The Competition Commission of India (CCI) has fined Mumbai’s Dr LH Hiranandani Hospital with a Rs 3.81 crore fine for entering into an anti competitive agreement with a stem cell bank, reported Mint.
The hospital required patients to exclusively use Cryobank as their stem cell supplier, which a patient complained about to the CCI.
The Commission fined the hospital 4 per cent of its average annual turnover in a majority order of five members, including the chairman, against one dissenting member, Geeta Gouri.
Amarchand Mangaldas partner Pallavi Shroff represented Hiranandani, while senior advocate Ramji Srinivasan and Dhall Law Chambers, which is a part of Talwar Thakore Associates, acted for the informant.
The majority held in its order:
The plea advanced by the counsel is misconceived in as much as it is not the case of OP hospital that the patients were free to avail the services of any stem cell bank. The OP hospital’s only argument is that if a patient was not willing to take services of Cryobank, the patient was free to leave the hospital and avail maternity services of another hospital. In fact, this is not a mitigating factor rather it is another aggravating factor. The hospital knew the difficulty of a patient in leaving the hospital where the patient had all along been taking services of maternity consultant and had developed a bond with the consultant. In fact, most of such patients are afraid of going to another consultant and resign to the fate.
[Download:majority order, dissenting order of Geeta Gouri Mr. Ramakant Kini vs Dr. L.H. Hiranandani Hospital, Powai, Mumbai]
Comments
Not "the" antitrust partner. One of the many.
From what I have heard, Dhall does not appear himself for the reason ACM-2 mentions, which is I guess why counsel appears.
Agreed.. but Microsoft was dominant in the market and was offering a product which had penetrated deep into the market. One could argue that they were providng a product which had not equivalent in the market.
But can we say the same thing about Hiranandani Hospital and its services?
Also, I think CCI is overreaching into the ambit of the Consumer Courts by entertaining such matter in the first place. CCI has the power to look into consumer issues and interest but from a more broader scope...
Second, a competition regulator and a consumer court has similar functions – to protect consumers. The former does it by protecting competition in the market, the latter does it by protecting individual rights (think [i]in rem[/i], [i]in personam[/i]). Look at it [u]jurisprudentially[/u]: any act that causes or is likely to cause an “appreciable adverse effect” on competition in a “relevant market” can be regulated by the competition regulator. Look at it [u]practically[/u]: a company will laugh if it is directed to pay paltry compensation of a few lakhs (after at least 5-6 years of litigation involving multiple appeals), but it will think 100 times if it is fined by the CCI. By the same token, it is a bigger negotiating tool to threaten competition litigation, as opposed to consumer protection litigation.
Btw, the remedy provided by the consumer courts are an [u]additional[/u] remedy i.e. it is always available regardless of other forums approached.
Trust this answers your question at #6 above.
Secondly, CCI's role is not limited to protecting the interest of consumer in market, it is also to promote and SUSTAIN competition in market and ensure freedom of trade. A healthy competitive market will always be beneficial to consumer..because a robust competition will invariably lead to better product/services at a cheaper rate. Therefore Competition Act is not just for consumer it is also for competition in market...which makes it similar yet very different from CPA.
Thirdly, any self respecting company will never laugh even if a penalty is imposed is in tune of few lakhs...
Finally, even CCI orders are appelable..from where I see even a competition litigation will take 5-6 years. DLF order came in August 2011..two and half years and matter is still pending before COMPAT.
I never suggested anything to be an [u]unique[/u] feature of the Indian law. Speaking of Indian law, the “market-test” is not mandated by the Parliament for the purposes of imposing fines on entities engaging in anti-competitive agreements. The hospital had no business directing patients to its preferred vendor. They engaged in shoddy practice and got shafted, as they should.
Second, big fines imposed by any competition regulator aim to sustain competition by sending a clear message to the big corporations who think they can get away with anything. I am perfectly aware of the jurisprudential, technical and practical differences between competition law and consumer protection law, which should have been clear from my previous comment. Competition law largely aims to provide better prices to the consumers by ensuring that there is a level playing field for all vendors and by punishing bullies.
Third, I don’t know your age or practice area, but you have no idea of what you are talking about. All corporations work on a cost-benefit model and there’s no honour at play when it comes to commercial litigation. Even in a more regulated market like the USA, the FDA and SEC litigations clearly show how much respect corporations have for the law and their responsibilities - its just MONEY MONEY MONEY.
Fourth, I was suggesting that consumer litigation is inconsequential as the final monetary damage is peanuts and most consumers cannot complete the battle anyway due to the timelines and costs involved. On the other hand, a big CCI fine (or even a sub judice BIG litigation) can affect the company’s valuation and hold up IPOs, FPOs and M&A. That's why we have competition law in the first place - to have effective sanctions. I hope you can see why a 5 year competition litigation is serious stuff to a company, but a 10 year consumer litigation is not.
And I also see that you are an astrologer....any big ticket competition litigation is yet to reach to any Conclusion yet you have already predicted that it will take only 5 years for competition litigation as against 10 years for consumer litigation..one another and major problem with Competition lawyer is that they think that legal profession is limited within the 4 walls of Section 3,4,5 and 6. Please do read news papers and law reporters to know about the kind of penalty that have been imposed on erring companies..including some of the hospitals, under the CPA. Besides Mr. Competition Law Astrologer, we are yet to discover how much fine (if any) will be finally imposed.
Competition Act is drafted in very general terms..primarily because it deals with a system called market which is evolving and ever changing. It Allows CCI a greater freedom to look into any alleged violation ..however at the same time it does not mean that it gives CCI a freedom to decide a case in total disregard of well established law and economic principle.If CCI felt that market analysis in this case was not relevant then they should have discussed it as to why such analysis was irrelevant rather than summarily dismissing it.
I did not say all companies are “chors”. Rather, I said that all companies decide their actions based on a cost-benefit analysis and business decisions are not about honour but rather about margins/profits – that does not suggest I implied “theft” of any kind. My point is simple: companies tend to evaluate litigation from a cost and business impact perspective i.e. a successful consumer claim for even 1 crore (which is not seen very frequently) is not a matter of much concern, but a competition litigation raises serious concerns even before it is finally decided (because it impacts certain transactions, has the potential of snowballing into a hefty fine and impacts share prices). You may be aware that companies do not want to set a bad precedent in litigation, which is why they sometimes prefer a settlement when they have a very weak case (this is seen more in the US where huge punitive damages are awarded, but not so much in India where damages are typically peanuts and rarely huge). Therefore, Indian companies would rather fight a consumer case even when they are clearly wrong, riding on the knowledge that very few cases will be pursued till the logical end. The journey to the end (including appeals) is typically 5-6 years, if not more. Even if pursued till the end, damages are not much. Since you refer to newspapers, you will surely know that the recent case of Dr. Kunal Saha, Rs. 6 crores was awarded against the doctors and the hospital who caused the death of his wife by negligence – Rs. 6 crores was reported widely as a “record”. Are you saying you are aware of a plethora of cases where consumers were awarded more than, say ... 50 lakhs? Or cases where companies compensated consumers meaningfully, because they felt that was the right thing to do?
I agree with you when you say no self respecting company will laugh at a penalty of few lakhs. However, it is my view (and it was also my statement) that paltry compensation is not a big deal for companies, when they get away with absolutely crappy business practices. Penalty and compensation have different impact.
In terms of timelines (and astrology), consumer litigation typically takes longer than competition litigation because the volume handled by the CCI is much lesser than the consumer courts. In any event, lawyers do have a sense of which forum would typically take how much time, although nobody can predict for sure. However, it is absolutely accurate to say that competition litigation typically takes less time as compared to consumer litigation.
I am not sure why you assumed I am a corporate lawyer. It was an incorrect assumption! I have represented a lot of companies and I know their approach to certain kinds of litigation. Competition fines are hefty and they hold up securities offerings, stall mergers and affect share prices. This is why companies take competition litigation more seriously.
We could argue more, but I do not see any point, especially since you may prefer nasty tactics and personal attacks.
My comment was in response to your general sweeping comment. And you being experienced hand will appreciate that any big ticket litigation whether it is Tax litigation or mining litigation, maritime litigation even litigation against key directors of company under Factories Act can affect security offering or M&A activity and it is not just limited to competition law.
I agree Competition Act is greater deterrent than CPA, however it would be unfair to compare hundreds or thousands crore fine imposed under CA. Fine imposed under CA is credited to Consolidated find of India whereas damages under CPA is given to individual. We are yet to see how much Damages COMPAT will award to individual.
One last thing you are banking too much on Cost benefit analysis in Competition Law Landscape...a large section of industry does not even know what this law prescribes and proscribes..and people can do cost benefit analysis only if they know that what is there in store of them.
With these words I rest my case...apologies if you were hurt...:)
But then you raise another angle involving the unfairness of comparing fines imposed under CA with damages under CPA. Regardless of any unfairness, (1) a company doesn’t care about who gets the money but rather about how much it dents the balance sheet (hence, potential jumbo fines are a bigger deterrent than potential peanut-sized damages), and (2) a company cares about the impact of litigation on business flow, which is why a mining suspension, a factory closure or a potentially huge tax liability raises concerns similar to competition litigation (because it impacts business and earnings adversely). Once again, appreciate that I am saying consumer litigation has little adverse impact in terms of revenue generation or balance sheet (since damages awarded are peanuts and many cases never see a logical end), but competition litigation is neither financially inconsequential nor dropped because the counterparty cannot pursue it. A company does not need to know the exact impact – a potential fine of 10% of its turnover is enough to make it tread cautiously. Yes, many mid-sized and small companies are not even aware of the newly introduced competition law sanctions, which is exactly why the CCI has to send a message.
PS: I wasn't hurt; only disappointed!!
And as to the headline, Fools Never Differ!
You are correct of course that it's based on anti competitive agreements. will make the appropriate correction.
Having said that, even [u]clear[/u] cases of unfair trade practices would be covered by the Competition Act, except that the COMPAT would have jurisdiction. Accordingly, UTP issues are indeed competition issues in terms of the Competition Act.
Consumer remedy is anyway a separate remedy which the consumers are free pursue. A civil court's decree or a CCI order does not take away the right to file a consumer case on the same facts, because COPRA provides an [u]additional[/u] remedy.