CCI Gets Tough On Public Sector Undertakings

• Competition Commission of India for the first time penalises Public Sector Undertakings for hampering the efforts of the Government in providing insurance coverage to economically weaker sections of society.
• A Public Sector Company whose shareholding is exclusively held by the Government of India may not constitute a single economic entity
• Solvency of public sector insurance companies considered a mitigating circumstance while imposing penalty.

Background

The Competition Commission of India ("CCI/Commission") recently imposed a penalty of INR 6.69 billion on four public sector insurance companies for causing an appreciable adverse effect on competition in the health insurance sector.¹ The Commission held that the conduct of National Insurance Co Ltd, New India Assurance Co Ltd, Oriental Insurance Co Ltd ("OICL") and United India Insurance Co Ltd ("UIICL") (collectively "PSICS") was in contravention of Section 3(1) read with Section 3(3)(d) of the Competition