By TIOL News Service

NEW DELHI, MAR 3, 2016: THE issue is: Whether the Director General of Health services qualifies as enterprise under Section 2(h) of the Competition Act and be subject to DG investigation for alleged abuse of its dominant position. YES is the answer.

Facts

The information was originally filed in the year 2004 by wing cdr. (retired) Dr. Biswanath Prasad Singh (the Appellant) against Director General of Health services /DGHS (the Respondent), which is providing preventive as well as curative healthcare services to Central Government employees, retired Central Government personnel and their dependent family members for the alleged unfair trade practices, abuse of dominant position and cartelization. For providing the above services, Respondent has empanelled several hospitals across the country. The appellant accused that under Central Government Health Scheme /CGHS, the respondent discriminated between hospitals on the basis of their accreditation to the National Accreditation Board for Hospitals and healthcare providers (NABH). The same practice is followed under Ex-servicemen Contributory Health Scheme (ECHS). The respondent through the issue of this Office Memorandum, has arbitrarily hiked the hospital base rate. The differential rate of payment is heavily tilted towards accredited hospitals and makes them eligible for higher rate of payment higher by 15% in comparison to other hospital even though they were in possession of matching technology and infrastructure.

The Respondent favours NABH accredited hospitals and puts the non-NABH accredited hospitals in a disadvantageous position. For example, rate for OPD consultation for NABH accredited hospitals has been fixed as Rs.58/- whereas the rates for the non-NABH accredited hospitals is Rs.50/-. The respondent abuse its dominant position, thwarted competition among hospitals discriminate against non-accredited hospitals and encourage cartelization. The Commission close the matter u/s 26(2) on the ground that the respondents do not directly engaged in any economic and commercial activities and hence did not qualify to be an ‘enterprise’ u/s 2(h) of the Act. Hence, this appeal.

Reasoning

1. The definition of enterprise covers all departments of the Government. The definition does not cover only those institutions connected with activities relating to goods but also covers activities relating to provision of services of ‘any kind’ which gives a very broad connotation to the gamut of activities that can be covered in the definition of services. As far as exclusion is concerned, there are two possibilities. Firstly, the activities of the Government relating to sovereign functions of the Government are excluded. Further, this is a matter of situation specific facts as to what activities can be considered as relatable to the sovereign functions. The second exclusion is categoric, i.e., activities covered by the departments of Central Government dealing with atomic energy, currency, defence and space.

2. As decided in various cases, DGHS is clearly in the nature of a service provider that does not perform a function which can be termed as inalienable. It cannot be said to be performing a sovereign function and, therefore, cannot be excluded from the definition of the term 'enterprise'.

3. CGHS is not just a facilitative mechanism but it also provides healthcare facilities by itself in the out-patient department and hence is clearly an enterprise which provides healthcare services to the target group. In cases which require hospitalization or further specialized care, references are made to hospitals which are empanelled for the purpose, including private hospitals as well. CGHS itself provides healthcare in its 273 allopathic dispensaries, 19 polyclinics, 73 labs and 85 Ayush hospitals. This network is further supplemented by private hospitals (648)and diagnostic centres (148). Therefore, the process of empanelment is essentially an expansion of CGHS’ activities of providing healthcare to the target group. It is not a facilitation but a clear provision of service.

(See 2016-TIOL-06-COMPAT-CACT)