Competition Law | September 2024 - Miscellaneous

CCI notifies CCI (General) Regulations, 2024

CCI, vide notification dated September 17, 2024, has brought into force the CCI (General) Regulations, 2024 ("General Regulations 2024"), which replaces the CCI (General) Regulations 2009 ("General Regulations 2009"). The key changes introduced in General Regulations 2024 are as follows:

• Intimation to parties about the prima-facie order: The General Regulations 2024 obligate CCI to share a copy of the prima-facie order with the parties within 7 (seven) days from passing of the said order in cases concerning the prima-facie contravention of Sections 3(4) (vertical agreements) or 4 (abuse of dominance position) of the Competition Act.
• Introduction of timelines for procedural steps: The General Regulations 2024 set out the following timelines for various procedural steps for conducting inquiry in matters concerning Sections 3 and 4 of the Competition Act:
  • Timeline for placing the investigation report for CCI's consideration: Earlier, Secretary of CCI was required to place the DG investigation report ("DG Report") before CCI for its consideration within 7 (seven) days from the date of receipt of such report. This has now been extended to up to 4 (four) weeks.
  • Timeline for filing objections/suggestions to the DG Report: The parties are required to file their objections/suggestions to the DG Report within 8 (eight) weeks from the date of receipt of the said reports.
  • Timeline for submitting the DG Report to CCI: Earlier, DG was required to submit the DG Report to CCI within 60 (sixty) days from the receipt of such directions from CCI. This has now been extended to 90 (ninety) days. However, CCI has the power to grant a reasonable extension of time to DG to submit the DG Report.
• Distinction between 'Miscellaneous Applications' and 'Interlocutory Applications' and fee for miscellaneous applications: The General Regulations 2024 draw a clear distinction between 'Miscellaneous Applications' and 'Interlocutory Applications' by stating that the former refers to the applications filed before CCI after passing of the final order in a case instituted under section 19 of the Competition Act and the latter refer to the applications filed during the pendency of a case under Section 19 of the Competition Act, or proceedings initiated with respect to a 'Miscellaneous Application'. Further, the General Regulations 2024 also provide the below mentioned filing fee for 'Miscellaneous Applications':

4. Deadline for passing the final order after an interim order: Earlier, CCI was obligated to pass the final order within 90 (ninety) days from issuance of an interim order by CCI. This has now been extended to 180 (one hundred and eighty) days.
5. Revision in fee for filing information/complaint: The General Regulations 2024 have revised the fee for filing information, as set out below:

6. Appointment of the monitoring agencies: As per the General Regulations 2024, CCI may now appoint monitoring agencies to monitor the status of compliance by parties of orders pertaining to combinations, commitments and settlements or any other provisions of the Competition Act. Such monitoring agencies may range between an accounting firm, management consultancy, any other professional organisation or chartered accountants/company secretaries/cost accountants.

(Source: Notification dated September 17, 2024)

CCI releases its market study on the diagnostic medical imaging equipment industry

In August 2024, CCI released its findings on the Diagnostic Medical Imaging ("DMI") equipment industry with a focus on MRI and CT scan equipment ("Report").

The key findings of the Report are set out below:

1. Dependency on imports: Due to supply chain constraints like limited infrastructure, technical expertise, and high cost of investment in setting up of manufacturing facility, DMI equipment market is highly dependent on imports with approximately 80% of all the DMI equipments being imported into India in 2022. The Government of India has implemented certain measures to boost local production.
2. Value chain: The value chain in the DMI equipment market is complex in nature as it comprises several stakeholders such as Original Equipment Manufacturers ("OEMs") including their authorised dealers, independent refurbished equipment suppliers, importers, after-sales service providers, hospitals, and diagnostic centres and patients.
3. Level of competition:

• New DMI Equipment Market:
  • the new DMI equipment market is oligopolistic in nature with top 5 (five) OEMs contributing around 98% and 91% in the CT scan market¹ and MRI market², respectively;
  • the entry barriers are medium to high due to several factors such as access to technical expertise, import dependency, and brand preference, which poses challenges to domestic OEMs; and
  • the after-sales services market is complex and the competition is based on several factors such as: (a) lifespan of equipments; (b) after-sales services are being offered by the OEMs as a packaged offering (where customers receive the equipment along with after-sales services), at the time of the purchase of the equipment by hospitals/diagnostics labs; and (c) lack of clarity for estimating the total cost of equipments by hospitals, and diagnostic labs.
• Refurbished DMI Equipment Market:
  • the refurbished DMI equipment market is more fragmented as compared to the new DMI equipment market, with the presence of several independent suppliers and OEMs; and
  • the after-sales service market is more competitive. Competition in this market was enhanced by suppliers exerting competitive constraints on each other by differentiating their services through innovative criteria (including availability and technical expertise).

Recommendations

1. OEMs must be encouraged to establish infrastructure facility for assembling the imported components in India. This would serve as a stepping stone for building a deeper and more robust manufacturing facilities in India.
2. Public private partnerships must be promoted to attract investment.

3. Additional testing laboratories accredited by National Accreditation Board of Testing and Calibration Laboratories should be established.
4. OEMs must undertake self-regulatory measures to be more transparent in terms of pricing of equipments, availability of spare-parts, and after-sales service. This will enable hospitals and diagnostic labs to make a more informed decision while selecting a particular equipment.

5. OEMs must be encouraged to provide open market access to spare parts to original equipment suppliers and independent service operators.

(Source: Report)

Footnotes

1 Top 5 (five) OEMs are General Electric Company , Siemens Healthcare Gmbh, Canon Medical

Systems Corporation/Toshiba Corporation, Philips Global Business Services LLP, and Fujifilm Holdings Corporation/Hitachi Medical Systems.

2 Top 5 (five) OEMs are Siemens Healthcare Gmbh, General Electric Company, Philips Global Business Services LLP, United Imaging Healthcare Co., Ltd. , and Fujifilm Holdings Corporation/Hitachi Medical Systems.

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