant market, abuse of dominant position and violation of Section 3(4) of the Act. For the sake of reference, paragraphs 6 to 15 and
26 to 37 of the reply filed by the appellant are reproduced below :
6. The objections, amongst other things, will also demonstrate that there are findings contradictory to the records of the case and also critical methodological and analytical inconsistencies in the DGs investigation, some of which are listed below : Findings contradictory to case records
(i) In dismissing H Hospitals arguments that actual prices of maternity services evidence a chain of substitution, the DG has stated that the rent of the room is only one component of cost and not the entire cost incurred by a maternity patient and accordingly a simplistic comparison of room rent is inadequate. In doing so, the DG has failed to observe that the prices of maternity services which were submitted by H Hospital were all-inclusive and did include delivery charges and expenses ordinarily incurred by patients obtained child birth services along with the rent of such rooms. This has been specifically stated in H Hospitals submissions to the DG dated 3 April, 2013 at footnote 10 of page 14. In any event, the DG did not conduct an independent investigation of maternity service prices in exercise of his investigative duties and without any basis jumps to an incorrect conclusion that low end hospitals/nursing homes do not compete with H Hospital and to suit pre-determined outcomes.
(ii) The DG has stated that H Hospital did not provide any evidence of the technical evaluation process for appointing an umbilical cord stem cell bank, as requested by the DG pursuant to the summons hearing. H Hospitals internal records of the technical evaluation of umbilical cord stem cell banks were submitted to the DG and also explained at length in H Hospitals legal submissions to the DG. The DG has ignored the evidence on record which clearly demonstrates that H Hospital conducts an annual objective selection process for choosing an umbilical cord stem cell bank to contract which leads to competition for the market.
(iii) The DG has stated that an exclusive tie up with an enterprise not based on any qualitative criteria does not keep in mind the choice and well-being of patients and runs contrary to patients interests. As mentioned above, the evidence in this regard has been neglected by the DG. The records of the stem cell bank on the basis of technical and objective parameters. This has been completely ignored by the DG and in no way considered in either of the DG Reports.
(iv) The DG has incorrectly observed that H Hospital did not have an exclusive tie-up arrangement with another stem cell banking service provider in earlier years. However, H Hospital had submitted executed version of two agreements with LifeCell, for the years 2009-2010 and 2010-2011. The LifeCell Agreements were for a period of 1 year each, by which H Hospital was bound to offer exclusively LifeCell stem cell banking services for its patients for a period of one year. Critical methodological inconsistencies in DG Reports
(i) The DG has erred in concluding that Super Speciality Hospitals constitute a separate class of medical establishments and has utterly failed to take into account his own observations in the Supplementary Report which contradict and discredit the existence of a separate category of Super Speciality Hospitals and consequently, his determination of the relevant product market.
(ii) The DGs analysis of H Hospitals catchment area is based on an incorrect data set of patients who availed of maternity and stem cell collection and banking services and not of those patient who obtained maternity services alone at H Hospital (being the actual consumers of the relevant product market).
(iii) The DGs findings on dominance fails to include competitors in the relevant market; and does not consider that competitors identified by him have larger market shares (according to value) than H Hospital and are therefore flawed.
(iv) The DG has distorted the statement of Dr. Sujit Chatterjee (CEO of H Hospital) at the summons hearing to malign and discredit H Hospital and arrive at value-judgements of violations of medical ethics, which have been erroneously used to support his conclusions on violations of the Competition Act.
(v) The DGs foreclosure analysis is based on subjective statements alone and not on an empirical or objective analysis which would demonstrate that LifeCell s significant market shares, recent entry and exponential growth of the downstream market are evidence of fierce competition and there is no foreclosure.
(vi) The Supplementary Report is flawed as it does not comply with the Honble Commissions direction to provide information on the distance travelled by seekers of maternity services from (i) super speciality hospitals: (ii) nursing homes (multi-facility); (iii) stand-alone maternity homes; and (iv) other hospital patients. To support the incorrect findings on the geographic market as contained in the original DG Report, the DG seeks this information not from the categories of medical establishments as mentioned above, but from stem cell banking companies and analyses data of patients who availed of both stem cell banking and maternity services instead of those who obtained maternity services alone. This conclusion is therefore flawed and cannot be relied upon.
(vii) Finally, the DG has not obtained submission or even recorded the informants or Mrs. Jains testimony to test the veracity of the claims made. II PRODUCT MARKET DEFINITION
7. The DG has defined the relevant product market in this case as the market for the provision of maternity services by Super Speciality Hospitals. In doing so, the DG has failed to follow the tests for defining a relevant product market as provided in the Competition Act, adopted incorrect methodologies and has failed to consider maternity services providers that compete with H Hospital and are considered as interchangeable and substitutable by a consumer. Accordingly, it is H Hospitals position that the DGs product market definition is incorrect and the correct product market definition should be the market for maternity services at hospitals, specialist maternity hospitals/clinics, nursing homes, birthing centres etc. for the reasons set out below. Overview of Methodological Errors of the DG
8. H Hospital submits that the DG has made a number of conceptual errors in the product market definition analysis which, inaccurate in itself, has also resulted in an incorrect conclusion on the relevant product market:
(i) First, the DG fails to define the relevant product market under the test laid down in Section 2(t) of the Competition Act, i.e. whether maternity patients at H Hospital would consider maternity services at other healthcare establishments (general hospitals, specialist maternity clinics/hospitals, nursing homes and birthing centres) as being substitutable/inter-changeable;
(ii) Second, the DG fails to apply the factors listed under Section 19(7) of the Competition Act to consider and assess actual prices, characteristics and features of the maternity services market which would identify maternity service providers that may be viewed as substitutes by the consumer and to which the consumer would switch when faced with price increases;
(iii) Third, the DG fails to understand and accurately apply the Small but Significant Non-Transitory Increase in Price (SSNIP) test to the actual price bands of maternity services submitted by H Hospital. If the SSNIP test been accurately applied to the facts of this case, the Dg would have observed a continuous price spectrum for maternity services across different types of healthcare establishments, such that no one price bracket or type of medical establishment can be viewed in isolation;
(iv) Fourth, the DG fails to identify what exactly constitutes a Super Speciality Hospital. The DGs definition of the relevant product market as maternity services at Super Speciality Hospitals is subjective, arbitrary, and seems to have no basis in any acceptable definition of the same; and
(v) Finally, the DGs product market definition of Super Speciality Hospitals is contradicted by the DGs findings in the supplementary investigation. The Supplementary Report demonstrates that there is no clear and objective definition of what a Super Speciality Hospital is and that no statute in India states or market players in the healthcare industry or the Informant itself believe, that Super Speciality Hospitals constitute a separate class of medical establishments. The results of the Supplementary Report however are no incorporated or addressed by the DG to analyse the product market as defined in the DG Report.
9. The DGs product market definition presupposes that Super Speciality Hospitals are in fact a separate class of medical establishments. The DG has only examined what he believes are Super Speciality Hospitals without an assessment of whether they are considered inter- changeable/substitutable for other medical establishments by a consumer. In doing so, the DG has failed to recognize the extent to which other hospitals, maternity specialist hospitals, nursing homes, maternity homes, etc., are demand-side substitutes and the extent to which they compete with and constrain H Hospital. It is H Hospitals position that Super speciality Hospitals are not, including on account of lack of any clear and objective definition, a separate class of healthcare establishments and are also considered by a patient to be inter-changeable/ substitutable for other medical establishments.
10. Each of these fundamental inaccuracies on the part of the DG which have led to an incorrect product market definition is dealt with in turn below. Failure to satisfy the test for relevant product market under Section 2(t)
11. A relevant product market is defined under Section 2(t) of the Competition Act as a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use.
12. At the outset, it is submitted that the DG, in defining the product market as provision of maternity services by Super Speciality Hospitals, has failed to apply the definition as laid down under Section 2(t) of the Competition Act. Section 2(t) requires a relevant product market to be defined by reference to demand-side considerations, based on consumers use for the products / services in question. In relation to healthcare markets, product markets may be defined by specific service lines or groups of related services. To a large degree, patients receive specific services based on clinical needs, where service lines might include, for example, obstetrics, neurosurgery, or endocrinology. Accordingly, the relevant product / service in consideration in this case is the provisions of maternity services, which is uncontested.
13. In the context of maternity service providers, identifying the relevant product market would require an assessment of where patients could avail of maternity services and the maternity service providers that would be considered interchangeable / substitutable for H Hospital by a patient, by reason of price, characteristics, or intended use. When defining a relevant product market under Section 2(t) of the Competition Act, one should examine the demand-side of the market and ask whether, from a consumers perspective, product A is a substitute for product B? Whilst the DG identifies that maternity services at Super Speciality Hospitals is the relevant product market in this case, the Dg has failed to consider whether a set of maternity service providers (i.e. Super Speciality Hospitals) would be considered a interchangeable or substitutable by a patient (i.e. a consumer) for maternity services at other healthcare establishments, by reasons of characteristics or prices or any other features. The fundamental question in defining the product market in this case is whether maternity patients at a Super Speciality Hospital would consider maternity services at other healthcare establishments (general hospitals, specialist maternity clinics/hospitals, nursing homes and birthing centre) as being substitutable/ inter-changeable, which has not been assessed by the DG.
14. Instead of conducting such an analysis, the DG merely jumps to the conclusion that [i]n the present case factors, such as, economic and social strata of the consumer (patient) peer pressure, social perceptions, brand value of the hospital at par with the social status, complication attached with the maternity, other health issues, relation with the doctors, relation of the family with the hospital and doctors etc. matters to the patient and her family in deciding a Super Speciality Hospital. Therefore, one cannot include all sorts of hospitals/clinics in a sweeping manner within one single market as contended by the OP without any regard to the features and pricing of the product in question. (emphasis added). Though the DG makes this observation, this is a purely subjective statement not based on any evidence, empirical analysis, or survey which is reflective of demand-side substitution in the purchasing of maternity services. The DG has only observed [i]f a low end hospital or nursing home sets its prices equal to or above Hiranandani or other Super Speciality Hospital, then it will lose patients and would be out of business. The DG only compares an extremely low-priced medical facility to H Hospital and concludes there is no substitutability. The DG has failed to consider the next best credible alternatives to H Hospital (whether slightly higher or lower-priced than H Hospital) available to a patient. Whilst there may be no direct competitive relationship between two extreme ends of a price spectrum, the DG has failed to consider the chains of substitution that would exist across the two ends of the price spectrum, such that there exists a competitive relationship between the lowest priced medical facility and the highest priced medical facility (Note that H Hospitals prices fall within the middle of a broad price spectrum for maternity services of a few sample competitors listed in paragraph 42 below). While H Hospital may not be a direct demand substitute for a low end nursing home, there are considerable overlapping establishments in between that reflect an indirect competitive relationship between the two ( as dealt with in paragraphs 39 to 43 below).
15. In any event, healthcare decisions are based on factors other than price. Particularly in relation to maternity services, consumer preferences play a critical role in a maternity patients ultimate choice of hospital. A number of non-price factors, such as, quality of services, choice of gynaecologist, affect a consumers purchasing behaviour and are taken into account by an expectant mother in choosing a hospital for child-birth. The importance on non-price factors in defining relevant markets in the healthcare industry has also been repeatedly recognized by American Courts in antitrust cases. In FTC v. Tenet Healthcare, the US Federal Trade Commission (FTC) and the district court had defined the relevant market as consisting of only low-cost hospitals and HMOs (Health Maintenance Organizations, which provide low-cost health care) and had specifically excluded high-cost hospitals. On appeal, the US 8th Circuit Court of Appeal found that: the fact that Cape Girardeau hospitals are higher priced than Poplar Bluff hospitals does not necessarily mean they are not competitors. See, e.g., United States v. Archer- Daniels-Midland Co., 866 F.2d 242, 246-47 (8th Cir. 1988). The district court placed an inordinate emphasis on price competition without considering the impact of a corresponding reduction in quality. The DG however has failed to analyse the actual economic strata of H Hospitals patients or other non-price factors, such as choice of doctors, social perceptions or peer pressure that would result in such patients choosing to obtain maternity services at Super Speciality Hospitals, to the exclusion of other maternity service providers such as maternity clinics, nursing homes, general hospitals, etc. No definition of Super Speciality Hospital
26. It is imperative to note that the DG has failed to define what exactly constitutes a Super Speciality Hospital. In fact, the original DG Report merely notes that the range of services and facilities that Hiranandani Hospital or any other Super-Speciality Hospital would possess are: (i) LDRP (Labour, Delivery, Recovery, Postpartum) Suite; (ii) NICU (Neonatal Intensive Care Unit & OT (Operation Theatre) on the same floor; (iii) 4D Ultrasound Scan; (iv) In-House Blood Bank; (v) In-House NICU; (vi) High Risk Pregnancy handling; (vii) Infertility Treatment; (viii) Pre Natal / Ante Natal care.
27. In listing the above facilities available at a Super Speciality Hospital, the DG has failed to examine whether general hospitals, nursing homes, or even single speciality maternity hospitals, are equipped with any of these facilities or provide any of these services. In this regard, it should be noted that a number of general hospitals, maternity specialist hospitals, and maternity and nursing homes, in Mumbai, provide most of these facilities and directly compete with H Hospital in the provision of maternity services and should therefore be included in the relevant product market. Whilst nursing homes may not have a blood bank, many would have a blood storing facility. The choice of a procuring a 4-D Ultrasound scanner is based on the assessment of individual purchasing establishments. For example, a medical facility that is owned by a radiologist or which is attached to a diagnostic centre, may have a 4D Ultrasound machine but may not necessarily be a feature of any particular Super Speciality Hospital and accordingly, H Hospital submits that the DGs identification of these facilities as constituting a discreet class of medical establishments must be rejected as being arbitrary. In any event, the DG Report fails to demonstrate how this is relevant to a purchaser of maternity services or is reflective of patient choice or demand side substitution to be taken into account for defining a relevant product market.
28. The DGs sole basis for identifying Super Speciality Hospitals as a standalone category of healthcare establishments is purported to be based on NABH guidelines (which has not been referred in the Supplementary Report). The Supplementary Report states Super Speciality centres are the centres which provide the following services: Cardiology, Clinical Haematology, Clinical Pharmacology, Endocrinology, Immunology, Medical Gastroenterology, Medical Genetics, Medical Oncology, Neonatology, Nephrology, Neurology, Neuro- radiology, Rheumatology, Cardiac Anaesthesia, Child & Adolescent psychiatry, Paediatrics Gastroenterology, Paediatric Cardio-Thoracic Vascular Surgery, Urology, Neuro-surgery, Paediatric Surgery, Plastic & Reconstructive Surgery, Surgical Gastroenterology, Surgical Oncology, Gynaecological Oncology, Endocrine Surgery, Vascular Surgery, Hepato-Pancreato-Biliary Surgery. However, this classification of what constitutes a Super Speciality centre is not provided for in an NABH guideline; rather, this has been imported from an NABH application form for applying for NABH accreditation by Small Health Care Organization. The DGs very classification for what constitutes a Super Speciality centre, purported to be based on an NABH guideline, is based on an application form for classification as a different category of healthcare organization and should be rejected by the Honble Commission. In any event, such a classification is not reflective of patient choice or demand side substitution and does not reflect actual considerations to be taken into account in defining a relevant product market, as required under the Competition Act.
29. Notably, the Honble Commission in its order dated 11 June 2013 under Section 26(8) of the Competition Act, directed the DG to conduct a further investigation and specifically directed the DG to provide information on the
[d]istribution of the clients of stem cell banks by category (a) Super Speciality Hospitals; (b) Nursing Homes (Multi facility); (c) Standalone Maternity Homes; and (d) Other- Hospitals. In providing a response to the Honble Commissions query, the DGs Supplementary Report notes [n]one of the other category of Hospitals, i.e., Super Speciality, Multi-Facility or Standalone Maternity Home etc. is definedit is therefore difficult to classify the Hospitals into four categories as asked by point 2 of the order under Section 26(8) of the Act. (emphasis added) In fact, the DGs supplementary investigation reveals that no Indian statute governing the provision of healthcare in India, (including the Bombay Nursing Homes Registration Act, 1949, Delhi Nursing Homes Registration Act, 1953, the Clinical Establishments (Registration and Regulation) Act, 2010) identify a Super Speciality Hospital as a separate category of hospitals, which is a direct contradiction of his product market or Super Speciality Hospitals as a different category of medical establishments.
30. The DGs supplementary investigation has also revealed that the Municipal Corporation of Greater Mumbai also does not recognize Super Speciality Hospitals as a separate or stand-alone category of healthcare establishment. The Municipal Corporation of Greater Mumbai only classifies clinical establishments into: (i) Municipal Hospitals; (ii) Municipal Maternity Homes; (iii) Municipal dispensaries; (iv) Municipal Health Posts; and
(v) Private Hospitals and Nursing homes. In any event, definitions in statutes do not define a relevant product market, Instead, all medical establishments that share a competitive relationship and compete with H Hospital would have to be included in the relevant product market.
31. Further, the Informant, when directed by the DG to segregate hospitals into Super Speciality Hospitals, Nursing Home (Multi-facility), Stand-alone Maternity Homes, and Other Hospitals, responded stating: We are unable to provide information in this regard. Stem cell banks were also directed by the DG to segregate medical establishments into the four above mentioned categories but were unable or did not do so only two stem cell banks (StemCyte and Cord Line) had provided any segregation and, in fact, StemCyte, in identifying Super Speciality hospitals also stated categorization mentioned against each hospital might not be accurate in some cases. The very fact that both the Informant and most stem cell Banks in India could not classify healthcare organizations into Super Speciality Hospitals, itself demonstrates that the Honble Commission should also not adopt such an incorrect and artificial classification and should not narrow the relevant product market on the basis of such an incorrect classification. Thus, actual empirical and further analysis, as set out in the Supplementary Report, contradicts and discredits the DGs definition of the product market (as defined in the DG Report.) These findings of the Supplementary Report have also not been addressed or taken into account to further determine what the correct product market should be in this case.
32. H Hospital further submits that classifying medical establishments into Super Speciality Hospitals is inaccurate. Various hospitals and nursing homes may have super specializations in relation to one or two verticals/service lines, such as Asian Heart Institute, Mumbai or Columbia Asia Hospital, Bangalore, which are super specialized in cardio-thoracic care or NIMHANS, Bangalore, which is super specialized in neurosciences and psychiatry. However, such super specialization does not imply specializations across all verticals and rarely, if ever at all, will any medical establishment be a Super Speciality Hospital across all disciplines.
33. In light of the above, it is submitted that the DGs purported classification of Super Speciality Hospitals as separate from any other type of healthcare organization is devoid of any definitional basis (whether under any Indian statute or MCGM classification) and fails under the very NABH guideline referred to by the DG. The Informant and most other stem cell banks have also failed to identify such a classification. In the absence of any clear and established parameter of what actually constitutes a Super Speciality Hospital and where maternity patients themselves avail of services at a number of different types of healthcare organizations, it is submitted that the DGs definition of a relevant product market as the provision of maternity services by Super Speciality Hospitals is not supported by any accepted definition (whether by statute or NABH), is subjective and arbitrary and should not be accepted as being the relevant product market in this case. Most importantly, the DG has not assessed whether patients would consider so called Super Speciality Hospitals as being inter-changeable or substitutable for other healthcare organizations, whether patient choice or demand side substitution not reflects that Super Speciality Hospitals are a discreet class in themselves, and the other medical establishments that share a competitive relationship and compete with H Hospital. Failure to properly consider factors listed under Section 19(7) of the Competition Act
34. Section 19(7) of the Competition Act contains a non- exhaustive list of factors which should be used when applying the Section 2(t) definition of a relevant product market.
35. The factors listed in Section 19(7) of the Competition Act are as follows: physical characteristics or end-use of goods; price of goods or service; consumer preferences; exclusion of in-house production; existence of specialized producers; and classification of industrial products. Though the DG has broadly stated that, in the context of the present case if one considers the distinct price and non-price factors of Super Speciality hospitals as against other categories of hospitals, the same suggests that Super Speciality Hospitals are in fact a distinct product market in themselves. A patient desiring to avail the services of Hiranandani Hospital or Seven Hills or other Hospitals like Fortis, Kokilaben etc. would not consider a mid-level or government hospital as a substitute, the DG has not assessed the actual prices, features, brand-value, or other characteristics of maternity services at Super Speciality Hospitals that would cause consumers to find that maternity services at Super Speciality Hospitals and other providers of maternity services are not inter- changeable or substitutable with other maternity service providers. In addition, Section 19(7) lists existence of specialized producers as a factor that should be considered by the Honble Commission in defining a relevant product market. In the context of maternity services, there are various maternity-specialist hospitals, nursing homes and maternity clinics, such as Dr. Phadkes Maternity Home, Ashwini Maternity Home, and Mukund Hospital, that cater to the provision of maternity services, but the pricing and other characteristics and features of such establishments have not been considered by the DG. This is dealt with further in paragraphs 39 to 53 below.
36. In order to define a relevant product market in accordance with the provisions of Section 19(7) of the Competition Act, the DG should have analysed actual prices, existence of maternity-specialist healthcare organizations, availability of facilities, compared the differences in quality of services provided, etc. of maternity services at different types of healthcare establishments (whether at super speciality hospitals, nursing homes, specialist maternity hospitals, or maternity clinics, etc.). This assessment key to determine whether maternity services at Super Speciality Hospitals could be interchangeable / substitutable for maternity services at nursing homes, specialist maternity hospitals, maternity clinics, etc. or whether maternity services Super Speciality Hospitals by virtue of their characteristics/features are a stand-alone product market.
37. Had the factors listed under Section 19(7) of the Competition Act been properly considered by the DG, this could have provided an indication of how consumers value maternity services provided at different establishments, including their responsiveness to relative price increases, enabling a proper assessment of patients choices or demand-side considerations affecting purchasing behaviour in maternity services.
21. After hearing the advocates/representatives of the parties, the majority of the Commission (Chairperson and three Members) passed order dated 05.02.2014, whereby it held that the agreement entered into between the appellant and Cryobanks is anti-competitive being in contravention of Section 3(1) of the Act as it has caused appreciable adverse effect on competition in the market of stem cell banking and imposed penalty of Rs. 3,81,58,303/- (Rupees Three Crores Eighty One Lacs Fifty Eight Thousands Three Hundred and Three only). In paragraphs 7 to 9, the Commission noticed the preamble, some of the provisions contained in the Act including Section 3, it then referred to the agreement entered into between the appellant and Cryobanks and recorded the following observations :
20. Stem cell banking services sector is at nascent stage in India. It is a small market with very few players providing this service. Although, the DG report and OP hospitals submissions talk of 13 players in this market, the respective market share scenario of the players shows that Life Cell and Cryobanks are the two major players, collectively holding around 67% of the market share in stem cell collection in Mumbai. The exclusive contracts between a hospital and stem cell bank has a tendency of distorting market mechanism altogether. The development and competition in stem cell service industry is bound to be hindered because of such exclusive arrangement between OP hospital & Cryobank as each player, instead of competing with other players for efficiency and competitive price, would endeavour to pay commission to different hospitals and mop up clients. The adverse effect on competition is much more telling in this particular market because of the total dependence of the expecting mothers on the maternity service providers to get access to the stem cell/ cord blood from newly born children born in the hospital. Consumer may further suffer in the long run when the tied up stem cell banker, due to inefficiency vis- a-vis other competitors or otherwise, exits or the level of services provided by him falls. In such a scenario, exclusive arrangements like the one in question in this case would result in totalfailure of service for consumer who wanted stem cells of the child to be preserved for future use. Though the enterprises may choose their business models which suit their respective requirements, in the peculiar facts and circumstances of the present case, the Commission is of the opinion that the agreement between OP hospital with Cryobank has adversely affected the growth of the stem cell banking market. Given the peculiar nature of the service like long term association resulting in tying in of the consumer for 21 years and the nascent stage of the market, such agreements foreclose the competition in the stem cell banking market and create entry barriers for competitors depriving the final consumers of not only the quality or price of services offered but also the choice of which service provider they would like to contract with. Further, by limiting consumer choice, it may result in permanent moulding of consumer preferences in the long run, thereby distorting the market mechanism completely.
21. Such exclusive arrangements do not accrue any benefit to the consumer and are rather at the cost of consumer. Further, OP hospital has also not been able to show any justification with regard to its agreement with Cryobank leading to any improvements in production or distribution of goods or provision of services or resulting in the promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services. Neither has it been shown that any benefit would accrue to the consumer due to such agreements. The Commission notes that such agreement pre-closes market for new entrants. A new entrant instead of meeting productive and dynamic efficiency has to meet an efficiency in giving commissions to trick the customers to itself. This actually kills all competition replacing competition culture by commission culture.
22. A perusal of website of OP hospital shows that the hospital gives following assurance to its patients: The department of Obstetrics and Gynaecology is very vibrant. Equipment in the department is the latest and the technology is the cutting edge in this field. We cater to all the obstetric women and have a special High Risk Obstetric clinic. Foetal monitoring is done by 4D ultrasound machines that are the flagship models of the company. The department has the very latest suites for child birth such as the single room birthing complex or LDRP (Labour Delivery Recovery and Puerperium) suites. The suite helps the family to be with the laboring mother, till delivery. This helps in family bonding.
23. The collection of umbilical cord blood by staff of the hospital or the staff of any stem cell bank did not involve any technical process and it was a mere physical process of collection and preservation by the bank into a specially brought kit. The hospital had assured every patient as noted above that family of expecting mother shall remain in the delivery/ child berthing room till delivery. There could be no issue in allowing staff of stem cell banks to collect umbilical cord blood. However, OP hospital to protect its Rs.20,000/- commission sacrificed the interest of its patients.
24. It is a well known fact that an expecting mother has to repeatedly consult her gynaecologists for various problems which she faces during 8-9 months period. No excepting mother, particularly at advanced stage of pregnancy, would like to change the doctor or the hospital as she develops a trust in the treatment of a hospital. When at the last stage of pregnancy, the woman is told, if she wants stem cell banking of her choice, she has either to change the hospital or to engage the Cryobank with whom OP hospital had agreement, no woman admitted in a super speciality hospital, to save few rupees will change the hospital. Mrs. Jain probably changed the hospital because she had already paid money to Life Cell for her childs stem cell banking. This, however, is not indicative of patients switching and migrating to other maternity hospitals without any cost or inconvenience. This aspect has been further accentuated by the fact that OP hospital did not inform Mrs. Jain and other patients during that time about its exclusive tie-up for stem cell banking with Cryobank. Thus, the argument of OP hospital that the patients were free to leave the hospital is a flimsy argument, not worth any weight.
25. It must be kept in mind that for the purpose of section 3, the Commission is not required to identify the relevant market but has to see if the agreement has anti- competitive effect in any market and this market may be the market of the product/ service of any party entering into the agreement. In the present case, it is the market of stem cell banking in which competition was being adversely affected among stem cell bankers and the free trade was not being allowed and the patients were being fleeced of not only choice but also money.
26. From the above discussion, the Commission concludes that the agreement between OP hospital and Cryobank was an anti-competitive agreement in contravention of section 3(1) of the Act. [Underlining is mine]
22. In paragraphs 27 to 29 of the majority order, the issue relating to the alleged dominance of the appellant in the relevant market and abuse of dominant position by the latter in the context of the findings recorded by the Jt. DG was discussed and it was observed :
27. The second issue is about the dominance of OP hospital and abuse of dominance. For the purpose of section 4 of the Act, DG identified provision of maternity services by Super Speciality Hospitals as the relevant product market and area within a distance of 0-12 km from O.P. hospital as the relevant geographic market. DG carried out the patient inflow analysis from different wards to the hospitals and found that 63.70% of the maternity patients in the hospital were coming from wards S, L, N and K/E. The DG also found that two more wards T & P/S contributing 7.5% which had common boundaries with ward S to be covered within the relevant geographic market. On the other hand, OP hospital has relied upon a report of economic consultant engaged by it viz. Genesis Economic Consultant Pvt. Ltd. for assessment of relevant geographic market and this economic consultant has suggested that relevant geographic market should not be bound to 12 km distance travelled but should include a catchment area, where the patient has to travel 16 to 20 km or roughly 12 km crow flight (straight line).Considering
12 km of actual distance travelled as more appropriate geographic area in view of the time consumed in travelling, DG came to conclusion that the OP hospital was dominant in relevant market of super specialty hospital within a distance of 0-12 km from OP hospital covering wards S,L, N,K/E, T&P/S. It found the condition put by OP hospital on its patients that in case one had to avail stem cell banking system, it will have only to avail services of Cryobank, as abusive and violative of section 4 of the Act.
28. The Commission considered the submissions of the parties and findings of the DG on this issue. The gamut of evidence collected by the DG focused mainly on the market share of OP hospital and the conclusions were consequently derived on that basis. At theoutset, it may be clarified that market share of an enterprise is only one of the factors that decides whether an enterprise is dominant or not, but that factor alone cannot be decisive proof of dominance. Also, the Act has not prescribed any market share threshold for determining dominance of an enterprise in the relevant market. In the present case, the Commission has reservations in accepting DGs findings on dominant position of OP hospital. The DG has relied on the list of hospitals submitted by OP hospital as being the similarly competent hospitals and further analysis was based on the data submitted by these hospitals. The DG observed that OP hospital has got the highest price in grade 5 for normal delivery and C-section delivery. However, the price structures for some of the hospitals in the data collected by DG appears comparable to OP hospital i.e. not much difference could be seen to indicate conclusively that OP hospital was dominant. Further, the DGs finding that OP hospital had commercial advantage over its competitors was not backed by any evidence.
29. In view of the foregoing, the Commission is of the opinion that it is not established that the OP hospital is dominant in the relevant market of provision of maternity services by Super Specialty/high-end Hospitals within a distance of 0-12 km from the Hiranandani Hospital covering S, L, N, K/E, T & P/S wards of Municipal Corporation of Greater Mumbai.
23. One of the Members, namely,Dr. Geeta Gouri, passed a dissenting order. She agreed with the majority that the finding recorded by the Jt. DG on the issue of alleged dominant positon enjoyed by the appellant in the relevant market and abuse thereof was legally imperfect and held that there was no contravention of Section 4 of the Act. She then referred to the datas collected by the Jt. DG and pointed out that 93% of the patients had availed only maternity services in the hospital and 7% out of the total patients numbering 3602 had availed stem cell banking services between 2009 and 2012. The learned dissenting Member further observed that the agreement between the appellant and Cryobanks does not stop the latter from enrolling patients from other hospitals where it provides services. The learned dissenting Member then discussed various clauses of Section 3(4) and held that the appellant did not violate Section 3 of the Act. For the sake of reference, the relevant portions of the dissenting order are reproduced below:
55. The Informant has alleged that consumers of the OP are exploited because: (i) OP has an exclusive supply agreement with a particular stem cell bank that results in denial of market access to other stem cell banks; and (ii) there is a tie-in of stem cell banking service with maternity services at the premises of OP due to which consumer choice is restricted.
56. In its investigation, the DG has concluded that tie-in arrangement between Hiranandani Hospital and M/s Cryobanks is an agreement in violation of Section 3(4) of the Act, thus creating appreciable adverse effect on competition in India.
57. The OP has rejected the conclusion of the DG in this regard and submitted that maternity patients of the OP are not necessarily required to purchase stem cell banking services. Accordingly, there is no tie-in for maternity patients. Further, the OP has quoted Commissions Order in Sonam Sharma v. Apple & Anr. (Case No. 24/2011) to highlight conditions of tying to conclude that the same are not present case. On the basis of submissions made, I shall record my views on section 3(4) violation in the ensuing paragraphs.
58. According to Section 3 of the Act, No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India.
59. Further, Section 3(4) of the Act highlights anti-competitive agreements between vertically related enterprise as Any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services, including: (a) tie-in arrangement; (b) exclusive supply agreement; (c) exclusive distribution agreement; (d) refusal to deal; (e) resale price maintenance, shall be an agreement in contravention of sub-section (1) if such agreement causes or is likely to cause an appreciable adverse effect on competition in India.
60. The DG, in his investigation report, has annexed four agreements signed by OP on yearly basis. First two of these are with Life Cell and latter two with Cryobanks. It is noticed that the fourth agreement (signed with Cryobanks for the period wef 01.09.2012 to 31.08.2013) states that Cryobanks has exclusive tie-up with other hospitals as well. It has also been submitted by the OP that all agreements signed by the OP with different stem cell banks are for a period of one year only and that these are terminable on notice by either party. Further, there is a process of objective evaluation in selecting the preferred stem cell bank. The OP has also submitted that Cryobanks has been selected objectively on account of its superior technology and in consumers interest despite the fact that it was offered greater remuneration by competitor stem cell banks. Issue: Is there is a vertical relationship between the OP and Cryobanks?
61. In the present case, while it is true that a hospital rendering maternity services does not require stem cell banks, the stem cell banks do require the services of the hospital to the extent that stem cell of the umbilical cord has to be collected within 10 minutes of delivery of a baby if the baby is delivered in a hospital. However, it is important to note that collection of stem cell from the umbilical cord can be done at home by a paramedic staff if delivery happens at home. It is important to note that hospital on its own does not produce anything that is used by stem cell banks; rather, hospital comes into the picture vis-a-vis stem cell value chain because delivery happens within the premises of hospital. Therefore, a hospital, apart from providing maternity services, becomes a platform where the patients deliver the baby and the stem cell banks collect the umbilical cord cell. To that extent and as discussed earlier in the Order (under economics of health care industry), a hospital and a stem cell bank may be said to be vertically related but this falls short of being in a vertical relation in a conventional sense. The definition of vertical integration requires a reference point with respect to which a firm is vertically integrated. That reference is a final consumable product. The hospitals inpatient and outpatient care are considered to be the final consumable output. Each consists of a package of services produced when a patient visits the hospital.
62. To refine the vertical integration definition, four dimensions have been proposed by Harrigan : stages, breadth, degree and form. The degree of vertical integration is the production of total input or output of required resources transferred to a later in-house production stage. In this case, hospital services are used only at the time of the collection of the sample and later the banking services are provided independently by the umbilical cord stem cell bank.
63. Further, as stated above, a patient demands maternity services and collection and banking of the umbilical cord stem cells, there are two outputs for final consumption. When the baby is delivered, a sample of umbilical cord stem cells is collected within 10 minutes from the placenta. Both the outputs are produced sequentially, at the same production stage and in a short time gap. This shows that the hospital is in a vertical relationship not only with obstetricians and other specialists for the provision of maternity services, but also with umbilical stem cell bank for collection of umbilical cord stem cells. Issue: Can the agreement between OP and Cryobanks be termed as a tie-in agreement?
64. Explanation (a) to Section 3(4) of the Act defines tie-in as including any agreement requiring a purchaser of goods, as a condition of such purchase, to purchase some other goods. In line with this, the agreement between OP and Cryobanks shall be tested for tie-in arrangement.
65. The Commission, in its Order Sonam Sharma v. Apple & Anr. had discussed the intricacies of tying and bundling: A tying arrangement occurs when, through a contractual or technological requirement, a seller conditions the sale or lease of one product or service on the customers agreement to take a second product or service. In other words, a firm selling products X and Y makes the purchase of product X conditional to the purchase of product Y. Product Y can be purchased freely on the market, but product X can only be purchased together with product Y. The product that a buyer is required to purchase in order to get the product the buyer actually wants is called the tied product. The product that the buyer wants to purchase is called the tying product. More often, tying is a sales strategy usually adopted by the companies to promote / introduce a slow-selling or unknown brand when it has in its portfolio a fast- selling or well known product, over which it has certain market power.
66. Referring to Van Den Bergh Foods Limited v Commission13, DG has submitted that vertical agreements of short duration terminable with a short notice by either party may be anti-competitive if effect of the agreement results in foreclosure.
67. It is evident from the submissions of the parties and the DG Report that OP provides maternity services to all those who seek its service. It is also submitted that it refuses all stem cell banks other than Cryobanks in its premises for stem cell banking services. The DG has submitted that during 2009-12, a total of 3602 patients enrolled at OP for maternity services, out of which only 252 availed stem cell banking services from its premises. It is evident that 3350 patients availed only maternity services during the period under reference and that these patients were not compelled to avail stem cell banking services from its premises. In view of this, it cannot be concluded that the agreement between OP and Cryobanks is a tie-in agreement since more than 93% of the patient had the choice of availing only maternity services. Issue: Whether the agreement between OP and Cryobanks is an exclusive supply agreement?
68. As per explanation (b) to Section 3(4) of the Act, "exclusive supply agreement" includes any agreement restricting in any manner the purchaser in the course of his trade from acquiring or otherwise dealing in any goods other than those of the seller or any other person.
69. The OP has quoted Balaklaw v. Lovell to highlight that it is the nature of competition that at some point there are winners and losers, and the losers are excluded It is evident from above that the tenet of exclusive supply agreement, generally observed between manufacturers and suppliers or between manufacturers and dealers, is that a seller restricts a trader (re-seller) from dealing with his competitor seller in order to stifle competition. While exclusive contracts can benefit competition in the market by ensuring supply sources or sales outlets, reducing contracting costs, or creating dealer loyalty, they become anti-competitive when a firm uses exclusive contracts to impede efforts of new firms to break into the market or of smaller existing firms to expand their presence. In other words, it has to be established that there has been injury to competition by way of foreclosure.
70. In the present case, conditions of exclusive supply agreement do not appear to hold true for the reason that OP does not stop Cryobanks from enrolling patients from other hospitals. This is supported from the fact that Cryobanks has exclusive tie-up with various hospitals across the country. In view of the aforesaid, it is opined that there is no foreclosure and accordingly no violation of Section 3(4) of the Act. Issue: Can the conduct of OP be said to be in the nature of refusal to deal?
71. According to explanation (d) of Section 3(4) of the Act, "refusal to deal" includes any agreement, which restricts, or is likely to restrict, by any method the persons or classes of persons to whom goods are sold or from whom goods are bought.
72. From the above, it emerges that allegation pertaining to refusal to deal will operate only if (a) parties have an agreement between them; and (b) parties to the agreement (buyer or seller) are restricted or likely to be restricted from selling or purchasing goods. In the present case, OP being the seller of hospital space to Cryobanks, parties to agreement are: OP and Cryobanks. It has been alleged that on account of the agreement between OP and Cryobanks, other stem cell banks have been refused to deal by the OP.
73. Every exclusive deal or requirements contract with one supplier (or distributor or other customer) could potentially be characterized as a refusal to deal with the suppliers competitors. In fact, any contract could be characterized as a refusal to deal with other suppliers to the extent of the business covered by the contract. Antitrust does not impinge on most companies choices to deal, or not to deal, with other companies. However, antitrust laws frown upon such refusals that have a foreclosure effect on substantial amount of a market i.e. whether the contravening entity has a substantial market power so as to adversely affect competition in its favour.
74. Importantly, any allegation of refusal to deal has to be analyzed under the rule of reason approach rather than per se approach that condemns it for being anti- competitive. While doing so, it has to be seen whether there has been / likely to have anti-competitive effect in the market. In NYNEX Corp. v. Discon Inc., the US Supreme Court reversed a decision by the Second Circuit that had suggested that a single contract between a single buyer and a single seller might be illegal per se.
75. If we adopt a per se approach, the agreement between Hiranandani Hospital and Cryobanks for the provision of umbilical stem cell banking services to the maternity patients restricts other stem cell banks to provide its services to the patients at the Hiranandani Hospital. The agreement also limits the choice of those patients who want to avail maternity services and umbilical cord stem cell banking services at Hiranandani Hospital, but desire to obtain cord stem cell banking services from a different umbilical cord stem cell bank.
76. In the present case, following are to be noted: (i) Impugned agreement of OP with Cryobanks was initially for one year only; (ii) the OP is able to influence less than 1% maternity patients in the area of Mumbai, if at all it does so; (iii) The effect of so called tie-in is cast on less than 7% of its customers; and (iv) As submitted by OP, the practice of having an arrangement exists in other hospitals also. As regards contention of the Informant that other stem cell banks are restricted from doing business with the patients of OP, it would be appropriate to say that OP is within its right to choose its business partners in accordance with its commercial interests. Issue: Is there AAEC arising out of the agreement OP and Cryobanks?
77. Under AoD analysis, it has been shown that OP has less than 1% market share in terms of maternity services in Mumbai. Keeping this in mind, analysis of AAEC would be done.
78. In the present case, allegations pertain to: (a) tie-in arrangement; (b) exclusive supply agreement and; (c) refusal to deal. As discussed above the agreements are not in the nature of either tie in or exclusive supply agreement.
79. Furthermore, as discussed while the agreement may be in the nature of a refusal to deal, however, a rule of reason approach has to be adopted in the analysis of this restraint. It needs to be established, whether such an agreement has an appreciable adverse effect on competition, with regard to all or any of the factors stated in section 19(3) of the Act.
80. As per section 19(3) of the Competition Act, 2002, the Commission shall, while determining whether an agreement has an appreciable adverse effect on competition under section 3, have due regard to all or any of the following factors, namely:- a. Creation of barriers to new entrants in the market; b. Driving existing competitors out of the market; c. Foreclosure of competition by hindering entry into the market; d. Accrual of benefits to consumers; e. Improvements in production or distribution of goods or provision of services; f.Promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services. Creation of barriers to new entrants in the market
81. While it is true that OP has placed restriction on other stem cell banks in its premises, it is definitely not correct to say that it has created barriers to new entrants no evidence has been adduced by DG in this regard. The DG, in his supplementary report, has submitted that there were atleast 13 stem cell banks and that market share of Cryobanks in Mumbai was 34.54% (2011-12). Driving existing competitors out of the market
82. Citing exclusive tie-in arrangement between OP and Cryobanks, DG has observed that other competitors in the market of stem cell banking services are not allowed to cater to the maternity patients of OP. It is also submitted that having exclusive tie-up arrangement with a particular service provider and not allowing others to utilize its infrastructure, OP has effectively driven out all the existing competitors of Cryobanks out of the market.
83. Reliance is placed on an internet article,16 wherein it has been reported that about 500 samples are collected by stem cell banks on a monthly basis and that the market, witnessing entry of more players since starting of cord cell banking service in 2004, is growing by about 45-50%. Further, there is no evidence to show that any of the existing stem cell bank has been driven out of the market that may be relatable to the agreement signed between the OP and Cryobanks. Foreclosure of competition by hindering entry into the market
84. Citing market share of OP in the relevant market, the DG has submitted that the OP has foreclosed 62.27% of the market. Earlier in the order, it has been shown that the DG has taken an incorrect relevant market into account. Accordingly, this market share is incorrect. Furthermore, for the purpose of Section 3, foreclosure effect has to be assessed from market perspective, for which relevant market need not be taken into account. Also, as discussed earlier, there is no evidence of any sort of foreclosure of competition by hindering entry into the market the market here is that of stem cell banking and not stem cell banking at the premises of the OP. In view of the foregoing, I am of the view that there is no AAEC and accordingly no case for Section 3(4) violation.
24. I have heard the learned counsel for the parties, considered the written submissions filed by them and carefully examined the record of the case. Two questions which arise for consideration by the Tribunal are :
(i) Whether the finding recorded by the majority of the Commission that the appellant is guilty of acting in violation of Section 3(1) of the Act is legally sustainable ?
(ii) Whether the penalty of Rs. 3,81,58,303/- imposed by the Commission by taking into consideration total turnover of the appellant for last three financial years is legally justified ?
25. Before dealing with the afore-mentioned questions and at the cost of repetition, I consider it necessary to observe that even though the Act does not prescribe any qualification to identify the locus of an informant, the Commission is expected to act with caution where the informant is a third party or a busy body, who may be espousing the cause of someone-else with ulterior motive. A careful reading of the allegations contained in the information filed by Respondent No. 2 leaves no manner of doubt that in the garb of espousing public cause to highlight the alleged anti-competitive practice adopted by the appellant by insisting that the expectant mothers must avail stem cell banking services from Cryobanks, Respondent No. 2 had,in fact, espoused the cause of LifeCell, with whom the appellant had similar agreementsin 2009-10 and 2010-11. As mentioned earlier, Respondent No. 2had not come forward with the assertion that he is related to Smt. Manju Jain or was authorised by her to lodge a complaint against the appellant. The informant also didnot claim that he is otherwise acquainted with Smt. Manju Jain and was espousing her cause against the appellants refusal to allow LifeCell to provide stem cell banking services to her. In the absence of any direct or remote nexus between Respondent No.
2 and Smt. Manju Jain, the only possible source of information, which constituted the foundation of the complaint/information filed by Respondent No. 2could be LifeCell. If this was not so, how the informant could know that Smt. Manju Jain had entered into an agreement with LifeCell India Private Limited, which is a leading stem cell banking company in the country providing umbilical cord stem cell banking services; that Smt. Manju Jain had twice visited Dr. Vinita Raut, Gynaecologist in the appellant hospital for consultation in connection with her pregnancy; that Smt. Manju Jain had independently entered into an agreement with LifeCell; that when Smt. Manju Jain contacted LifeCell for using its stem cell banking services, the latter informed her that the appellant had directed it not to enrol any patient of the hospital because Cryobanks is their cord blood banker with effect from 01.09.2011 and the patients are not allowed to use the services of any third party stem cell banker; thatSmt. Manju Jain requested the appellant to allow her to engage LifeCell for collection of cord blood samples but the latter not only declined but also put undue pressure on her to terminate the existing agreement with LifeCell for umbilical cord stem cell banking services and to avail the services of a competitor i.e. CryoBanks; thatSmt. Manju Jain refused to succumb to the undue pressure exercised by the appellant and opted for another high-end multi- speciality hospital for maternity services. These and other facts mentioned in paragraphs 23 to 30 of the information, some of which are factually incorrect and misleading, could, by no means, be in the personal knowledge of Respondent No. 2. The same could have been supplied only and only by LifeCell with whom Smt. Manju Jain had entered into an agreement for taking stem cells. It is also important to note that Smt. Manju Jain had neither entered into any agreement with the appellant for maternity services nor had she informed Dr. Vinita Raut on 17.10.2011 about her having entered into an agreement with LifeCell for stem cell banking services and no material was produced by Respondent No. 2 before the Jt. DG or the Commission to show that the appellant had pressurised Smt. Manju Jain to terminate her agreement with LifeCell as a condition for providing maternity services.
26. Unfortunately, the Jt. DG and the majority of the Commission completely overlooked the afore-mentioned aspect of the case and conducted the entire exercise with a pre-conceived notion that the appellant was a super-speciality hospital and had acted in violation of the provisions of the Act. The findings recorded by the Jt. DG and the majority of the Commission, which have been extracted hereinabove unmistakably show that they are based on pure conjectures and imaginations and not on any concrete evidence. Although, Respondent No. 2 did not produce any evidence, the Commission proceeded to decide the matter by assuming that the agreement between the appellant and Cryobanks had adversely affected the growth of stem cell banking market and the same had the effect of foreclosing the competition in the stem cell banking market and create entry-barriers for competitors.
27. Another grave error committed by the Jt. DG and the Commission is non-examination of Smt. Manju Jain, who was the most important player in the entire episode involving alleged anti-competitive action of the appellant in collaboration with Cryobanks. Admittedly, the information lodged by Respondent No. 2 centred round the allegation that due to the anti- competitive agreement entered into between the appellant and Cryobanks, the former refused to allow LifeCell to provide stem cell banking services to Smt. Manju Jain at the time of delivery of her second child and she was forced to avail maternity services in another hospital at the last stage of her pregnancy. Only Smt. Manju Jain could have testified on the following issues: (a) Whether she had entered into any agreement with the appellant for maternity services ? (b) Whether during her visit to Dr. Vinita Raut on 17.10.2011, Smt. Manju Jain had disclosed that she had already entered into an agreement with LifeCell for obtaining stem cells from her umbilical cord (placenta) ? (c) Whether the appellant had coerced her to terminate the agreement entered into with LifeCell and to avail the services of Cryobanks for stem cell banking ?
28. The non-examination of Smt. Manju Jain was fatal to the allegations levelled by Respondent No. 2 that the appellant had indulged in anti- competitive activities and this omission would acquire greater significance in the backdrop of the fact that between 2009 and 2011, the appellant had entered into similar agreements with LifeCell with exclusivity clause and nobody including Respondent no. 2 had come forward to complain against the same. Of course, Respondent No. 2 has not offered any explanation as to why a qualified person like him did not complain against the agreement entered by the appellant with LifeCell.
29. What is most surprising is that the Commission didnot independently examine the various factors enumerated in Section 19(3), (5), (6) and (7) for deciding what constituted relevant market for the purpose of the present case. Both, the Jt. DG and the majority of the Commission were under a mistaken impression that the relevant market was of the market of maternity services ignoring that the whole dispute centred round the provision of stem cell banking services, which were being provided by the 13 entities in different parts of the country and two additional service providers had come into existence during the pendency of the information.
30. De horse the above fatal defects in the proceedings conducted by the Jt. DG and the majority of the Commission and the impugned order, I shall consider whether the finding recorded by the majority of the Commission that the appellant is guilty of acting in violation of Section 3(1) of the Act is legally sustainable. For this purpose, it will be apposite to notice the provisions of Sections 3 and 19(3), (5), (6) and (7) of the Act. The same read as under : Section 3 -Anti-competitive agreements (1)No enterprise or association of enterprises or person or association ofpersons shall enter into any agreement in respect of production, supply,distribution, storage, acquisition or control of goods or provision ofservices, which causes or is likely to cause an appreciable adverse effect oncompetition within India. (2) Any agreement entered into in contravention of the provisions containedin subsection (1) shall be void. (3) Any agreement entered into between enterprises or associations ofenterprises or persons or associations of persons or between any person andenterprise or practice carried on, or decision taken by, any associationof enterprises or association of persons, including cartels, engaged in identicalor similar trade of goods or provision of services, which (a) directly or indirectly determines purchase or sale prices; (b) limits or controls production, supply, markets, technical development,investment or provision of services; (c) shares the market or source of production or provision of services byway of allocation of geographical area of market, or type of goods orservices, or number of customers in the market or any other similarway; (d) directly or indirectly results in bid rigging or collusive bidding,shall be presumed to have an appreciable adverse effect on competition: Provided that nothing contained in this sub-section shall apply to anyagreement entered into by way of joint ventures if such agreementincreases efficiency in production, supply, distribution, storage,acquisition or control of goods or provision of services. Explanation.For the purposes of this sub-section, bid rigging means any agreement,between enterprises or persons referred to in sub-section (3) engaged inidentical or similar production or trading of goods or provision of services, whichhas the effect of eliminating or reducing competition for bids or adversely affectingor manipulating the process for bidding (4) Any agreement amongst enterprises or persons at different stages or levelsof the production chain in different markets, in respect of production,supply, distribution, storage, sale or price of, or trade in goods or provisionof services, including (a) tie-in arrangement; (b) exclusive supply agreement; (c) exclusive distribution agreement; (d) refusal to deal; (e) resale price maintenance, shall be an agreement in contravention of sub-section (1) if such agreement causesor is likely to cause an appreciable adverse effect on competition in India. Explanation.For the purposes of this sub-section, (a) tie-in arrangement includes any agreement requiring a purchaser ofgoods, as a condition of such purchase, to purchase some other goods; (b) exclusive supply agreement includes any agreement restricting in anymanner the purchaser in the course of his trade from acquiring orotherwise dealing in any goods other than those of the seller or any otherperson; (c) exclusive distribution agreement includes any agreement to limit, restrictor withhold the output or supply of any goods or allocate any area ormarket for the disposal or sale of the goods; (d) refusal to deal includes any agreement which restricts, or is likely torestrict, by any method the persons or classes of persons to whom goodsare sold or from whom goods are bought; (e) resale price maintenance includes any agreement to sell goods oncondition that the prices to be charged on the resale by the purchasershall be the prices stipulated by the seller unless it is clearly stated thatprices lower than those prices may be charged. (5) Nothing contained in this section shall restrict
(i) the right of any person to restrain any infringement of, or to imposereasonable conditions, as may be necessary for protecting any of hisrights which have been or may be conferred upon him under (a) the Copyright Act, 1957 (14 of 1957); (b) the Patents Act, 1970 (39 of 1970); (c)the Trade and Merchandise Marks Act, 1958 (43 of 1958) or theTrade Marks Act, 1999 (47 of 1999); (d)the Geographical Indications of Goods (Registration and Protection)Act, 1999 (48 of 1999); (e) the Designs Act, 2000 (16 of 2000); (f) the Semi-conductor Integrated Circuits Layout- Design Act, 2000 (37of 2000);
(ii) the right of any person to export goods from India to the extent to whichthe agreement relates exclusively to the production, supply, distribution orcontrol of goods or provision of services for such export. Section 19(3), (5), (6) and (7) Sec. 19.Inquiry into certain agreements and dominant position of enterprise- (1) The Commission may inquire into any alleged contravention of theprovisions contained in subsection (1) of section 3 or sub-section (1) ofsection 4 either on its own motion or on (a) [receipt of any information, in such manner and] accompanied by suchfee as may be determined by regulations, from any person, consumer ortheir association or trade association; or (b) a reference made to it by the Central Government or a StateGovernment or a statutory authority. xxx xxx (3) The Commission shall, while determining whether an agreement hasan appreciable adverse effect on competition under section 3, have dueregard to all or any of the following factors, namely: (a) creation of barriers to new entrants in the market; (b) driving existing competitors out of the market; (c) foreclosure of competition by hindering entry into the market; (d) accrual of benefits to consumers; (e) improvements in production or distribution of goods or provisionof services; (f) promotion of technical, scientific and economic development bymeans of production or distribution of goods or provision of services. xxx xxx (5) For determining whether a market constitutes a relevant market for thepurposes of this Act, the Commission shall have due regard to the relevantgeographic market and relevant product market. (6) The Commission shall, while determining the relevant geographicmarket, have due regard to all or any of the following factors, namely: (a) regulatory trade barriers; (b) local specification requirements; (c) national procurement policies; (d) adequate distribution facilities; (e) transport costs; (f) language; (g) consumer preferences; (h) need for secure or regular supplies or rapid after- sales services. (7) The Commission shall, while determining the relevant product market,have due regard to all or any of the following factors, namely: (a) physical characteristics or end-use of goods; (b) price of goods or service (c) consumer preferences; (d) exclusion of in-house production; (e) existence of specialised producers; (f) classification of industrial product
31. A plain reading of Section 3 makes it clear that sub-section(1) thereof can be invoked only if the agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services causes or is likely to cause an appreciable adverse effect on competition within India. Sub-section (2) of Section 3 is declaratory in nature. It provides that any agreement entered into in contravention of the provisions of Section 3(1) shall be void. Sub-section (3) contains a presumption of an appreciable adverse effect on competition if the agreement has any of the effects/consequences enumerated in clauses (a) to (d). Sub-section (4) lays down that any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provisions of services including those specified in clauses (a) to (e) shall be an agreement in contravention of sub-section (1) if such agreement causes or is likely to cause an appreciable adverse effect on competition in India.
32. While recording a finding that the appellant is guilty of violation of Section 3, the Jt. DG and the Commission completely overlooked that the agreement entered into between the appellant and Cryobanks did not, in any manner, restrict the choice of the service provider in the relevant market i.e. market for stem cell banking. By virtue of the agreement, the appellant could provide stem cell banking services to the patients who wanted to avail such services only through Cryobanks but the latter was free to enrol any patient(s) for such services to be availed in any other hospitals, maternity homes etc. That apart, there were 13 other players in the market of stem cell banking and the patients were free to avail services of any of these service providers according to their convenience and financial capacity. The Jt. DG and the Commission confused the basic issue by presuming that the stem cell banking service was an integral part of the maternity services provided by the appellant hospital and this confusion has resulted in miscarriage of justice in as much as the appellant has been found to be guilty of violating Section 3(1) of the Act without anyevidence that the refusal of the appellant to allow LifeCell to provide stem cell banking services to Smt. Manju Jain had appreciable adverse effect on competition.
33. At this stage, I may notice two earlier decisions of the Commission. In Subhash Yadavs case, the informant had alleged that Respondent No. 1, who holds dominant position in the relevant market of Sports Utility Vehicle (SUV) was guilty of abusing its dominant position and that the agreement between Respondent No. 1 and Daimler A.G., Germany was anti-competitive and violative of Section 3 (1) of the Act. While rejecting the arguments of the informant, the Commission referred to the aim and object of the Act, Section 3 thereof and observed :
6. It may be noted that the aim and object of the Act, is to prevent the practices having adverse effect on the competition, to promote competition and thereby to protect the interest of the customers. In nutshell, the purpose of this Act is to protect and promote fair competition in the markets in India. However, for the protection of individual consumer interest, there is another statue already in existence known as Consumer Protection Act, 1986 ('the Act of 1986') which mainly deals with protection of consumer interest against the deficiencies in services or goods being purchased by the consumers from sellers. Therefore, there is a clear difference between the two statutes stated above. The Competition Act is primarily concerned with ensuring and maintaining free and fair competition in Indian markets and the Act of 1986 is looking after individual consumer grievances against unfair trade practices and deficiencies in goods/services.
7. Finally, section 3 deals with two kinds of agreements. Section 3(3) of the Act, deals with horizontal agreements i.e., where the parties are engaged in identical or similar trade of goods or provision of services which determines the purchase or sale price, limit or control the production, indulge in bid rigging, etc. Whereas section 3(4) of the Act, deals with vertical agreements which are tie-in-arrangement, exclusive supply agreement and refusal to deal between the parties who are at different levels of production chain in different markets. The informant did not substantiate how the agreement between OP 1 and OP 6 has infringed section 3(1) of the Act. In Shri Sonam Sharmas case, the informant alleged that Respondents Nos. 1 and 2 had entered into some secret exclusive contracts/agreements with Respondents Nos. 3 and 4 for sale of iPhone in India, even prior to its launch, as a result of that, Respondents Nos. 3 and 4 got exclusive rights to sell for undisclosed number of years. It was also alleged that the handsets sold by Respondents Nos. 3 and 4 were compulsorily locked and would work only on their respective networks and none other. The informant further alleged that with a view to maximise its profits, Respondent No. 3 had manipulated its internet services in such a manner that they were no longer usable on iPhones and introduced iPhone-specific plans, which were costlier than their normal internet plans and in this manner, the customers were made to pay extra for using internet on their iPhone. Another allegation made by the informant was that the prospective iPhone purchasers had to leave their respective network providers and to compulsorily opt for expensive mobile telephonic services. The Commission analysed the allegations made in the information and issued an order under Section 26(1) for investigation by the DG, who submitted report with the finding that there was breach of Section 3 of the Act and further that the tie-in-arrangement between the parties would have appreciable adverse effect on the market. The Commission considered the findings and conclusions recorded by the DG and culled out the following issues :
i. Appreciable adverse affect arising from such agreements;
ii. Abuse of dominance by the opposite parties by:
a) Imposing unfair conditions in the purchase of Apple iPhones
b) Imposing discriminatory conditions on users who had purchased their Apple iPhones from a source other than OP 3 and OP 4
c) Indulging in such concerted practices under the agreements/ understandings between them, which results in denial of access, to the other GSM network providers
d) Concluding contracts for the sale of iPhones subject to acceptance by other parties of supplementary obligations
e) OP 3 &OP4 using their dominant position in the GSM market to enter and control the iPhone market in India. After examining the definitions of the relevant market, relevant product market and relevant geographic market, the Commission observed:
56. There are two issues that need to be highlighted before commenting on the dominant position of the opposite parties. Firstly, the business model / strategy of Apple in India need to be emphasized. At the time of launch of iPhones in India, Apple did not have its own retail stores. It might have been a conscious decision of Apple to sell the iPhones through existing mobile network operators (MNOs) in a locked state apart from APRs. This arrangement suited both Apple and MNOs since the former did not have to incur establishment / marketing expenditures while the latter were guaranteed of turf- client for the period of lock-in. In any case, the locked-in customers had the option to get their phone unlocked by paying some fees. It is observed that similar arrangement has been made by Apple in many countries where it launched its iPhones. For instance, in the US, AT&T has been the exclusive network of the iPhone.
57. Secondly, the Commission notes that while the Informant has submitted that information pertains only to iPhone 3G and 3GS, it is not clear whether data relied in the information to portray Apple's position includes all variants of iPhone. In the opinion of the Commission, relevant market cannot be segmented variant-wise (as has been proposed by the Informant) unless it is established that different variants have such distinct characteristic so as to be viewed as a distinct product by the customers - the only test that has been enshrined in the Act is substitutability/interchangeability from demand perspective.
58. Coming to the issue of dominance of Apple, it is noted from various independent reports that Apple's share in smartphone market in India was around 3% during 2008-11. On this screening criterion, the argument of Apple's dominance falls flat. However, the DG has analysed dominance of other factors as envisaged under 19(4) conditions and has concluded that even then, Apple cannot be said to be in a dominant position. The Commission endorses the view of the DG.
59. As regards the dominance of OP3 and OP4 in the second relevant market, the DG has held on the basis of section 19(4) conditions that neither Airtel nor Vodafone has adequate market power so as to be deemed dominant. Also, the argument made by the Informant that OP3 and OP4 hold nearly 52% of market share in the GSM services in India cannot be accepted for the fact that they are horizontal competitors who fight for greater market share. Moreover, there is no allegation qua these OPs that they have indulged into anti-competitive conduct among themselves for a common cause.
60. According to the data available on the website of Cellular Operators Association of India (COAI), Group Company wise percentage market share in terms of GSM subscribers for the month of December 2012 is as follows: Sl. No. Name of Company Subscribers (actual) Market Share
1 BhartiAirtel 18,19,06,892 27.68%
2 Vodafone Essar 14,74,76,290 22.44%
3 IDEA 11,39,46,827 17.34%
4 BSNL 9,71,72,146 14.79%
5 Aircel 6,33,47,284 9.64%
6 Uninor 4,15,20,544 6.32%
7 Videocon 36,40,312 0.55%
8 MTNL 51,19,179 0.78%
9 Loop Mobile 30,28,539 0.46% All India 65,71,58,013 100.00% Source: http://www.coai.com/statistics.php - Subscriber Figures for Dec 2012 From the above data as also the data submitted by the DG, it is observed that none of the OPs can be deemed dominant in terms of respective market share in the relevant market and other Section 19(4) conditions.
61. An issue has been raised by the Informant, submitting that OP3 and OP4 hold more than 50% of GSM market, thereby making them dominant in the market. The Commission notes that there is no indication of any sort of agreement between them (OP3 and OP4) that could be deemed anti-competitive. Therefore, it is not relevant to take cognizance of this piece of information in the given context, more so when they are competitors in the same market.
62. In view of the above discussion, Commission opines that since dominance does not get established, there can be no case for abuse of dominance under Section 4 of the Act. The Commission then discussed whether the agreements between the respondents were anti-competitive, referred to Section 3 of the Act and proceeded to observe :
66. A tying arrangement occurs when, through a contractual or technological requirement, a seller conditions the sale or lease of one product or service on the customer's agreement to take a second product or service. In other words, a firm selling products X and Y makes the purchase of product X conditional to the purchase of product Y. Product Y can be purchased freely on the market, but product X can only be purchased together with product Y. The product that a buyer is required to purchase in order to get the product the buyer actually wants is called the tied product. The product that the buyer wants to purchase is called the tying product. Examples of tying include the tied sales of machines and complementary products, the tied sales of machines and maintenance services, as well as technological ties that force consumers to buy two or more products from the same supplier due to compatibility reasons. More often, tying is a sales strategy usually adopted by the companies to promote / introduce a slow-selling or unknown brand when it has in its portfolio a fast-selling or well known product, over which it has certain market power.
67. Price bundling is a strategy whereby a seller bundles together many different goods / items for sale and offers the entire bundle at a single price. There are two forms of price bundling - pure bundling, where the seller does not offer buyers the option of buying the items separately, and mixed bundling, where the seller offers the items separately at higher individual prices. From producers perspective, mixed bundling is usually preferable to pure bundling, both because there are fewer legal regulations forbidding it, and because the reference price effect makes it appear even more attractive to buyers. Bundling is used as a strategic pricing tool by the producers to price discriminate among groups of buyers with different preference schedule in order to capture larger pie of social surplus thus generated.
68. Having discussed tying and bundling, it is important to underscore the fact that there is a subtle difference between the two concepts. The term "tying" is most often used when the proportion in which the customer purchases the two products is not fixed or specified at the time of purchase, as in a "requirements tie-in" sale. A bundled sale typically refers to a sale in which the products are sold only in fixed proportions (e.g., one pair of shoes and one pair of shoe laces or a newspaper, which can be viewed as a bundle of sections, some of which may not be read at all by the customers). Bundling may also be referred to as a "package tie-in." It is also true that various foreign courts have occasionally used the two terms interchangeably.
69. On the other hand, anti-trust concerns are raised in the case of tie-in as held in section 3(4) (a), although per se it is not anti-competitive. Therefore, the Commission has been at pains to distinguish between a tie-in arrangement and bundling in this specific case. Economics literature suggests that there are pro- competitive rationales for product-tying. These include assembly benefits (economies of scale and scope), quality improvement as also addressing pricing inefficiencies. Generally, the following conditions are necessary and essential in respect of anti-competitive tying:
1. Presence of two separate products or services capable of being tied: In order to have a tying arrangement, there must be two products that the seller can tie together. Further, there must be a sale or an agreement to sell one product or service on the condition that the buyer purchases another product or service (or the buyer agrees not to purchase the product or service from another supplier). In other words, the requirement is that purchase of a commodity was conditioned upon the purchase of another commodity.
2. The seller must have sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product: An important and crucial consideration for analyzing tying violation is the requirement of market power. The seller must have sufficient economic power in the tying market to leverage into the market for the tied product. That is, the seller has to have such power in the market for the tying product that it can force the buyer to purchase the tied product.
3. The tying arrangement must affect a "not insubstantial" amount of commerce: Linked with the above requirement, tying arrangements are generally not perceived as being anti-competitive when substantial portion of market is not affected.
70. The present case involves a distribution / sales arrangement between Apple and Airtel / Vodafone is a case of 'contractual tying' wherein the handset manufacturer and service provider have joined hands to offer a packaged product to a customer. Tying arrangements are common in the wireless- telecommunications industry. Worldwide wireless networks compete for exclusive contracts to offer popular mobile devices. However, the Commission deliberated on whether such tying arrangements are anti- competitive. An agreement between two parties in a vertical chain to be anti- competitive essentially requires that the intention of such an agreement was foreclosure in both the relevant markets resulting in considerable consumer harm. But as pointed out that for a vertical agreement to be anti competitive requires the monopolization claim to hold, and given the minuscule market share of the tying party the monopolization claim will be contrived. Nevertheless, we assess this agreement in the framework of 19(3)(a) (b) and (c) by posing the following questions: Does this agreement prevent Airtel and Vodafone customers to use other smart phones? Does the agreement prevent unlocked iPhone users to use services of other mobile service provider? Consequently, is there a foreclosure effect of the agreement on any of the two markets - smartphone and mobile services?
71. Given the fact that none of the opposite parties (Apple/ Airtel / Vodafone) have dominant position in their respective market, as discussed earlier and that there has been no intention and evidence to show that market has been foreclosed to competitors or that entry-barriers have been erected for new entrants in any of the markets by any of the opposite parties, the anti- competitive analysis of the tie-in arrangement shall be made while addressing the above questions.
72. In this case, it is found that a consumer interested in buying an iPhone is tied to one of the two mobile networks i.e. Airtel or Vodafone. It is worth noting that at the time of launch of iPhone in India, Apple did not have an outlet to sell its iPhone, a high-end smartphone. Instead of investing money on creating sales and service outlet and incurring advertisement expenditure, Apple's strategy was to have tactical agreement with network operators, possibly the best partners for selling mobile handsets. This arrangement also helped Apple in gauging the public perception for iPhone before actually selling iPhone through its own retail stores. The mobile network companies who spent money on creating distribution channel and incurring advertisement expenditure wanted the iPhone to be locked-in for some period so that they would be able to recoup their investment over a period of time.
73. To assess the alleged anti-competitive effect of the tie-in arrangement between Apple and Airtel / Vodafone in line with Section 19(3), the Commission examined the following: A. Share of markets: Market share of Apple iPhone in the smartphone segment; subscribers using Apple iPhone as a percentage of total GSM subscriber. B. Sanctity of exclusivity under multiple arrangements of Apple with other service providers as well as premium resellers, apart from the cited opposite parties. C. Effect of the tie-in arrangement between a handset manufacturer and a service provider vis--vis consumer choice.
74. Relying on the market share statistics of smartphones in India as provided by the DG, the Commission observes that Apple had a share of less than 6% in the market of smart phones during the period 2008-
11. Furthermore, share of GSM subscribers using Apple iPhone to total GSM subscribers in India is miniscule (less than 0.1%). Similarly, relying on the data provided by the DG on mobile service provider, the Commission observes that no operator has more than 35% market share in an otherwise competitive mobile network service market. As none of the impugned operators (OP3 / OP4) have market- share exceeding 30%, that smartphone market in India is less than a tenth of the entire handset market and that Apple iPhone has less than 3% share in the smartphone market in India, it is highly improbable that there would be an AAEC in the Indian market.
75. In the present case, the Commission notes from the DG's investigation that Apple iPhone had approached several service providers to sell its handset without exclusivity as regards the service provider. Apart from service providers, these handsets were also sold through the Apple Premium Resellers (APRs). The exclusivity argument put forward by the Informant flies in the evidence of multiple choices for both purchase of iPhone as well as network service provider for consumers.
76. The Commission also notes that a consumer having a mobile handset (smartphone or otherwise) is free to exercise his choice for availing network services without any restrictions. Furthermore, the network operators do not require any particular handset to be purchased by the customer in order to avail its network services. Moreover, the lock-in arrangement of iPhone to a particular network was for only for a specific period and not perpetual, a fact known to prospective customer. It is difficult to construe consumer harm from the 'tie-in' arrangement between the opposite parties. The Commission observes that there is no restriction on consumers to use the network services of OP3 and OP4 to the extent that the network services can be availed on any mobile handset, even an unlocked iPhone purchased from abroad. Also, a consumer who has purchased a locked iPhone in India and paid the unlocking fees is free to choose the network operator of his choice.
77. On the basis of facts submitted by the DG, none of the OPs have a position of strength to affect the market outcome in terms of market foreclosure or deterring entry, creating entry barriers or driving any existing competitor out of the market and within the theoretical framework of tying arrangement, the anti-competitive concerns in terms of section 3(4) violations does not hold. On the other hand, Commission has reasons to believe that the distribution arrangement between the impugned parties helped create a market for iPhone in India wherein domestic consumers got an opportunity to purchase a contemporary handset which was otherwise available through the grey market.
78. The Commission does not find any evidence to show that entry-barriers have been created for new entrants in the markets i.e. smartphone market and mobile services market by any of the impugned parties. Similarly, nothing has been brought to the notice of the Commission to reveal that existing competitors have been driven out from the market or that the market itself has been foreclosed.
79. Under these circumstances, on the basis of the counter-factual posed, the Commission opines that there is no anti-competitive effect of the tie-in arrangement as alleged by the Informant. In fact, there is some suggestion in the literature that the earlier tying arrangement between the iPhone and the service providers in other jurisdictions may have spurred wireless service providers to invest in innovation in mobile devices. Such innovation has resulted in an explosion of new mobile devices and continued growth of the mobile communications industry. It has not caused the disastrous results on competition or the formation of double-monopolies that some have feared. Hence, the belief that the tying arrangement has caused serious harm is misplaced.
34. In the order under challenge, the majority of the Commission has not even referred to the view taken by it in Shri Sonam Sharmas case what to say of discussing the same. In her minority opinion, Dr. Geeta Gouri has correctly analysed Section 3 read with Section 19, referred to previously decided cases as also the cases decided in other jurisdictions and concluded that there is no violation of Section 3(3) or 3(4) of the Act. I am in complete agreement with the view expressed in the minority order and hold that the finding recorded by the majority of the Commission that the agreement entered into between the appellant and Cryobanks for providing stem cell banking service is violative of Section 3(1) of the Act is wholly erroneous and unsustainable.
35. Respondent No. 2s contention that the agreement had the effect of foreclosing competition is belied by the fact that the at least two new entities namely, Novacord and Unistem Biosciences have entered the market in 2011 and 2012 respectively i.e. after execution of the agreement between the appellant and Cryobanks and no evidence whatsoever was produced before the Jt. DG or the Commission to show that any operating entities had exited the market on account of operation of the impugned agreement.
36. As a corollary to the above conclusion, it must be held that the penalty imposed by the Commission under Section 27 of the Act cannot be upheld.
37. The following are the other reasons why the penalty imposed by the majority of the Commission is liable to be set aside :
(i) The view taken by the Commission on the interpretation of the term turnover is contrary to the view expressed by the Tribunal in Appeal No. 79 of 2011-M/s. Excel Corp Care Limited Vs. Competition Commission of India and others decided on 29.10.2013 along with Appeals Nos. 80 and 81 of 2012. In that case, the Commission had imposed penalty on the appellants @ 9 % of the average turnover of three financial years. While modifying the order of the Commission, the Tribunal made the following observations:
60. The arguments put forward by Shri Ravinder Narain, Shri Ramji Srinivasan as also by Dr. V. K. Aggarwal are more or the less correct when they point out the total absence of reasons as to why the CCI decided to inflict the penalty @ 9% of the average turn over. Time and again we have been reiterating the necessity of the reasons while ordering the penalty. We hope that the CCI take serious note of that factor. This is particularly true as the CCI is an adjudicatory body as declared by two Supreme Court judgments. The role as an adjudicatory body would cover all the aspects of hearing and deciding.
61. There can be no dispute that where harsh financial penalties are inflicted the reasons become all the more necessary.
62. All the learned counsels very seriously canvassed the question of relevant turn over. The argument that the appellants, United Phosphorous Ltd. and M/s. Excel Corp Limited, are the multi product companies was not seriously disputed by Shri Balaji Subramanian, learned counsel for the CCI. We have no reason not to accept that factor. As regards the arguments based on EU and OFT guidelines, we are of the opinion that those guidelines are undoubtedly relevant in arriving at the issue of deciding upon the turn over. However, those guidelines cannot be treated as be all and end all in the matter and would have to be considered in the light of the facts of each case. We, however, accept the contention that in the circumstances of this case the relevant turn over should be considered in case of the two appellants who are multi product companies. To that extent we generally agree with the sentiment expressed in the relied upon judgment of the South African Tribunal in the case of Southern Pipeline Contractors & anr. vs. The Competition Commission. We must, at this stage, take into consideration the argument by Shri Balaji Subramanian. The learned counsel who supported the penalty on the basis of the average turn over. The learned counsel invited our attention to our judgment in the matter of MDD Medical Systems India Pvt. Ltd. vs. Foundation for Common Cause & Ors. (Appeal No. 93 of 2012) and more particularly to paragraph 23. Relying on those observations, the learned counsel argues that in that judgment we had rejected the concept of relevant turn over. We must explain that firstly the companies which we were dealing with in that case were not multi-product companies. Secondly, we had specifically pointed out that the restricted turn over could not be taken into consideration. A restricted turnover is different from the relevant turn over. In that case the argument was that we must only consider the turn over generated in the supplies made only to the Government Hospitals. We had pointed out that the business of supply of the materials could not be any different from the supplies to the other Hospitals. It was on that basis that we had rejected the argument. We must repeat that we had not rejected the total concept of relevant turn over. We are accepting the argument regarding the relevant turn over in the peculiar circumstances of this case where the two appellant companies have clearly indicated that the other products of those companies have no connection and do not depend upon the product involved in this matter, that is ALP Tablets. We, therefore reject the argument of Shri Balaji Subramanian. [Underlining is mine]
(ii) It is not in dispute that the appellant is a multi-speciality hospital and its total annual turnover is the income derived from the services provided in different specialities and not maternity services alone. The figures provided by the appellant (paragraph 47 of the written submissions filed on 20.03.2015) show that the total commission earned by the appellantfrom Cryobanks was Rs. 85,45,567/- from September, 2011 to August, 2012 and September, 2012 to August, 2013. The total maternity revenue generated from maternity patients who availed Cryobanks services during the aforesaid period from 2011 to 2013 was Rs. 3,96,76,307/- and overall maternity revenue for the same period was Rs. 4,92,80,090/-. The average maternity turnover for preceding three financial years i.e. 2009-10, 2010-11 and 2011-12 was Rs. 2,01,89,412/-. Unfortunately, the Commission clubbed the revenue generated from all the services provided by the appellant hospital and accordingly imposed penalty, which is legally impermissible in view of the Tribunals order inM/s. Excel Corp Care Limited Vs. Competition Commission of India and others.
(iii) Since the term turnover appearing in clause (b) of Section 27 has not been defined, the same must take its colour from the preamble, definitions of various terms and other provisions of the Act including Sections 3 and 4, the contravention of which can invite an order of penalty and other consequences enumerated in Section 27. In this connection, reference can usefully be made to the proposition laid down by the Supreme Court in Central Bank of India Vs. State of Kerala and others [(2009) 4 SCC 94] on the interpretation of statutes. The question considered in that case was whether Section 38-C of the Bombay Sales Tax Act, 1959(for short "the Bombay Act") and Section 26-B of the Kerala General Sales Tax Act, 1963 (for short "the Kerala Act") and similar provision contained in other State legislations by which first charge has been created on the property of the dealer or such other person, who is liable to pay sales tax etc., are inconsistent with the provisions contained in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short the DRT Act) for recovery of `debt' and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the Securitisation Act) for enforcement of `security interest' and whether by virtue of non obstante clauses contained in Section 34(1) of the DRT Act and Section 35 of the Securitisation Act, two Central legislations will have primacy over State legislations will have primacy over State legislations are the questions which arise for determination in these appeals. While answering the aforesaid question in negative, the Supreme Court referred to some of the principles of interpretation of statutes. The relevant paragraphs (paragraphs 25 to 27 of the Manupatra publication of that judgement) are extracted below :
25. As a prelude to the consideration of question relating to conflict between Central and State legislations and priority, if any, given to the dues of banks, financial institutions and other secured creditors under the DRT Act and Securitisation Act, it will be useful to notice some rules of interpretation of statutes, one of which is the rule of contextual interpretation. This rule requires that the court should examine every word of a statute in its context. In doing so, the Court has to keep in view preamble of the statute, other provisions thereof, pari materia statutes, if any, and the mischief intended to be remedied. Context often provides the key to the meaning of the word and the sense it carries. Its setting gives colour to it and provides a cue to the intention of the legislature in using it. In his famous work on Statutory Interpretation, Justice G.P. Singh has quoted Professor H.A. Smith in the following words: No word', says Professor H.A. Smith `has an absolute meaning, for no words can be defined in vacuo, or without reference to some context'. According to Sutherland there is a `basic fallacy' in saying `that words have meaning in and of themselves', and `reference to the abstract meaning of words', states Craies, `if there be any such thing, is of little value in interpreting statutes'. ... in determining the meaning of any word or phrase in a statute the first question to be asked is -- `What is the natural or ordinary meaning of that word or phrase in its context in the statute? It is only when that meaning leads to some result which cannot reasonably be supposed to have been the intention of the legislature, that it is proper to look for some other possible meaning of the word or phrase.' The context, as already seen in the construction of statutes, means the statute as a whole, the previous state of the law, other statutes in pari materia, the general scope of the statute and the mischief that it was intended to remedy. In PoppatlalShah v. State of Madras 1953CriLJ1105MANU/SC/0074/1953, this Court while construing the word `sale' appearing in the Madras General Sales Tax Act, 1939 before its amendment in 1947, observed: it is a settled rule of construction that to ascertain the legislative intent, all the constituent parts of a statutes are to be taken together, and each word, phrase or sentence is to be considered in the light of the general purpose of the Act itself.
26. In Reserve Bank of India v. Peerless General Finance and Investment Company Limited[1987]2SCR 1 MANU/SC/0073/ 1987 , it was observed, "that interpretation is best which makes the textual interpretation match the contextual." Speaking for the Court, Chinappa Reddy, J. noted the importance of rule of contextual interpretation and held: Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place. It is by looking at the definition as a whole in the setting of the entire Act and by reference to what preceded the enactment and the reasons for it that the Court construed the expression `prize chit' in Srinivasa (1980) 4 SCC 507MANU/SC/0042/1980 and we find no reason to depart from the Court's construction.
27. In R. v. National Asylum Support Services (2002) 4 All ER 654, LORD STEYN observed "the starting point is that language in all legal texts conveys meaning according to the circumstances in which it was used. It follows that context must always be identified and considered before the process of construction or during it. It is, therefore, wrong to say that the court may only resort to the evidence of contextual scene when an ambiguity has arisen." [Underlining is mine]
38. Section 3 speaks of anti-competitive agreement and Section 4 deals with abuse of dominant position. A finding that the particular agreement is anti-competitive or any enterprise or group of enterprises are guilty of abuse of dominant position can be recorded only with reference to the particular goods, product or service. An enterprise may be engaged in manufacture, production, supply, distribution, etc. of multiple products. Another enterprise like the appellant may be engaged in providing multi-dimensional services. Such enterprise may be found guilty either of entering into anti- competitive agreement with reference to particular product/goods or services or may be held guilty of abuse of dominant position in respect of such product/goods or services, but the finding of violation of Sections 3 and/or 4 of the Act recorded by the competent authority i.e. the Commission cannot be made applicable to agreements entered into between the enterprise and another person in respect of other products, goods or services qua there is no allegation of anti-competitive agreements or abuse of dominant position and the turnover of other products and services cannot be clubbed with the one qua which a finding of violation of the provisions of the Act is recorded.
39. At the cost of repetition, it deserves to be emphasised thatthe appellant has been providing multiple healthcare services, maternity service being one of them and stem cell banking which is being provided by a third party (Cryobanks), can at best be considered as a small part of the maternity services provided to those who are desirous of availing such services. Therefore, even if the finding of the majority of the Commission that the agreement entered into between the appellant and Cryobanks is violative of Section 3(1) of the Act is to be upheld, the turnover of the appellant with reference to stem cell banking services only could be taken into consideration for the purpose of imposing penalty and not the turnover with reference to other services or income derived from other sources.
40. While imposing penalty, the Commission completely overlooked the following important factors :
(i) Smt. Manju Jain, who wanted to avail stem cell banking services did not complain that due to refusal of the appellant to allow LifeCell to collect stem cell at the time of her delivery had caused any loss, damage or harm to her.
(ii) The informant did not make any complaint against the agreements executed between the appellant and LifeCell in the years 2009-10 and 2010-11, which gave exclusive rights to LifeCell to collect stem cell from the maternity patients coming to the appellant who were desirous of availing that service.
(iii) This case was first of its type in which private healthcare service sector was being evaluated under the Competition Act on the allegation of violation of Sections 3 and 4 in the context of stem cell banking.
(iv) After the termination of agreement entered into between the appellant and Cryobanks, the former neither renewed the agreement nor entered into any other exclusive agreement with Cryobanks or any other stem cell banks. In fact, the appellant furnished an undertaking before the Commission on 30.03.2014 not to enter into any similar agreement.
41. In the result, the appeal is allowed. The majority order of the Commission is set aside and the information filed by Respondent No. 2 is dismissed. [G.S. Singhvi] Chairman 18th December, 2015