2018 (1) TMI 1755 - AT - Law of Competition

Anti-competitive action - abuse of dominant position - contravention of provisions of Section 4 of the Competition Act 2002 - HELD THAT - As regards relevant geographic market the commission came to a definite conclusion that the consumer looking for a commercial/office unit in Noida and Greater Noida may not prefer other areas. Thus the relevant market is the market for Provisions of services of development and sale of commercial space in Noida and Greater Noida . In so far as Earth Infra s dominant position is concerned the Appellants alleged misuse of its dominant position in not paying assured return @ 12% every month in terms of MoU. The underlying principle for assessing dominance of an enterprise being linked to the market power enjoyed by it the commission came to a definite conclusion and held that no data has been provided by both the Informants in support of their assertion that Earth Infra is dominant in the relevant market. It further held that no document has been filed in support of assertion that Earth Infra is abusing their dominance. In absence of any prima facie case of contravention Commission closed the application under Sub-section (2) of Section 26 of the Act. Conclusion - The burden of proof lies with the informants to establish dominance and abuse under Section 4 of the Competition Act. Without evidence allegations cannot be substantiated. Appeal dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether Earth Infrastructure Ltd. held a dominant position in the relevant market of "Provisions of services of development and sale of commercial space in Noida and Greater Noida".
If Earth Infrastructure Ltd. held a dominant position, whether there was an abuse of such dominance, particularly in terms of not paying the assured return of 12% per month as per the Memorandum of Understanding (MoU) with the informants.
Whether the Competition Commission of India (CCI) erred in closing the information under Section 26(2) of the Competition Act, 2002, due to lack of prima facie evidence of contravention of Section 4 of the Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Dominance in the Relevant Market

Relevant Legal Framework and Precedents: The assessment of dominance under Section 4 of the Competition Act, 2002, requires establishing that an enterprise holds a dominant position in the relevant market. The relevant market is defined both in terms of product and geographic market.
Court's Interpretation and Reasoning: The court referred to previous cases (Case No. 05 of 2016 and Case No. 06 of 2016) to establish that the real estate market is divided into residential and commercial segments, with commercial units forming a separate relevant product market.
Key Evidence and Findings: The Commission concluded that the relevant geographic market was "Noida and Greater Noida" for commercial space. However, no evidence was presented by the informants to prove Earth Infra's dominance in this market.
Application of Law to Facts: The Commission determined that without evidence of market dominance, the allegations of abuse could not be substantiated.
Treatment of Competing Arguments: The appellants argued that Earth Infra was dominant due to its actions, but failed to provide supporting data or documentation.
Conclusions: The court upheld the Commission's finding that Earth Infra did not hold a dominant position in the relevant market.

Issue 2: Abuse of Dominance

Relevant Legal Framework and Precedents: Abuse of dominance under Section 4 involves using a dominant position to engage in practices detrimental to competition or consumers.
Court's Interpretation and Reasoning: The court noted that the appellants alleged non-payment of assured returns as an abuse of dominance.
Key Evidence and Findings: No documents or data were provided to demonstrate Earth Infra's alleged abuse of its market position.
Application of Law to Facts: Without evidence of dominance, the question of abuse was moot.
Treatment of Competing Arguments: The appellants' counsel highlighted the breach of MoU terms but could not establish a link to market dominance.
Conclusions: The court agreed with the Commission's decision to close the case due to lack of evidence of abuse of dominance.

Issue 3: Closure of Information by CCI

Relevant Legal Framework and Precedents: Section 26(2) of the Competition Act allows the CCI to close a case if no prima facie evidence of contravention is found.
Court's Interpretation and Reasoning: The court evaluated whether the CCI's decision to close the information was justified.
Key Evidence and Findings: The CCI's closure was based on the absence of evidence supporting claims of dominance and abuse.
Application of Law to Facts: The court found that the CCI acted within its authority under Section 26(2).
Treatment of Competing Arguments: The appellants failed to provide new evidence or arguments to challenge the CCI's decision.
Conclusions: The court upheld the CCI's order to close the information.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "No data has been provided by both the Informants in support of their assertion that Earth Infra is dominant in the relevant market."
Core Principles Established: The burden of proof lies with the informants to establish dominance and abuse under Section 4 of the Competition Act. Without evidence, allegations cannot be substantiated.
Final Determinations on Each Issue: The appeals were dismissed due to lack of merit, and the CCI's decision to close the case was upheld. No orders as to costs were made.

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