The Competition Commission of India (CCI) imposed a penalty of INR 3.81 crore ($614,000 approx.) on a Mumbai hospital for entering into anti-competitive agreements with a stem cell bank and causing appreciable adverse effect on competition in the market of stem cell banking.
Mumbai based Dr. L. H. Hiranandani Hospital entered into exclusive agreements with Cryobanks International India (“Cryobank”) to collect the stem cells blood soon after woman’s delivery. The consumers were not allowed to get the stem cells collected by any other service provider.
CCI declared null and void the agreement between hospital and Cryobank for the years 2011-12 & 2012-13 and directed hospital not to enter into a similar agreement with any stem cell bank in future.
CCI said, “The exclusive contracts between a hospital and stem cell bank has a tendency of distorting market mechanism altogether. The development and competition in stem cell service industry is bound to be hindered because of such exclusive arrangement between hospital & Cryobank as each player, instead of competing with other players for efficiency and competitive price, would endeavour to pay commission to different hospitals and mop up clients. The adverse effect on competition is much more telling in this particular market because of the total dependence of the expecting mothers on the maternity service providers to get access to the stem cell/ cord blood from newly born children born in the hospital. Consumer may further suffer in the long run when the tied up stem cell banker, due to inefficiency vis-a-vis other competitors or otherwise, exits or the level of services provided by him falls. In such a scenario, exclusive arrangements like the one in question in this case would result in total failure of service for consumer who wanted stem cells of the child to be preserved for future use.”
The Commission, however, declared that the hospital is not in a dominant position in the relevant market of ‘provision of maternity services by Super Specialty/high-end Hospitals’.