Competition Commission of India was wrong to throw out abuse claim against Director General of Health

The Competition Appeal Tribunal (Compat) has declared that Indian’s competition regulator, the CCI had no grounds to reject an abuse of dominance investigation into the Director General of Health Services (DGHS) on the basis that it was a public body not subject to competition law.

The complainant Veteran’s Forum alleged that DGHS discriminated between hospitals by granting more favourable terms and reimbursements to healthcare centres that were accredited by the National Accreditation Board for Hospitals and Healthcare Providers.  The CCI dismissed the complaint on the grounds that neither body was an ‘enterprise’ for the purpose of Indian competition law because it was not engaged in economic or commercial activities.   Consequently, the CCI did not go on to consider the abuse claims.

The Compat overruled the CCI and considered that it had taken far too simplistic a view of the concept of an enterprise under India’s competition law.  DGHS provides healthcare in over 400 centres and Compat concluded that it could not be deemed to be performing a sovereign function and therefore meriting exclusion from competition law responsibilities.

The case makes clear that public bodies can be subject to antitrust liability in India.  It may encourage competition law complaints to be made against organs of the Indian public administration where they are engaged in economic or commercial activities.

The case is reminiscent of early cases in Europe which have clarified the application of competition law to the activities carried on by state and public bodies.  The competition law provisions contained in Article 101/102 TFEU apply to ‘undertakings’.  It is clear that this concept can apply to a public body provided that it is engaged in economic or commercial activities. 

The key principles are the following:

·         Competition law applies to undertakings, that is, bodies engaged in economic activity.  It is firmly established that ‘the concept of an undertaking encompasses every entity engaged in an economic activity regardless of the legal status of the entity and the way in which it is financed’.  Case C-41/90 Höfner and Elser ECLI:EU:C:1991:161, [1991] ECR I-1979

·         The use of regulation by a public body in the pursuit of commercial activity or objectives does not preclude that activity from being subject to competition law.  Case 41/83 Italy v Commission (British Telecommunications) ECLI:EU:C:1985:120, [1985] ECR 873

·         A body can act as an undertaking in respect of some of its functions and not in respect of others.

·         To qualify as an undertaking for the purposes of EU competition law, it is not necessary that the public body has a distinct legal personality that is separate from the state.  Case 118/85 Commission v Italy (Transparency Directive) ECLI:EU:C:1987:283, [1987] ECR 2599

·         Conduct amounts to economic activity when the body is: (a) supplying a good or service, and (b) that supply is of a commercial nature.