Real estate developer cleared of dominance abuse allegations under Section 4 as market competition increased significantly

CCI examined allegations against a real estate developer group for abuse of dominance under Section 4 of the Competition Act. The Commission defined Gurgaon as a separate relevant geographic market due to its unique characteristics and proximity to Delhi. However, CCI found that by 2011-12, when the disputed property was booked, market dynamics had changed significantly with entry of new players including established brands like Tata and Godrej. The Commission concluded that no individual player, including the respondent group, held a dominant position during the relevant period. Since dominance was not established, allegations of abuse could not be examined. The case was closed under Section 26(6) of the Act.

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Issues Involved:
1. Allegations of contravention of Section 4 of the Competition Act, 2002.
2. Definition of the relevant market.
3. Determination of dominance in the relevant market.
4. Examination of alleged abuse of dominance.

Issue-wise Detailed Analysis:

1. Allegations of Contravention of Section 4 of the Competition Act, 2002:
The Informant alleged that the Agreement for the allotment of an apartment in the 'Regal Gardens' project was non-negotiable and contained several clauses that were unfair, discriminatory, and heavily biased towards OP-2, thus contravening Section 4(2)(a)(i) of the Act. Specific clauses were highlighted, such as mandatory payment for parking space irrespective of car ownership, escalation of apartment price due to increased costs, payment of External Development Charges (EDC), discretionary rebates, changes in preferential location, mandatory club facility charges, electricity supply arrangements, changes in building plans, construction timelines, and force majeure conditions.

2. Definition of the Relevant Market:
The Commission initially found the OP group to be dominant in the market for "provision of services for development and sale of residential units in Gurgaon." However, the DG's Investigation Report defined the relevant market more broadly, including residential units developed under both Residential Group Housing (RGH) and Residential Plotted Land (RPL) licenses. The Commission redefined the relevant market as "the provision of services for development and sale of residential apartments/flats in Gurgaon," distinguishing between different types of residential properties based on consumer preferences and end-use.

3. Determination of Dominance in the Relevant Market:
The DG's Supplementary Investigation Report assessed the dominance of the OP group in the revised relevant market from 2011-12 to 2014-15. Factors considered included market shares, size and resources of the enterprise, economic power, dependence of consumers, and entry barriers. The DG found that the OP group had a market share of 8.93% in launched residential apartments/flats and 8.38% in units sold, with 17.40% of the market value. Despite strong financial strength, the OP group did not hold a dominant position due to the fragmented market and presence of several competitors.

4. Examination of Alleged Abuse of Dominance:
The Commission noted that the existence of dominance is a prerequisite for examining abuse of dominance under Section 4 of the Act. Given the DG's findings that the OP group did not hold a dominant position in the relevant market during the relevant period, the Commission concluded that there was no need to examine the allegations of abuse of dominance. The market dynamics had changed since previous cases where the OP group was found dominant, with new players entering the market and altering competitive conditions.

Conclusion:
The Commission concluded that the OP group did not contravene the provisions of Section 4 of the Act as it was not in a dominant position in the relevant market during the relevant period. The case was ordered to be closed under Section 26(6) of the Act.

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