Se­lec­tion of fo­rum

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - Su­nil Tyagi ht­es­tates@hin­dus­tan­times.com The au­thor is a se­nior part­ner at Zeus Law, a cor­po­rate com­mer­cial law firm. One of its ar­eas of spe­cial­i­sa­tions is real es­tate trans­ac­tional and lit­i­ga­tion work. If you have any queries, email us at ht@zeus.firm.

Re­cently, there have been cases where flat own­ers have filed com­plaints against builders/de­vel­op­ers with the Com­pe­ti­tion Com­mis­sion of In­dia (CCI), al­leg­ing un­just and one-sided pro­vi­sions of builder­buyer agree­ments they have ex­e­cuted with builders. CCI, how­ever, only has the author­ity to look into com­plaints of mis­use of dom­i­nant po­si­tion by a seller in the mar­ket.

The present case arose af­ter al­le­ga­tions by com­plainants re­gard­ing mis­use of dom­i­nant po­si­tion by a de­vel­oper (Jaypee group) in the process of pro­vi­sional apart­ment al­lo­ca­tion which was said to be one-sided, thus prej­u­dic­ing the rights of con­sumers. Di­rec­tions were thus given to the di­rec­tor gen­eral of CCI to in­ves­ti­gate the mat­ter.

The in­ves­ti­ga­tion re­port con­cluded that the de­vel­oper was pro­vid­ing “ser­vices” while de­vel­op­ing and sell­ing apart­ments and hence CCI had ju­ris­dic­tion over the mat­ter. The re­port also re­marked that the rel­e­vant mar­ket in the present case was “pro­vi­sion of ser­vices for de­vel­op­ment and sale of res­i­den­tial apart­ments in Noida and Greater Noida.” The in­ves­ti­ga­tion re­port con­cluded on the ba­sis of avail­able and sold dwelling units that the de­vel­oper could not be said to be in a “dom­i­nant po­si­tion” in the mar­ket since it could not op­er­ate in­de­pen­dently of the com­pet­i­tive forces.

The CCI felt the need for fur­ther in­ves­ti­ga­tion and di­rected the di­rec­tor gen­eral to con­duct the same. In the sup­ple­men­tary re­port the DG an­a­lysed the con­cept of in­te­grated town­ship as a sep­a­rate mar­ket and con­sid­ered it a rel­e­vant mar­ket in this case. Jaypee was found to have the largest share in this seg­ment and hence was con­cluded to be in a dom­i­nant po­si­tion in the re­port.

The CCI dis­cussed the ques­tion whether the Jaypee group had vi­o­lated pro­vi­sions of the Com­pe­ti­tion Act 2002 and had abused its dom­i­nant po­si­tion. The CCI looked into what was a rel­e­vant mar­ket. The CCI re­jected the analy­ses of the DG that rel­e­vant mar­ket was “in­te­grated town­ship” in this case. It opined that “in­te­grated town­ships” could not be con­sid­ered a sep­a­rate prod­uct mar­ket from “stand­alone res­i­den­tial projects” since there was suf­fi­cient de­gree of sub­sti­tutabil­ity be­tween stand­alone res­i­den­tial projects and in­te­grated town­ships. It was fur­ther held by the CCI that res­i­den­tial houses/vil­las/ apart­ments con­sti­tuted a sep­a­rate mar­ket and that the buyer looked into “brand value”, “back­ground”, “num­ber of projects com­pleted”, “de­liv­ery time­lines”, “value for money”, “ameni­ties”, “de­sign”, “ma­te­ri­als”, “fix­tures”, “lo­ca­tion of the project”, “prox­im­ity to rail­ways sta­tion, metro sta­tion and hos­pi­tals” etc as rel­e­vant fac­tors and it was on the ba­sis of th­ese that the ma­jor­ity or­der con­sid­ered the said mar­ket as a dis­tinct prod­uct mar­ket.

The CCI de­cided that the rel­e­vant ge­o­graphic mar­ket would be Noida and Greater Noida and since th­ese places had a brand im­age of their own and the de­lin­eation given to the mar­ket was “pro­vi­sion of ser­vices for de­vel­op­ment and sale of res­i­den­tial apart­ments in Noida and Greater Noida re­gions”.

Af­ter de­ter­min­ing what the rel­e­vant mar­ket, was CCI looked into the ques­tion of dom­i­nance and was of the opin­ion that res­i­den­tial seg­ment of the realty sec­tor was highly frag­mented with the pres­ence of large num­ber of play­ers. On the ba­sis of mar­ket share and fi­nan­cial re­sources, the said builder was seen to have stiff com­pe­ti­tion. It was, there­fore, de­cided by CCI that the builder did not enjoy a po­si­tion of dom­i­nance in ac­cor­dance with the pro­vi­sions of the Com­pe­ti­tion Act, 2002, in the res­i­den­tial seg­ment in Noida and Greater Noida.

Thus, when buy­ers are ag­grieved and de­cide to re­fer their com­plaints to CCI, they should know that the CCI, be­fore get­ting into the ques­tion of com­plaints re­lat­ing to de­fi­cient ser­vices or un­fair prac­tices by the de­vel­oper, has to as­cer­tain if the builder has abused its dom­i­nance in the rel­e­vant mar­ket as per the pro­vi­sions of the Com­pe­ti­tion Act, 2002. The buy­ers may have griev­ances against the builders even if the builder does not hold a dom­i­nant po­si­tion in the mar­ket. To seek a rem­edy as con­sumers, buy­ers may ap­proach the con­sumer fo­rum for ap­pro­pri­ate ju­ris­dic­tion for re­dres­sal. In such cases, con­sumer fo­rums may be a bet­ter plat­form be­cause the pre­lim­i­nary ques­tion of abuse of dom­i­nance in rel­e­vant mar­ket does not have to be de­ter­mined and the fo­rum can di­rectly ad­dress the griev­ances of the buy­ers.


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