2018 (8) TMI 2146 - CCI - Law of Competition

Anti-competitive agreements - case is that Informant has alleged that the OP group being a dominant player in the market has imposed unfair and arbitrary terms and conditions in the Agreement and that such conduct violates the provision of Section 4 of the Act - Whether the OP group has contravened the provisions of Section 4 of the Act? - relevant market - Dominance - Abuse of Dominance. HELD THAT - Section 4 of the Act prescribes abusive conduct by a dominant enterprise. Since the conduct of the OP group needs to be analysed under Section 4 of the Act the existence of a position of dominance in terms of the Act needs to be determined first as there can be no abuse of dominance in the absence of dominance. The position of dominance of an enterprise is usually with context to a relevant market within which such an enterprise is alleged to be abusing its position. Relevant market - HELD THAT - The Commission observes that if the cities in NCR like Noida or Ghaziabad or Faridabad are compared with Gurgaon as per the criteria laid down above it becomes apparent that the conditions of competition in these cities are not homogenous. Hence these cannot together be considered as one geographic market. Even if there is a 5% increase in the price of the properties in Gurgaon a consumer s preference will not change since there are other external factors to be considered while purchasing a residential property in the market. The geographic region of Gurgaon has gained relevance owing to its unique circumstances and proximity to Delhi Metro Stations preference by MNCs big commercial and institutional centres shopping malls well developed infrastructure wide roads etc. Thus in view of the foregoing the Commission opines that the city of Gurgaon is a separate relevant market. Dominance - HELD THAT - In the present case it is noted that the property in relation to which the allegation of abuse has been made was booked in 2011-12 whereas in the previous cases the property was booked in the period 2006-2009. The investigation by the DG shows that the market dynamics as they existed then are different from those in 2011-2012. Several new players have entered the geographic market of Gurgaon to provide the services of development of residential apartments. These include not only new players competing to make a space for themselves in the market but also players with established brand names such as Tata and Godrej. Thus in such a changed market scenario during the relevant period no individual player including the OP group appears to have the ability to influence the conditions of competition in the relevant market. Abuse of Dominance - HELD THAT - Since the OP group does not appear to be in a dominant position in the relevant period with the changed scenario there remains no requirement to examine the allegations of abuse of dominance since in the absence of dominance there can be no case of abuse of dominance in terms of Section 4 of the Act. The Commission concludes that the contravention of the provisions of Section 4 of the Act is not established in the instant matter. Hence the case is ordered to be closed under Section 26(6) of the Act.

Summary

Issues Involved:
1. Allegations of contravention of Section 4 of the Competition Act, 2002.
2. Definition of the relevant market.
3. Determination of dominance in the relevant market.
4. Examination of alleged abuse of dominance.

Issue-wise Detailed Analysis:

1. Allegations of Contravention of Section 4 of the Competition Act, 2002:
The Informant alleged that the Agreement for the allotment of an apartment in the 'Regal Gardens' project was non-negotiable and contained several clauses that were unfair, discriminatory, and heavily biased towards OP-2, thus contravening Section 4(2)(a)(i) of the Act. Specific clauses were highlighted, such as mandatory payment for parking space irrespective of car ownership, escalation of apartment price due to increased costs, payment of External Development Charges (EDC), discretionary rebates, changes in preferential location, mandatory club facility charges, electricity supply arrangements, changes in building plans, construction timelines, and force majeure conditions.

2. Definition of the Relevant Market:
The Commission initially found the OP group to be dominant in the market for "provision of services for development and sale of residential units in Gurgaon." However, the DG's Investigation Report defined the relevant market more broadly, including residential units developed under both Residential Group Housing (RGH) and Residential Plotted Land (RPL) licenses. The Commission redefined the relevant market as "the provision of services for development and sale of residential apartments/flats in Gurgaon," distinguishing between different types of residential properties based on consumer preferences and end-use.

3. Determination of Dominance in the Relevant Market:
The DG's Supplementary Investigation Report assessed the dominance of the OP group in the revised relevant market from 2011-12 to 2014-15. Factors considered included market shares, size and resources of the enterprise, economic power, dependence of consumers, and entry barriers. The DG found that the OP group had a market share of 8.93% in launched residential apartments/flats and 8.38% in units sold, with 17.40% of the market value. Despite strong financial strength, the OP group did not hold a dominant position due to the fragmented market and presence of several competitors.

4. Examination of Alleged Abuse of Dominance:
The Commission noted that the existence of dominance is a prerequisite for examining abuse of dominance under Section 4 of the Act. Given the DG's findings that the OP group did not hold a dominant position in the relevant market during the relevant period, the Commission concluded that there was no need to examine the allegations of abuse of dominance. The market dynamics had changed since previous cases where the OP group was found dominant, with new players entering the market and altering competitive conditions.

Conclusion:
The Commission concluded that the OP group did not contravene the provisions of Section 4 of the Act as it was not in a dominant position in the relevant market during the relevant period. The case was ordered to be closed under Section 26(6) of the Act.