Aftermarket Abuse of Dominance: Lessons from the CCI's Ruling in Vivek Sharma v. Max Super Specialty Hospital (2026)
Background
On 21 May 2026, the Competition Commission of India (CCI) closed proceedings against Max Super Specialty Hospital, Patparganj, one of twelve hospitals that were investigated for allegedly overcharging patients for medicines, consumables, diagnostics and room rent.1
The CCI’s inquiry revolved around one central issue - once a patient is admitted to a hospital, is the hospital their only realistic supplier for medical consumables, i.e. everything from drugs to diagnostic tests? Or can the patient meaningfully choose alternate suppliers in a competitive market for hospital services?
The CCI’s investigative arm, the Director General (DG) considered that once admitted, patients were “locked-in” in the hospital’s ecosystem (i.e., an “aftermarket”). The CCI reached a different conclusion. It decided that super-specialty hospitals operated within a broad, unified market for healthcare services across Delhi-NCR, and patients were not confined to a distinct “aftermarket” once admitted. Given no single hospital held a dominant position within this unified systems market, the CCI found that the hospitals had not violated the Competition Act, 2002 (Act) and closed proceedings.
The Aftermarket Theory - US and EU perspectives
The CCI’s order in Vivek Sharma is the most thorough application of the “aftermarkets” doctrine in Indian competition law since the framework was first articulated in Shamsher Kataria v. Honda Siel Cars India Ltd. & Ors. (2014), in the automotive sector. (Shamsher Kataria).
The aftermarket theory holds that competition in a primary market may not be sufficient to regulate conduct in a related secondary market. Once a customer has committed to a primary product, switching to an alternative supplier for complementary goods or services can be prohibitively expensive. That lock-in, whether driven by explicit contractual terms, product design, sunk costs, or information gaps, can give a supplier market power over its “captive” customers, that has nothing to do with how competitive the primary market is.
The US Supreme Court (SCOTUS) addressed this directly in Eastman Kodak v. Image Technical Services (1992). When Kodak stopped supplying spare parts to independent service organisations for its copiers, it argued that its lack of market power in the primary copier market meant no abuse was possible. The SCOTUS disagreed - it considered whether customers could realistically anticipate and factor in long-term aftermarket costs before making their primary purchase. Where information gaps, switching costs, practical considerations made that difficult, a firm could operate as an effective monopoly in the aftermarket, regardless of competitive constraints in the primary market.
The European Court of Justice reached the same conclusion in Hugin (1979) and Hilti (1994), respectively, where brand-specific spare parts and consumables were treated as distinct aftermarkets even where the manufacturer held a modest share of the broader primary market.
Applications of the Aftermarket Theory in CCI’s Jurisprudence
The CCI appeared to apply the underlying reasoning in the aftermarket theory in early decisions. For instance, in Neeraj Malhotra v. Deutsche Post Bank Home Finance Ltd. (2010), the CCI assessed whether prepayment penalties on home loans deterred borrowers from switching lenders. The majority view rejected the aftermarket framework, concluding that no individual lender held dominance in the primary housing loan market. However, dissenting opinions argued that these penalties operated as heavy switching costs, effectively locking buyers in through contractual captivity, despite the market conditions prevailing in the broader market.
The CCI also considered the dynamic of captive consumers and aftermarkets in the real estate sector. In Belaire Owners’ Association v. DLF Limited (2011), the majority found the developer dominant in the market for certain types of apartments in Gurgaon, explicitly noting that sunk costs and unfair agreements impeded buyers from switching to competitors. In a dissenting opinion Member R. Prasad extended this logic to identify a legally distinct aftermarket created by the buyer’s initial financial commitment. He reasoned that once buyers paid earnest money and signed an agreement to purchase an apartment, they were trapped in a project-specific market where the developer exercised absolute monopolistic control.
Shamsher Kataria (2014) was the first instance when the aftermarket theory was fully articulated and applied.⁶ The CCI found that fourteen car manufacturers held dominant positions in the aftermarkets for their own brands’ parts and repair services, regardless of their standing in the primary market for cars. The CCI set out three conditions for determining whether a secondary market is a genuine aftermarket rather than simply part of a unified market:
Whole-life costing: Whether consumers can accurately assess and compare total long-term maintenance costs prior to purchasing the primary product. In the automotive market, the CCI considered that this information was largely inaccessible.
Reputation effects: Whether the threat of losing primary market sales deters suppliers from overpricing secondary products. For passenger cars, the CCI held that the initial purchase and subsequent pricing for spare parts were too disconnected for reputation to constrain aftermarket exploitation.
Switching costs in the primary market. Whether consumers can abandon the primary product for a competitor’s offering without facing prohibitive financial barriers. High replacement costs lock car owners into their existing brand’s ecosystem.
The CCI’s reasoning on each of these factors supported the existence of a separate aftermarket in Shamsher Kataria. It adopts a different approach in the hospital ecosystem in Vivek Sharma.
Assessing Vivek Sharma v. Max Against the CCI’s established Aftermarket Framework
In Vivek Sharma, the CCI dismissed the idea of a separate aftermarket for elective inpatient care. This emerged from its careful application of the three-pronged aftermarket test:
Whole-Life Costing (Unified Market): The CCI observed that elective patients typically receive a detailed cost estimate before admission, giving them details about the medical procedure, drugs, consumables and room rent. It noted that the final bills did not vary significantly from the original estimate. Since patients could use this information to compare options at other hospitals before committing, the CCI held that patients could reasonably assess “whole-life costing” up front. This pointed toward a single unified market, rather than a distinct primary market and connected aftermarkets.
Reputation Effects (Aftermarket Indicated): Conversely, the CCI accepted that well-established hospitals with strong reputations and sought-after doctors did not face credible competition from other hospitals that offered more competitive pricing for in-patient consumables and services.
Switching Costs (Unified Market): The CCI acknowledged that patients almost always use the hospital’s own pharmacy and laboratories in practice, partly due to internal protocols and partly for convenience. However, it clarified that the relevant question is not whether patients are locked into secondary services once admitted, but whether they can switch hospitals without bearing a prohibitive cost. Despite some procedural friction, including discharge requirements and the tendency of the new hospital to request fresh diagnostics, the CCI concluded that patients could reasonably shift to alternative hospitals, pointing towards a unified systems market.
However, the CCI recorded an important reservation. It noted that a legally distinct aftermarket may arise in specific circumstances, such as post-surgical recovery, where the cost of switching mid-treatment exceeds the cost of continuing at the same facility. A patient in active recovery has neither the ability to compare costs in advance nor any realistic prospect of moving to another provider.
Ultimately, the CCI favoured the unified systems market approach, defining the relevant market as the “market for provision of healthcare services by super speciality hospitals in Delhi NCR“. It concluded that none of the 12 hospitals could be considered “dominant” within the meaning of the Act, and as such, that there was no abuse of dominance. The unified market finding in this case rested on the pre-commitment transparency and switching flexibility specific to elective admissions. Where those conditions are absent, the competition law analysis will differ.
Conclusion
The CCI has now applied the aftermarket theory across the automotive, healthcare, financial services and real estate sectors. Its articulation of the legal principles indicate that the outcome in any given case depends on the specific structure of the market in question, transparency in pricing and consumers’ practical ability to opt for alternate suppliers. Where customers have access to sufficiently detailed pricing information up front, they are more likely to be able to meaningfully assess “whole life” costs before committing to the primary purchase. This also impacts whether the customer can realistically exercise their choice to switch between suppliers.
Although the CCI declined to identify a distinct aftermarket in Vivek Sharma v. Max Hospitals on the facts before it, the ruling does not dilute the doctrine. The CCI reaffirmed the three-part framework established in Shamsher Kataria and its reasoning makes clear that a different factual matrix, particularly one involving reduced pre-commitment transparency or limited primary-market mobility, would have produced a different result. The aftermarket doctrine remains a live consideration in Indian competition law, and businesses operating in markets with dependent secondary products would be well-advised to treat it as such.
Case No. 77(1-12) of 2015, orders dated 21 May 2026. The CCI investigated allegations pertaining to 12 hospitals - Max Super Specialty Hospital (Patparganj), Max Smart Super Specialty Hospital (Saket), Max Super Specialty Hospital (Shalimar Bagh), BLK Max Super Specialty Hospital, Max Multi Specialty Centre (Panchsheel Park), Max Multi Specialty Centre (Pitampura), Fortis Flt. Lt. Rajan Dhall Hospital (Vasant Kunj), Fortis Escorts Institute and Research Centre Ltd., Sir Ganga Ram Hospital, Indraprastha Apollo Hospital, Batra Hospital & Medical Research Centre and St. Stephen’s Hospital.