No Dominant Position: CCI Dismisses The Complaint Against DLF Gayatri Developers

The Competition Commission of India (CCI), led by Ravneet Kaur (Chairperson), Sangeeta Verma (Member), and Bhagwant Singh Bishnoi (Member), closed a complaint against DLF Gayatri Developers (Developer) on the ground that the Developer does not hold a dominant position in the relevant market no violation of Section 4 of the Competition Act, 2002 (Act) exists. The complaint was filed by Jitendra Bathla (Informant) against the Developer, which is a joint venture between DLF India Ltd. and Gayatri Infra Private Limited, alleging a breach of provisions under Section 4 of the Act. Brief Facts: The Informant booked a residential plot in the DLF Garden City Project, developed jointly by two prominent real-estate developers. However, the Developer provided the Club Agreement (CA) in 2019 after a delay in possession to be delivered in 2014. The Informant alleged that the CA contains unfair and discriminatory clauses in contravention of the Act. The grounds of the allegation by the Informant are that the club management holds absolute discretion to grant, curtail, or terminate club memberships, imposes exorbitant club charges, including 5 years of club membership fees, annual subscription charges, and a security deposit, with the right to hire club facilities to non-members and restrict members from using the facilities, the management has discretion to introduce multi-club membership with separate terms and conditions. Lastly, the Developer insists on arbitration proceedings conducted at their premises by their employees, solely in English, and seeks confirmation from applicants that they have no objection to this arrangement. The Informant argued that the Developer promoted the club to market the project at the expense of plot owners. Furthermore, he also filed a consumer complaint in the District Consumer Commission, Hyderabad, in 2020 for compensation due to delayed possession and other arbitrary charges whose decision was in his favor. He contended that there is no res judicata as the relief sought was not raised in the previous District Commission complaint. Observations of CCI: The Commission emphasized that outlining the relevant market is sine qua non for examining the allegation against the Developer. It involves the determination of the relevant product and relevant geographic market in terms of Section 2(t) and 2(s) of the Act. With respect to the relevant product, the Commission noted that residential plot buyers have more flexibility compared to residential apartments. Unlike apartments, where the construction is completed before possession is given to the buyer, plot buyers have the liberty to choose the floor plan, structure, and other specifications within the applicable regulations. As a result of these differences in characteristics and buyer preferences, residential plot buyers may not find residential apartments as suitable substitutes. Based on the services' substitutability, characteristics, prices, and intended use, the relevant product market can be defined as the market for "services related to the development and sale of residential plots." The Commission observed that the relevant geographic market is defined by the location of the residential plot purchased by the Informant. The plot was initially part of Andhra Pradesh, however, it is now situated in Telangana, near National Highway 44, and approximately 50 kilometers from Hyderabad. Potential plot buyers seeking a residential plot in this particular area show a preference for Mahabubnagar due to various factors, including the level of development, pricing, distance from Hyderabad, and other amenities. Even a slight increase in plot prices is unlikely to prompt consumers to switch to neighboring areas due to factors like consumer preferences, availability of urban infrastructure facilities, and transportation services. CCI emphasized that Mahabubnagar exhibits unique and uniform market conditions, setting it apart from the conditions prevailing in adjacent areas. Consequently, the relevant geographic market can be defined as the "Mahabubnagar district in the State of Telangana". Therefore, it concluded that the relevant market may be defined as the market for the “provision of services for development and sale of residential plots in Mahabubnagar district in the State of Telangana”. After examining the Developer's position in the market, the CCI found that there are several other residential projects in Mahabubnagar, Telangana, such as Girdhari Constructions, Ashoka Ventures, Siri Sampada Homes, Sri Rama Bhoomi Developers, and Vardhan Developers, which are of comparable size and offer similar amenities. Many of these real-estate developers have been active in the sector for an extended period. In conclusion, the Commission closed the complaint and observed that the Developer does not hold a dominant position in the relevant market and...

No Dominant Position: CCI Dismisses The Complaint Against DLF Gayatri Developers

Sachika Vij

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