Bohemia is a republic in South Asia with its capital at Riverdale.

The laws of Bohemia are in pari

materia with the laws of India. Bohemia enacted its competition law, the Bohemian Competition
Act (the Competition Act), in 2002. However, due to resistance from business and industrial
houses in Bohemia, the Competition Act was only brought into force in a phased manner, with
the last provisions coming into force in June, 2011. The Competition Act has provisions that deal
with anti-competitive agreements and abuse of a dominant position. These were brought into
force with effect from 20 May 2009. The provisions relating to mandatory notification of
combinations (also known across the world as the merger control provisions) along with
implementing regulations, were brought into force with effect from 1 June 2011. The
Competition Commission of Bohemia (the CCB) treats decisions of the Competition
Commission of India, other decisions of Indian courts on the Indian Competition Act, 2002 and
also regards the competition regulators of the European Union and the United States highly, and
relies on precedent from these jurisdictions as well.
HCF Medi Machines AG (HCF) is a company which manufactures high-cost medical equipment,
particularly MRI machines which are purchased by hospitals, high specialty clinics and
diagnostic clinics. It was stated that, HCF requires that only genuine spare parts of the MRI
machines be used when replacing any parts of its MRI machines and installation of the
replacement components must be carried out by service providers that are authorized by HCF. If
the purchasers (i.e., the hospitals) doesnt comply with the terms and conditions then would stand
in breach of the warranty provided by HCF (which is for a period of three years). A similar
practice is carried out by Takshi and Parry as well. HCF enters into agreements with select
service providers in Bohemia. Certain clauses of these standard agreements are set out below:
1. The service provider must install HCFs MRI machines, and provide repair and
maintenance services;
2. The service provider must maintain a stock of HCF spare parts for the MRI machines,
which the
3. service provider would replenish on an ongoing basis through request orders placed with
HCF;
4. Every service provider would be given a geographical area of responsibility where the
designated
5. service provider would be the sole service provider of HCFs MRI machines.

The service provider may deal in MRI machines made by competitors, only after obtaining prior
written approval from HCF.
Similar terms and conditions existed in the agreements between Takshi and Parry and their
respective authorized service providers.
As a result of these terms and conditions, hospitals in Bohemia began to procure their MRI
machines and spare parts for the MRI machines through these authorized service providers. In
fact, in the meeting of Bohemian Medical Association (BMA), an association of major hospitals
and clinics located in Bohemia, held that Several members have received notices from HCF,
Takshi and Parry prohibiting the employment of independent service providers to service the
MRI machines in their hospitals. The Association resolves that only the authorized service
providers shall be used. Further it was held that the hospitals were free to negogiate greater
discounts and hospitals are encouraged to price their MRI services such that the negogiated rates
are recovered. The resolution of the BMA results in a majority of hospitals in Bohemia relying
on the authorized service providers to supply, maintain and repair their MRI machines.
Mr.Amandeep Sodhi is a second generation sole proprietor of Fantasy Medicare Service Limited
which has been providing hospitals with medical supplies, equipment and spare parts for close to
45 years. Mr. Sodhi has seen a decline in his business with the emergence of the authorized
service providers which have been steadily gaining increased market share, particularly since the
BMA resolution of December 2012. As a result, Mr. Sodhi, unaware of the stringent nature of
the terms and conditions required of authorized service providers, contacted HCF with the
intention of becoming an authorized service provider. Mr. Sodhi learnt of these terms and
conditions in the response provided by HCFs India office. Mr. Sodhi found these prices to be 1.5
times the prices at which authorized service providers are supplied the spare parts by HCF.
Feeling aggrieved by the nature of the terms and conditions and pricing of HCF, Mr. Sodhi filed
an Information under Section 19(1)(a) of the Competition Act before the CCB against HCF,
Takshi and Parry and alleged that the agreements entered into between HCF, Takshi and Parry
and their respective authorized service providers were anti-competitive and amounted to an
exclusive supply agreement.
The CCB passed an order under Section 26(1) of the Competition Act, directing the Office of the
Director General (DG) to investigate the alleged violation of Section 3(4) of the Competition

Act. The DG also found violation of Section 3(4) of the Competition Act. Further, it found HCF,
Takshi and Parry to be in violation of Section 4 of the Competition Act, due to their dominance
in the market for the supply of spare parts of their respective MRI machines where they
possessed the ability to operate independently of competitive forces. The CCB upheld the
findings of the DG and fined HCF, Takshi and Parry 5% of their average turnover for the
preceding three financial years, aside from ordering them to cease and desist from their anticompetitive conduct. Takshi and Parry appealed the order to the Competition Appellate Tribunal
(COMPAT) (Appeal No. 1/2014), while HCF challenged the jurisdiction of the DG to expand the
scope of its investigation to a violation of Section 4 of the Competition Act before the Riverdale
High Court. The Riverdale High Court found in favour of the petitioner, and ordered that the
DGs investigation and the ensuing final order of the CCB was void as the DG did not have the
authority to extend the scope of the investigation to Section 4 violations.
Ms. Debjoy Bhattacharya, a retired Major with the Bohemian national Navy approached the
Athena Specialty Hospital in Riverdale for getting an MRI. However, she was informed MRI
diagnostics was not included in her pension scheme due to which she was forced to dip into her
savings in order to pay for the high cost MRI diagnosis at Athena. She discovered that other
hospitals also charged similarly exorbitant rates for their MRI diagnostic services, and had done
so since the BMA meeting in December 2012. Ms. Bhattacharya filed an Information under
Section 19(1)(a) of the Competition Act alleging price-fixing by the hospitals through the BMA
by virtue of having agreed to negotiated prices with HCF, Takshi and Parry, and because of the
anti- competitive nature of their implicit agreement to exclusively avail of the authorized service
providers.
The CCB passed an order under Section 26(1) of the Competition Act, directing the Office of the
Director General (DG) to investigate and found a violation by the BMA under Section 3 of the
Competition Act for entering into anti-competitive practices in the nature of a cartel, through
price-fixing by virtue of agreeing upon negotiated prices among HCF, Takshi and Parry. The
CCB fined the hospitals and the BMA 10% of their total turnover for the preceding three
financial years, aside from ordering them to cease and desist from their anti-competitive conduct.
This order was passed by all members of the CCB. The BMA and the hospitals appealed the
CCB order before the COMPAT (Appeal No. 2/2014). The COMPAT found that the two sets of

appeals before it were inter-connected and decided to hear the appeals together. After extensive
arguments by counsel appearing on behalf of all parties, the COMPAT made the following
findings by way of a common order:
Appeal No. 1/2014
The COMPAT found no violation on the grounds that the requirements of the equipment
manufacturers were imposed in order to ensure the proper functioning of the MRI machines and
their longevity. In particular the COMPAT held that the nature of the terms and conditions
resulted in fewer repairs because of the increased longevity of components and longer intervals
between services.
Appeal No. 2/2014
The COMPAT found that there was no instance of cartelization, and the BMA was not serving as
a platform for a hospitals cartel, as the hospitals were merely complying with the requirements
of MRI machine manufacturers, and were not acting independently of this constraint;
The COMPAT also found that there was no instance of a cartel among the hospitals in the form
of price-fixing, as the negotiated rates were to act as the maximum price, and since the hospitals
were free to negotiate greater discounts. In addition, these negotiated prices resulted in passing
on the benefits of reliable services to the patients availing of the MRI diagnostic techniques.
The CCB filed a Special Leave Petition (SLP) before the Supreme Court of Bohemia against the
order of the Riverdale High Court quashing the DGs Report and the subsequent CCB order
against HCF, Takshi and Parry.
In the meantime, Mr. Sodhi and Ms. Bhattacharya respectively also appealed the order of the
COMPAT before the Supreme Court, alleging that the MRI manufacturers were guilty of abusing
their dominant position in the market for spare parts of MRI machines, concluding anticompetitive agreements with service providers, and that the BMA and the hospitals were guilty
of cartelization and price-fixing.
The Supreme Court admitted the SLP as well as the civil appeals, and directed that all the
appeals be listed for final hearings together as they were all related. The Supreme Court will now

listen to all the arguments including those relating to the powers of the DG, along with the
substantive issues involved in the cases.