2015 (3) TMI 724 - Commission - Indian Laws

Abuse of dominant position - Arbitrary clauses in Buyer Builder Agreement - Contravention of the provisions of section 4 of the Competition Act - Held that - The Informant alleged that OPs were dominant in the relevant market. However, having regard to the factors stated under section 19(4) of the Act, it does not appear so. Apparently, there are several other real estate developers such as DLF, Ramprastha Group, Anantraj Group, Earth Infrastructure Group etc. which are operating in the relevant market. As per informants own submissions, the land bank of OPs in the relevant market in Gurgaon is around 778 acres. As per the information available in public domain the land bank of other players e.g. DLF (over 3000 acres), Ramprastha Group (over 1000 acres), Anantraj Group (around 100 acres) is also enormous. Accordingly, it seems unlikely that with such land bank, the OPs had huge size or resources or any other advantage that could have capacitated them to work independently of their competitors. Since the case under section 4 of the Act depends primarily on the position of the Opposite Parties i.e. whether they held a dominant position or not, in the absence of OPs holding a dominant position the Commission need not go into the question of abuse. Based on the foregoing, no prima facie case of contravention of the provisions of section 4 of the Act is made out against the opposite parties. It is a fit case for closure under section 26(2) of the Act and the same is hereby closed.

Summary

Issues:
Alleged abuse of dominant position by real estate companies in a residential project in Gurgaon, Haryana.

Analysis:
1. Allegations and Background: The informant filed a complaint against two real estate companies, alleging contravention of Section 4 of the Competition Act, 2002. The complaint involved issues related to booking a residential unit, payments made, demands by the companies, and cancellation of the unit.

2. Demand Letters and Payments: The informant detailed the demands made by one of the companies, including an early demand for payment and subsequent arrears. Despite payments made by the informant, the company allegedly refused further payments and eventually canceled the unit, leading to disputes over the Builder-Buyer Agreement.

3. Unilateral Cancellation and Refund Issues: The informant claimed that the unilateral cancellation of the unit by the company amounted to an abuse of dominant position. Additionally, disputes arose regarding the refund amount offered by the company, which the informant considered unfair and an unfair trade practice.

4. Unfair Clauses in the Agreement: The informant highlighted various clauses in the Builder-Buyer Agreement imposed by the companies, which were deemed arbitrary. These clauses included aspects like forfeiture policy, penalties for payment delays, and the absence of an exit option for the informant, among others.

5. Market Definition and Dominant Position: The Commission analyzed the relevant market for the case, focusing on the development and sale of residential apartments in Gurgaon. However, it found that the companies did not hold a dominant position in the market, considering factors such as land bank size and competition from other real estate developers.

6. Decision and Closure: As the companies were not deemed to hold a dominant position in the relevant market, the Commission concluded that no prima facie case of contravention of Section 4 of the Act was established. Therefore, the case was closed under Section 26(2) of the Act, with directions to inform the parties accordingly.

This detailed analysis of the judgment highlights the issues raised by the informant, the actions of the companies, the disputes over payments and cancellation, the unfair clauses in the agreement, the market definition, and the Commission's decision to close the case based on the lack of a dominant position by the companies in the relevant market.