By way of a December 9 2016 order, the Competition Appellate Tribunal (COMPAT) set aside a Competition Commission of India (CCI) order dated August 26 2015 and directed that an investigation be conducted into allegations that DLF Universal Ltd had abused its dominant position in its Capital Greens Phase III residential project in Gurgaon.(1)
Ess Cee Securities Private Limited and Signature Securities Private Limited filed a claim against DLF for alleged abuse of its dominant position. According to the informants, DLF delayed in providing flats and there were other anomalies similar to those on which DLF was penalised in Bellaire.
The informants contended that they had purchased two luxury flats in the DLF Capital Greens Phase III and, after discovering that DLF had indulged in similar unfair practices, approached the CCI. The informants stated that DLF was dominant in the market for high-end luxury residential flats in Delhi, as all other residential flat projects in Delhi were social housing projects, fulfilling only basic living needs and lacking the features associated with luxury residences.
The informants specifically distinguished flats offered under the Delhi Development Authority (DDA) higher income group from luxury residential flats due to their poor construction and the fact that DDA flats are not readily available to buyers, as they are offered on a lottery basis.
The CCI closed the case, observing that:
"in regards to dominance of DLF in the relevant market, it is noted that in the geographic region of Delhi, DLF is just one of the real estate developers engaged in the provision of services relating to development and sale of residential apartments and cannot be considered as dominant."
While setting aside the CCI's order, COMPAT observed that the CCI had inaccurately defined the relevant product market – an important consideration when analysing the impact of anti-competitive conduct – and failed to consider the relevant product market based on the informants' request. Further, COMPAT held that the CCI was inconsistent in its findings in this regard, given its ruling in Bellaire's Association v DLF Limited:
"If for some reason the Commission was not convinced with declaring relevant product market in the manner in which the informant had requested, it should have given a well analyzed reason for not adhering to its established views."
COMPAT then defined the relevant product market as "the provision of services relating to development and sale of high-end luxury residential apartments in Delhi".
COMPAT held that the CCI had erred in defining the relevant market and thus remitted the case to the CCI to decide whether DLF was dominant in the relevant market, as decided by COMPAT, and whether it had abused its dominance and thereby acted in contravention of Section 4(2) of the Competition Act.
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(1) COMPAT order dated December 9 2016. For full text see http://compat.nic.in/Judgements.aspx.