- The Informant No.1 is a Society registered under the West Bengal Societies Registration Act, 1961 and is stated to be constituted for the amelioration of its members who are intending purchasers of commercial units different multi-storied projects in the Rajarhat area New Town, Kolkata. The informant No.2 is stated to be the President of the Informant Association.
- The Opposite Parties DLF Commercial Complexes Ltd. (‘the Opposite party No1) M/s DLF Retail Developers Limited (‘the Opposite Party No.2’) to be referred to as ‘DLF’ collectively herein after, are stated to be the largest developers of properties operating in India and whereas other opposite parties are related to DLF.
- In January 2008, the opposite party Nos. 1 and 2 issued an advertisement containing details of commercial/retail outlets to be constructed on the land measuring 3 acres (approx.) in Rajarhat, under the name and style ‘DLF Tower’. The opposite party No.1 held itself out as the authorized agent to receive bookings for the said project and it was accordingly opened around the year, 2008.
- Then the members of the informant association approached the opposite party Nos. 1 and 2 with the object of setting businesses in the proposed complex. During the course of the meeting with the opposite party Nos. 1 and 2 in their Office at New Delhi, the opposite Nos. 1 and 2 misrepresented some facts to the members of the informant association. Any person who desires to book an apartment is required to fill an application form accepting certain terms and conditions which were onerous and unilateral.
- It has been alleged that the intending purchasers were left with no discretion to negotiate and due to disparity in the bargaining were forced to accept the terms and conditions dictated by the opposite Nos. 1 and 2 accordingly they applied in the prescribed format. It has been further alleged, that DLF again abused its dominant position reiterated in the receipts that even the issuance of allotment letter does not entitle an allottee of a provisional or ﬁnal allotment of the proposed property. It was stipulated in the receipt that terms and conditions stated in the application form shall govern the allottee and the company till such time a buyer agreement is executed.
- It has been alleged at even though 90% of the members of the informant association have made payments in excess of 35% of their cost within a period of four months from the of issuance of the allotment letter, no construction activity has started at the Site even alter a lapse of four months from the date of issuance of the allotment letter.
- It has been alleged that the opposite party Nos. 1 and 2 even purported to cancel the allotments made in favour of the members forfeiting 20% of the unit cost of each member under clause 11 of the application form taking advantage of their superior position.
- It has been stated that in or about August, 2008 the members of the informant association received Commercial Buyer agreement from the company contradicting its earlier purported action to cancel the allotments.
- It has been alleged that even this Commercial Space Buyers Agreement is a standard printed form of the agreement leaving no space for negotiation with the members of the informant association. It stated that most all the members signed the said agreement on dotted lines to the it that they had already paid 35% of their project unit cost. It is further alleged that and except few members, other members have not received back copies of the agreements duly signed by the company.
- On these facts and allegations, the informants have prayed to the Commission to initiate enquiry against DLF for, inter alia, abuse of dominant position; to direct the opposite parties to produce the relevant records involving the decision making process culminating into the grant of sanction/approval of the building plans as well as the increase of building upto 12th floor, to pass order directing discontinuation of all the arbitrary clauses in the agreement forthwith; to pass appropriate orders restraining the opposite parties from arbitrary cancellation of allotment; to pass order providing exit option to an allottee with full refund of money paid along with interest @ 18% p.a. as well as compensation; to direct the agreement to stand modified to the extent and in the manner that clause 11 be abolished specifically or as may be found appropriate; to pass order imposing penalty on DLF; to pass order awarding the cost and expenses in the favour of the informant association and lastly to pass such other or further orders as the Commission may deem fit and proper in the facts and circumstances of the case.
The questions to be resolved to hold DLF censurable of conferring any demonstration which is in renunciation to Section 4 of the Competition Act, 2002 are as below :-
Whether DLF Is Dominant In The Above Relevant Market, In The Context Of Section 4 Read With Section 19(4) Of The Competition Act, 2002? If yes, is there Any Abuse Of Dominant Position In The Relevant Market?
REASONS GIVEN BY THE COMMISSION
The allegation made by the informant against DLF that there was abuse of dominant position in the relevant market as it has imposed unfair conditions in the sale of commercial space in their project DLF Galleria located in the city of Kolkata. But the informant has miserably failed to provide any conclusive evidence that DLF enjoys dominant position in developing commercial space in the metropolis of Kolkata. On the basis of the information available in public domain, is seen in Kolkata that many IT companies which has generated more demand of commercial office and retail space. Many prominent companies like Godrej, Infinity, Unitech, Sapooji Pallonji and TCG Urban Infra Holding etc. are major developers of both office and retail space in Kolkata besides number of local developers who have been developing retail space for showrooms and other outlets. Going by the section 4 of the Act, the expression “dominant position” means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to operate independently of competitive forces prevailing in the relevant market; or affect its competitors or consumers or the relevant market in its favour here DLF, being a new entrant in developing commercial space in Kolkata, is having only one property related to commercial retail space which cannot be treated as a dominant enterprise which can operate independently of competitive forces prevailing in the relevant market or affect the competitors or the relevant market in its favour. As the factum of DLF enjoying a dominant position in developing commercial space in Kolkata has neither been established by the informant nor it has been substantiated from the information available in public domain no case of violation of section 4 of the Act is made out against DLF. The Commission observed that neither the information has made any allegations in respect of contravention of section 3 and Section 4 the Act nor in the facts and circumstances of the case there appears to be any infringement of the provisions of that sections. In the light of the above analysis, Commission is of the view that no prima facie case is made out for making a reference to the Director General for conduction investigation into the matter and proceedings are liable to be closed under section 26(2) of the Act.
Dominance is not considered bad per se but its abuse is. Abuse is stated to occur when an enterprise or a group of enterprises uses its dominant position in the relevant market in an exclusionary or/ and an exploitative manner.
In the above case the allegation is not adequate in determining the Dominant Position as to establish the dominant position , the relevant market of Rajarhat, New Town, Kolkata is to be determined or the nearby areas not reference to the whole of India. Competition Act deﬁnes dominant position (dominance) in terms of a position of strength enjoyed by an enterprise, in the relevant market in India, which enables it to: an operate independently of the competitive forces prevailing in the relevant market; or an affect its competitors or consumers or the relevant market in its favor. It is the ability of the enterprise to behave or act Dominance has significance for competition only when the relevant market has been deﬁned.
Now Relevant Market plays a vital role when dealing with unfair practises. The Relevant market involves the description of the context in which certain economically harmful conduct could take place. The process therefore, of defining a market and a relevant market, is of the first moment, meaning thereby that any assessment of the conduct of a market player can only follow and not precede the definition. The process begins by assuming provisionally that certain anti-competitive conduct exists in the market. It then proceeds to define through a series of questions, the boundaries of the smallest market in which such conduct could be sustained. After the contours of the smallest market are defined and drawn, the actual conduct in question is subjected to an analysis, to determine if it has or could have an anticompetitive effect.
The determination of ‘relevant market’ by the Competition Authority has to be done, having due regard to the ‘relevant product market’ and the ‘relevant geographic market’. In practice, defining a relevant market is sometimes only approximate. It is often difficult to predict the reactions of purchasers/consumers to a price increase. It is here that investigation becomes critical to the determination of the relevant market
A relevant market has therefore two fundamental dimensions, product and geographic. The product market describes the good or service. The geographic market describes the locations of the producers or sellers of the product or service. Relevant market is defined by consumer or purchaser preferences and actions. For instance, if purchasers consider two goods to be close substitutes or readily interchangeable, those two goods are considered to be in the same relevant market
Relevant market is crucial in analyzing Dominance and offences of Abuse of Dominance. The new Indian competition law defines a dominant position as a position of strength, enjoyed by an enterprise in the relevant market, which enables it to operate independently of competitive forces prevailing in the relevant market or affect its competitors or consumers or the relevant market in its favour. The same Act describes, inter alia, abuse of dominance to occur when an enterprise uses its dominant position in one relevant market to enter into, or protect, other relevant market. For an enterprise to abuse a dominant position, it must hold a dominant position in a relevant market. The first step, therefore, in an evaluation of an enterprise’s actions is to define the relevant market.
Another factor for the determination of dominance is the dependence of consumers on the enterprise. Apart from OP 1, other large developers are competing with each other in the relevant market with projects of varying magnitudes and having comparable size and resources than that of the OP 1. Presence of such players with comparable projects in the relevant market indicates that the buyers have the option to choose from various developers in the relevant geographic market.
In Belaire vs DLF case DLF’s ‘high end’ residential building in Gurgaon targets only specific consumers, according to their capacity to pay. On the issue of relevant geographic market, CCI stated that a decision to purchase a high end apartment in Gurgaon is not easily substitutable by a decision to purchase a similar apartment in any other geographical location. Further Gurgaon is known to posses certain unique geographical characteristics such as its proximity to Delhi, proximity to airports and a distinct brand image as a destination for upwardly mobile families. It was held that DLF had the highest market share (45%), vis-a-vis the market share of the nearest competitor (19%) which was more than twice of its competitor, leading to hardly any competitive constraints. Further, DLF had a clear early mover’s advantage and occupies a leadership position as real estate is a sector with natural entry barriers due to high cost of land and brand value of incumbent market leaders.
Coming on this case here DLF being a new entrant in developing commercial space in Kolkata, is having only one property related to commercial retail space. In view of these factors the DLF cannot be treated as a dominant enterprise which can operate independently of competitive forces prevailing in the relevant market or affect the competitors or the relevant market in its favor to ensure that such enterprise does not abuse its dominant position. Furthermore constructing a building without clearance is illegal undoubtedly but it does not violate or attract any provision of the Competition Act. Therefore CCI decision to close the case, irrefutably seems to be justified.
Delineation of “Relevant Market” is central to effective enforcement of competition laws. For the Competition Authority, such description clarifies the space within which parties need to adjudicate on competition cases. It is indeed the first step in the analysis of conduct on the part of the market players concerned. Hence, based on the above analysis the commission order about the opposite parties remains legally sound, astute in observations as they do not enjoy dominance in the particular relevant market. The Informant had an option to purchase commercial/ retail place from Unitech, Godrej Properties, Infinity or by any Local Builder like Astra to carry out their businesses, as these all come under the jurisdiction of the relevant market, and are easily substitutable. Moreover in regard to the allegation of contraventions of provisions of the Competition Act, it is stated that remedy for these issues does not lie before the Commission and the Informant may approach the appropriate forum for that purpose.
 Dr. S CHAKRAVARTHY in his article on Relevant Market In Competition Case Analyses; visited on 10/8/2016
 Case. No. 69 of 2014 Mr. Gautam Dhawan v M/s. Parsvanath Hessa Developers Pvt. Ltd.
 http://circ.in/pdf/Case_Study_08.pdf; visited on 9/8/2016
Harsh Pandey, 5th Year, BA LLB(Hons.), School of Law, KIIT University