By way of a January 4 2016 order,(1) the Competition Commission of India (CCI) closed a case alleging that four public sector general insurers and their association had established anti-competitive agreements.(2)

The informant was a third-party administrator (TPA). TPAs ensure that health insurance services are efficient, consumer-centric and serve the needs of India's growing healthcare infrastructure.

It was alleged that the General Insurance Public Sector Association (GIPSA), an informal association of the four insurers, had been established and used to further the insurers' anti-competitive conduct. The informant alleged that despite being an ad hoc body, GIPSA expressed interest in setting up the Health Insurance TPA of India Ltd (HITPA), a captive TPA, through a joint venture, thus demonstrating that GIPSA was being used to further anti-competitive agreements among the insurers.

The informant supplied a circular issued by the Department of Financial Services directing the chief managing directors of the four insurers not to conduct standalone group health insurance business with each other without obtaining express consent from all concerned directors, to ensure that there was no competition among them. The informant also supplied communications showing compliance with the circular.

The director general's investigation found that the insurers' decision to establish HITPA was meant to ensure increased efficiency in delivery standards. HITPA had no exclusive rights to the insurers' business and thus would not foreclose the market or lead to an appreciable adverse effect on competition.

Further, HITPA was not yet operational on the date on which the director general's report was submitted. The director general also considered that the meeting records supplied in order to prove cartelisation were incomplete and unsigned, and hence could not be considered genuine. As regards the instructions issued by the Department of Financial Services, the director general found that the insurers continued to compete with each other. However, their conduct during the investigation showed no violation of Section 3(3) of the Competition Act.

As regards the joint venture, the CCI considered that the mere formation of a joint venture cannot be considered anti-competitive per se, especially since the same was not functional at this nascent stage. The CCI was of the opinion that the formation of HITPA by way of the joint venture was a commercial decision aimed at combating the inefficiencies and deteriorating services provided by existing TPAs. On analysing the impact of the joint venture (ie, in terms of Section 19(3) of the Competition Act 2002), it appeared that HITPA would not affect the market for existing TPAs in any appreciable adverse manner.

As regarding the alleged business sharing agreement between the insurers, the CCI noted that the evidence supplied by the informant was not only incomplete, but also unsigned. It did not even mention the name of the organisation, person or authority that had purportedly issued the instructions and guidelines.

Regarding the culpability of the association, on review, it was determined that the details furnished by the association and the meeting minutes of its governing board did not fall under the scope of Section 3 of the act. The investigation found no anti-competitive arrangement among the four insurers. The CCI agreed with these findings.

Finally, in relation to the alleged liability of the Department of Financial Services for issuing the purported circular, the CCI noted that the department functions only as an extension of the government and acts on behalf of the president in order to monitor the overall performance and functioning of public insurers. Hence, it does not qualify as an 'enterprise' within the definition set out in Section 2(s) of the act. However, the CCI opined that the department should refrain from issuing any directions or guidelines to public insurers in the interest of protecting competition.

For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4929 2525) or email ([email protected]). The Vaish Associates website can be accessed at


(1) For the full text, please see the CCI website.

(2) For further details, please see "Competition Commission of India (CCI) closes case against General Insurance Public Sector Undertakings and their association for alleged cartelization".

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