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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 ..... bserves 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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 Informant within 30 days, failing which the booking amount was liable to be forfeited without any notice to the Informant. Apart from this, several clauses of the 'Agreement' were violative of provisions of Section 4(2)(a)(i) of the Act, being highly unfair and discriminatory towards the allottee and heavily biased towards OP-2. Some of the clauses alleged to be anti-competitive were: i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptions) 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 force majeure. 5. Upon consideration of the facts and circumstances of the case, the Commission found the OP group to be dominant in the relevant market of "provision of services for development and sale of residential units in Gurgaon" and observed that prima facie the conduct of the OP group was abusive and in contravention of provisions of Section 4 of the Act. Thus, the matter was referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 year 2011-12). The Informant booked the residential apartment on 03.03.2012 in the said project and executed the buyer's agreement on 01.09.2012 (i.e. in financial year 2012-13). The execution of agreements of the project in question was started on 16.05.2012 and more than 80% of the level of execution of agreements was achieved during the financial year 2014-15. Hence, the relevant scop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (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 that during the cumulative relevant period of 2011-12 to 2014-15, OP group had the highest market share of 8.38%, followed by Emaar MGF with 6.34%. The difference between the top two developers during the entire relevant period was 652 residential apartments/ flats. The other competitors up to 5th position were Ireo, Vatika, and Ansal Housing and Construction Ltd. (Ansal Housing and Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal 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 resources of the OP group and other developers i.e. top three developers in terms of licensed land bank, launches, sales (unit-wise and value-wise), the DG has done a comparative analysis of various financial parameters namely total and current assets and liabilities, total revenue, net income, reserve and surplus, net working capital and return on assets for the relevant period of 2011-12 to 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pared 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 OP group also came down to 6th in the year 2014-15. It was noted by the DG that the Informant had chosen to purchase the apartment for his own personal use from the OP group despite the availability of similar apartments/flats in the same relevant market available at lesser rates in the same locality. vi. Entry barriers: The DG has not found any entry barrier in the relevant market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, 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 redressal forums, and do not merit examination under the competition law. Moreover, in previous matters relating to real estate, it has been held that contractual breaches do not ordinarily give rise to a competition law issue which require intervention by the Commission. Analysis: 17. The Commission has perused the materials available on record including the Investigation Report and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 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 provision of services for development and sale of residential apartments/ flats" can be considered to be the relevant product market in the present case. 23. Further, the city of Gurgaon can be considered to be the relevant geographic market in the instant case based on factors like different regulatory authorities and different rules and regulations for Gurgaon, Delhi, Noida, etc., s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 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 market during the relevant period, out of which the OP group was at 2nd position with a market share of 8.93%. Furthermore, if the market shares are considered for the years 2011-12 and 2012-13 (i.e. the years when the Informant decided to purchase the residential apartment from the OP group) then it is observed that the OP group was at 2nd and 4th position in these years with a market sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our 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 barrier in the instant case. 32. Thus, after assessing the facts of the present case in terms of the factors in the Act, the Commission is of the view that the OP group does not have a dominant position in the relevant market in terms of Section 4 of the Act. 33. The Commission is conscious of the fact that the OP group was found to be in a dominant position in Case no. 19 of 2010 (Belaire ..... X X X X Extracts X X X X X X X X Extracts X X X X
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