2024 (11) TMI 934 - CCI - Law of Competition

Housing society changes staff allocation and maintenance charges without establishing market dominance under Section 4

The CCI examined allegations of abuse of dominant position under Sections 3 and 4 of the Competition Act, 2002, regarding unilateral changes in ... Contravention of provisions of Section 3 and 4 of the Competition Act, 2002 - unilateral changes in allotment of housekeeping staff and increase in Monthly Maintenance Charges - abuse of dominant position - whether the Opposite Parties fall in the category of ‘enterprise’? - HELD THAT:- In the present matter, since Opposite Parties are undertaking commercial activities, they squarely fall under the ambit of ‘enterprise’ in terms of Section 2(h) of the Act. Thereafter, an appropriate relevant market, as per Section 2(r) of the Act which comprises of relevant product market and relevant geographic market, is required to be delineated. The next step is to assess the dominance of Opposite Party in the relevant market so delineated, in terms of the factors enumerated under Section 19(4) of the Act. Once the dominance of Opposite Party is established, the final step is to analyze the allegations pertaining to abuse of dominance in terms of provisions of Section 4 of the Act. With regard to the relevant geographic market, the Commission has taken into consideration the location of the project, which is in Kannamangala, Taluka-Devanahalli, Bengaluru, Karnataka. This location falls within the Bangalore Metropolitan Region. It may be noted that the conditions of competition within the Bangalore Metropolitan Region on account of level of development, cost of real estate, connectivity to state capital, transport facilities, regulatory authorities, local/municipal laws etc. can be distinguished from other neighbouring areas. In view of the same, the Commission is of the view that the relevant geographic market in the instant matter be considered as ‘Bangalore Metropolitan Region’. The Commission is of the prima facie view that the relevant market in the present case would be ‘the market for provision of services for development and sale of apartment to cater to the needs of senior citizens in Bangalore Metropolitan Region.’ The Commission is of the opinion that there exists no prima facie case and the Information filed is directed to be closed forthwith under Section 26(2) of the Act. Consequently, no case for grant of reliefs as sought under Section 33 of the Act arises and the same is also rejected. Issues:Alleged contravention of provisions of Section 3 and 4 of the Competition Act, 2002 by multiple parties in a residential complex.Detailed Analysis:1. Allegations and Parties Involved:The Information filed alleged contravention of Section 3 and 4 of the Competition Act by Covai Property Centre, Covai Senior Citizen Services Pvt. Ltd., and Ozone Urbana Infra Developers. The Informant, a resident of Urbana Irene, purchased an apartment and was allegedly forced into accepting services from Covai Services due to tie-in arrangements between the parties.2. Tie-in Arrangement and Service Agreements:The Informant claimed that tie-in arrangements between the parties led to a lack of choice in selecting service providers. The agreement mandated the Informant to enter into a service agreement with Covai Services, leading to unilateral changes in services and maintenance charges, allegedly due to misuse of dominant position by Covai.3. Abuse of Dominant Position and Anti-Competitive Conduct:The Informant alleged that Covai misused its dominant position by increasing service charges arbitrarily, affecting residents' affordability. The Informant sought reliefs including removal of confirming party status, ownership rights of common areas, and mutual decision-making on service terms and rates.4. Market Analysis and Geographic Relevance:The Commission analyzed the relevant market for services catering to senior citizens in Bangalore Metropolitan Region, considering factors like amenities, location, and competitive constraints posed by other developers. The Commission concluded that OP-3 did not hold a dominant position in the market.5. Applicability of Competition Act Sections:The Commission determined that the tie-in arrangement did not fall under Section 3(4) of the Act as it involved an agreement between the enterprise and an end consumer. Citing a previous case, the Commission found no prima facie case for contravention and closed the Information under Section 26(2) of the Act.6. Decision and Communication:The Commission decided to close the case, finding no grounds for the alleged contraventions. The Secretary was directed to communicate the decision to the Informant, concluding the matter under Section 26(2) of the Competition Act, 2002.