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TMI Blog2018 (8) TMI 2146X X X X Extracts X X X X X X X X Extracts X X X X ..... s of manufacturing Pharmaceutical Duplex Board printed packaging. OP-1 is a public limited company involved in the business of development of residential, commercial and retail properties. The project under reference was launched by DLF Home Developers Limited (DHDL), a wholly owned subsidiary of OP-1. Pursuant to the scheme of amalgamation/ merger duly approved by the High Court of Delhi vide its order dated 31.07.2013, DHDL amalgamated with OP-2. 3. As per the information, the OP group launched a residential township by the name of 'Regal Gardens' in Sector 90, DLF Garden City, Gurgaon consisting of 3BHK and 4BHK apartment units having floor area ranging between 1693 to 2215 square feet. The Informant applied for the allotment of an apartment in the said project and paid 10% of the sale price of the apartment and parking space amounting to Rs. 8,59,850/- as the booking amount. Thereafter, buyer's agreement (the Agreement) was executed between the Informant and OP-2 on 01.09.2012 and Apartment bearing No. 4, Floor No. 15, Block D in the said project of OP-2 was allotted to the Informant. 4. The Informant alleged that the Agreement was non-negotiable and had to be executed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o raise any dispute. viii. Clause 9 of the agreement provided that the building plans and layout plans including additions in apartment floor plans, building plans, specifications, etc. may be changed at the discretion of OP-2. ix. Clause 11(a) of the agreement mandated OP-2 to complete the construction of the building/apartment within 42 months of the application (subject to several exceptions) but did not subject OP-2 to any liabilities for non- compliance or for not honouring the timelines set out in the agreement. x. Clause 11(b) empowered OP-2 to suspend construction upon Force Majeure conditions and for which the allottee had no right to claim compensation of any nature. xi. Clause 14 provided that if OP-2 failed to deliver possession after 42 months the allottee could give notice of termination within 90 days of expiry of 42 months. Thereafter, OP-2 would be at a liberty to sell the apartment on terms and conditions as it may deem fit and the allottee would be allowed refund of amounts paid by him after the sale by OP-2 materializes but will not be entitled to any interest. Thus, this clause in effect gave no option for termination to the allottee in the event of for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l apartment would not be substitutable with a villa or a plot or independent floor. Hence, it was observed that apartments/ villas/ plots /independent floors cannot be considered in the same category as done by the DG. Therefore, the relevant market was defined as the market for the 'provision of services for development and sale of residential apartments/ flats in Gurgaon' and the DG was directed vide order dated 09.11.2016 to conduct further investigation under Regulation 20(6) of the Competition Commission of India (General) Regulations, 2009 and submit a Supplementary Report. The DG submitted the Supplementary Investigation Report on 11.08.2017. DG's findings in Supplementary Investigation: 8. In view of the Commission's order dated 09.11.2016, the DG identified the following issue for supplementary investigation: 'Whether OP group is dominant as per the provisions of the Competition Act, 2002 or not, in the revised relevant market as defined by the Commission'. 9. The DG examined the above issue for the years 2011-12 to 2014-15. It was noted that the project in question, 'Regal Gardens' in Sector 90, DLF Garden City, Gurgaon, was launched on 01.03.2012 (i.e. in financial y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mulative period of 2007-08 to 2011-12. b) Launched residential apartments/ flats: Further, the DG examined the number of launched residential apartments/flats in Gurgaon in the relevant period i.e. 2011-12 to 2014-15 and found that there were about 30 developers who had launched 39,061 saleable residential apartments/flats. It was noted that the highest share was that of Supertech Ltd. (Supertech) group i.e. 8.95%, followed by the OP group with 8.93%, M3M India (P) Ltd. (M3M) with 7.38%, Ireo with 6.55% and Vatika with 6.08% share respectively, for the cumulative period of 2011-12 to 2014- 15. Further, it was noted that the top position was occupied by a different developer in each financial year. c) Number of residential apartments/ flats sold (unit-wise): With respect to the total number of residential apartments/ flats sold (unit-wise) during the relevant period as per the actual data submitted by the concerned developers, the DG found that there were about 39 developers who sold a cumulative total of 31,913 residential apartments/ flats of which approximately 50% were sold by top ten developers, Though each year top position was occupied by different developer, it was found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OP group, was Rs. 86 lakh only. f) Inventory: The DG took note of the data collected from developers regarding the status of inventory, i.e. the residential apartments/ flats, which were launched and not sold as on 31.03.2011. In the beginning of the relevant period i.e. 2011-12 as on 31.03.2011, the total inventory available for sale was 11,245 units. With the launch of cumulative total of 39,061 residential apartments/ flats during the relevant period, the total available residential apartments/ flats for sale were 50,306 units. It was observed from the data collected from 29 developers that Ireo Private Limited, having 1248 unsold units, occupied the top position followed by Vatika with 1120 units and Emaar MGF with 1106 unsold units. The OP group stood at 16th position with 269 unsold units. The DG while concluding the analysis of data submitted by the developers observed that the market share in the range of 8 to 9% in a fragmented market where there are a number of players, no developer including the OP group can be said to be a dominant player in the relevant market in the relevant period. ii. Size and resources of the enterprise: To ascertain the size and resource ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the TATA group) and Godrej Properties Ltd. (belonging to Godrej group) have entered the relevant market during the relevant period. Though these are relatively new entrants in the relevant market, they enjoy the benefit of their respective group's brand value as well as their strong financials. Thus, the DG has found that even though the OP group enjoys sound financial strength as compared to its competitors, the same does not enable it to act independently of competitive forces prevailing in the relevant market during the relevant period. v. Dependence of consumers: Based on the data regarding launch of similar projects as that of the OP group during 2011-12, the DG has observed that the Informant and other consumers had several choices of residential apartments/ flats available with them, as many projects were launched by established/ major developers during the relevant period. In fact, the number as well as comparative position of various developers in selling residential apartments/ flats during 2011-12 to 2014-15 witnessed significant change. During this period, none of the developers could retain the top position on a year on year basis. Further, the position of the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affect the: (i) competitors; (ii) consumers; or (iii) relevant market in its favour. 14. The OP group stated that the data submitted by it as well as the data pertaining to the market share of different developers under various aspects (licenses, launches, sales etc.) collected, analysed and concluded by the DG, shows that the market is highly competitive and fragmented. In this regard, the OP group has submitted that the Herfindahl-Hirschman Index (HHI) for the residential apartments launched during 2011-2014 in Gurgaon was 175.12, which reveals that the market is not concentrated. 15. Further, with respect to the relevant market delineated by the Commission, the OP group contended that the relevant product market ought to have been defined to include the resale / secondary market in which numerous apartments/flats are available at competitive prices and the relevant geographic market also ought to be defined so as to extend to all of the National Capital Region (NCR). 16. Furthermore, the OP group has averred that the allegations raised by the Informant in the instant case are at best alleged contractual or commercial disputes within the purview of civil courts, or consumer r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product market by other players operating in the same geographic market. For the said purpose, the relevant factors that a buyer considers before purchasing a particular product have to be considered. Some of the factors which combined together determine the aspect of substitutability and interchangeability include the budget, location of the project, quality of construction, general plan of development, amenities provided by the builder, materials used, value for money, developer's/ group's brand value, its expertise in the field, perception of brand in general, historical background, number of completed projects, possession/delivery within reasonable time and history of litigation are few of the many factors that are considered by the buyers while approaching a particular developer/ builder. Based on these factors, substitutability is possible within the entire market of services provided by the developers/ builders in respect of residential apartments/ flats launched in a particular period. Further, even if the factors provided under Section 19 (7) of the Act are considered then in terms of physical characteristics and end use, price and consumer preferences, the market for "the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the city of Gurgaon is a separate relevant market. Dominance 25. With respect to dominance, the Commission observes that the DG has primarily relied upon two sources to obtain data for analyzing the market share, size & resources of different players, and the land bank in credit of each player in the relevant market, i.e., DGTCP and Haryana Urban Development Authority (HUDA) and from other players/ developers operating in the market. 26. In the instant case, in order to analyse the market share of the OP Group with respect to licensed land allotted by the DGTCP, the DG has observed that residential licenses were granted to around 96 developers during the period 2007-08 to 2011-12 for a cumulative total land of 5,549.38 acres. Out of this OP Group had a share of 8.30% and occupied 3rd Position with respect to its competitors such as Emaar MGF, Vatika, Ireo and Unitech with a share of 8.84%, 8.56%, 7.68% and 7.30% respectively. 27. Further, with regard to the total residential apartments/ flats launched during the period 2011-12 to 2014-15, the DG has observed from the data submitted by around 40 developers that there were 30 developers who launched projects in the relevant ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the financial strength of the OP group and found that the same is evident from its assets and liabilities, as it has huge reserves and surplus exceeding that of their competitors. Even so a considering other factors like the number of players in the market, the number of residential projects launched and sold by the OP group and its competitors and entry of new players over the past four years in the relevant market indicate that the OP group no longer has the ability to influence the market in its favour. 31. With regard to the dependence of consumers on the OP group and entry barriers, it is noted that there are several established real estate players that are operating in the same field as the OP group providing choices to the consumers intending to purchase residential apartment/ flat. Given the options available in the relevant market, even at the time the Informant had decided to purchase residential apartment/ flat, it does not appear that the consumers were dependent on the OP group. Moreover, there is no regulators bar on the entry of new players in the market. The presence and rapid growth of the innumerable players in the market itself refutes the issue of entry barri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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