2020 (5) TMI 753 - AT - Law of Competition

Anti-competitve action - abuse of dominant position - contravention of the provisions of Sections 3 and 4 of the Competition Act 2002 - HELD THAT - The opinion of the Commission in regard to OP-1 holding relatively and comparably an inferior position as compared to giants like Sahara Parsvanath Omaxe with bigger projects and better resources knocks the bottom of an argument advanced on behalf of the Informants in regard to the OP-1 holding the dominant position in the relevant geographic market i.e. Lucknow qua the development and sale of residential flats which is the relevant product market in the case. The Informants may have grievances in regard to the deficiency in services in as much as the quality of construction of the project may have been compromised by the Developer i.e. OP-1 and that the area earmarked for providing common facilities was partially utilised for raising more residential towers thereby shrinking the space reserved for common facilities at the cost of comfort of the allottees besides extracting more money in the form of additional charges for maintenance and parking space beyond the stipulations in the Agreement but that would be a breach of the contractual obligation entitling the allottees to claim compensation. On consideration of the material on record and the reasons assigned by the Commission there are no doubt that OPs 1 to 4 were not holding dominant position in the relevant market which being residential apartment project is different from residential plot and commercial building projects thereby justifying the conclusion that the relevant product market and the relevant geographical market have been flawlessly identified. Once OPs 1 to 4 were not dominant players in the relevant market question of abuse of dominant position does not at all arise. The Competition concerns raised by the Informants are unfounded though for alleged breach of contractual obligation they may have a cause before the Competent Forum. There being no legal infirmity in the impugned order the appeal is dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

Whether the Opposite Parties (OPs), specifically OP-1, held a dominant position in the relevant market for the provision of services for the development and sale of residential flats in Lucknow.
Whether there was an abuse of dominant position by OP-1 as alleged by the Informants.
Whether there existed any anti-competitive agreement among the OPs as per Section 3 of the Competition Act, 2002.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Dominant Position in the Relevant Market

Relevant legal framework and precedents: The assessment of dominance is guided by Section 4 of the Competition Act, 2002, which prohibits the abuse of dominant position. The determination of dominance involves analyzing the market power of an entity in the relevant market.
Court's interpretation and reasoning: The Tribunal agreed with the Commission's finding that OP-1 did not hold a dominant position in the relevant market. The presence of other major real estate developers such as Sahara, Eldeco, and Omaxe indicated a competitive market environment.
Key evidence and findings: The Commission identified the relevant market as the provision of services for the development and sale of residential flats in Lucknow. The presence of numerous competitors with comparable or superior resources and project sizes negated the dominance of OP-1.
Application of law to facts: The Tribunal applied the criteria of market share, size, and economic strength to conclude that OP-1 was not dominant in the relevant market.
Treatment of competing arguments: The Informants' argument of OP-1's dominance was countered by the evidence of a competitive market with multiple players.
Conclusions: The Tribunal upheld the Commission's view that OP-1 was not dominant, thus dismissing the allegations of abuse of dominance.

Issue 2: Abuse of Dominant Position

Relevant legal framework and precedents: Section 4 of the Competition Act, 2002 addresses the abuse of dominant position, which includes imposing unfair or discriminatory conditions or prices.
Court's interpretation and reasoning: Without a dominant position, the question of abuse does not arise. The Tribunal noted that any grievances regarding service deficiencies or contractual breaches should be pursued in a different legal forum.
Key evidence and findings: The alleged additional charges and poor quality of construction were viewed as contractual issues rather than competition law violations.
Application of law to facts: The Tribunal found no evidence of OP-1 using its market position to impose unfair conditions, as it was not dominant.
Treatment of competing arguments: The Tribunal acknowledged the Informants' grievances but directed them towards contractual remedies rather than competition law claims.
Conclusions: The Tribunal concluded that there was no abuse of dominant position by OP-1.

Issue 3: Anti-competitive Agreement

Relevant legal framework and precedents: Section 3 of the Competition Act, 2002 prohibits anti-competitive agreements that cause or are likely to cause an appreciable adverse effect on competition.
Court's interpretation and reasoning: The Tribunal found no evidence of any agreement among the OPs that could be considered anti-competitive.
Key evidence and findings: The Commission's investigation did not reveal any collusion or agreement that restricted competition.
Application of law to facts: The absence of any concerted practices or agreements among the OPs led to the dismissal of this allegation.
Treatment of competing arguments: The Informants' claims lacked substantive evidence to support the existence of anti-competitive agreements.
Conclusions: The Tribunal upheld the Commission's finding that there were no anti-competitive agreements among the OPs.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "Once OPs 1 to 4 were not dominant players in the relevant market, question of abuse of dominant position does not at all arise."
Core principles established: The assessment of dominance requires a comprehensive analysis of the market structure and competitive dynamics. Without dominance, the abuse of dominance cannot be established.
Final determinations on each issue: The appeal was dismissed with the Tribunal affirming that OP-1 was not dominant, there was no abuse of dominance, and no anti-competitive agreement existed among the OPs.

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