CCI orders investigation into Athletics Federation of India for abuse of dominance

By an order dated March 16 2016(1) the Competition Commission of India (CCI) ordered a detailed investigation into the Athletics Federation of India (AFI) for restricting the organisation of marathons without the AFI's permission.

The case was referred to the CCI by the Department of Sports, Ministry of Youth Affairs and Sports. It was alleged that in its 2015 annual general meeting (held on April 10 and 11), AFI agreed to take action against state units, officials and athletes that encouraged the organisation of marathons without the AFI's permission.

The CCI considered that in the relevant market (ie, the provision of services relating to the organisation of athletic activities in India), AFI was the dominant body for managing athletics in India and, by virtue of its association with the International Association of Athletics Federation, the Asian Athletics Association and Indian Olympic Association, it controlled athletic activities throughout the country. In relation to the organisation of athletic activities in India, AFI was the overarching authority, with control over all such events and activities. Thus, AFI was considered to be dominant in the relevant market.

The CCI held that AFI tried to impose discriminatory terms and conditions by requiring other athletic organisations to obtain its permission in order to conduct national and international marathon meets, and was thus restricting the entry of new entrants into the relevant market. AFI's conduct prima facie appeared to be an abuse of its dominant position under Section 4 of the Competition Act. The director general has been directed to investigate the AFI's conduct for abuse of its dominant position.

CCI ordered to reconsider matter against director general of health services

By an order dated March 1 2016(2) the Competition Appellate Tribunal (COMPAT) set aside a CCI decision refusing to order an investigation into the director general of health services (DGHS) for discriminating between National Accreditation Board for Hospitals (NABH) accredited hospitals and healthcare providers and non-accredited hospitals under the Central Government Health Scheme (CGHS) for government employees managed by the Union Ministry of Health and Family Welfare. The case has now been referred back to the CCI for reconsideration.

In the information filed by Wing Commander (Retd) Dr Biswanath Prasad Singh, it was alleged that the DGHS had issued an office memorandum authorising an extra 15% payment to NABH-accredited hospitals from the contributory health service schemes under the CGHS. It was further alleged that the DGHS abused its dominance and thereby thwarted competition among hospitals through empanelment under the CGHS. The information contented that the DGHS was not providing a level playing field and was thus discriminating against non-accredited hospitals.

The CCI held that the DGHS's activities are not covered under the definition of 'enterprise' within the Competition Act because the DGHS is not directly engaged in any economic or commercial activities. Its role is limited to controlling and regulating the Indian healthcare system. As such, according to the CCI, its conduct could not be investigated for any abuse of dominance under the act and the case was closed.

COMPAT held that the definition of 'enterprise' within Section 2(h) of the act covers government departments, except in relation to sovereign functions and activities carried out by the central government in relation to atomic energy, currency, defence and space.

According to COMPAT, CGHS is not only a facilitative mechanism, but also provides healthcare facilities. In cases which require hospitalisation or further specialised care, references are made to hospitals which are empanelled for this purpose. As such, COMPAT held that, by its own admission, the respondent was not only a facilitator helping its target group to seek healthcare in empanelled hospitals, but also provided healthcare in its 273 allopathic dispensaries, 19 polyclinics, 73 labs and 85 Ayush hospitals.

Thus, COMPAT held that the DGHS is an enterprise and remitted the matter back to the CCI for reconsideration as to whether there is a case for further investigation.

For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4929 2525) or email (mmsharma@vaishlaw.com). The Vaish Associates website can be accessed at www.vaishlaw.com.

Endnotes

(1) CCI order dated February 16 2016. For the full text please see the CCI's website.

(2) COMPAT order dated March 1 2016. For the full text please see COMPAT's website.

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