The Competition Commission of India (“CCI”) has dismissed an information filed by an individual resident of Gurgaon, Haryana (“Informant”) against M3M India Private Limited (“M3M”) which is a real estate developer alleging contraventions of Section 3 (anti-competitive agreements) and Section 4 (abuse of dominant position) of the Competition Act, 2002, as amended (“Act”).
The information related to the real estate residential project M3M Merlin, located in Sector 67, Gurgaon. The information alleged that the project was launched in 2011 and was to consist of 10 towers with world-class amenities. However, M3M changed the layout and constructed the additional 11th tower without the necessary prior approval of the homebuyers/residents. It was stated that M3M is developing around 11.23 million square feet, concentrating mainly across Sector 65 and 67 of Gurgaon, Haryana. Accordingly, it is a dominant player and has abused its dominant position by constructing an additional tower without obtaining prior approval of the residents.
The information stated that in the real estate sector, a residential unit is different from a commercial unit and the services for development and sale of standalone House, villa etc. is also a distinct product compared to services for development and sale of residential flats or apartments. Hence, residential flats form a separate product and the relevant product market was delineated in the information as the ‘market for provision of services of development and sale of residential flats’. The relevant geographic market was delineated in the information as ‘Sector 67, Gurgaon, as according to the information a person intending to buy a residential flat in Sector 67, Gurgaon may not prefer to purchase the same in other areas because of various factors such as price, distance, locational preferences, availability of transport facilities etc.
The CCI observed that as per the scheme of the Act, relevant market comprises relevant product market and/or relevant geographic market. The relevant product market is a market comprising of all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use. The relevant geographic market, on the other hand, defines the contours with regard to geography within which the conditions of competition for supply of goods or provision of services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas.
The CCI noted that independent residential units such as villas, estate homes, and row-houses in an integrated township have unique characteristics/features and are altogether different products, distinct and separate from other residential properties such as residential flats/ multi-storey apartments and therefore the CCI agreed with the delineation of the product market as done by the Informant. However, with regard to the geographic market, the CCI was of the view that the relevant geographic market in the instant case should be ‘Gurgaon’ as the conditions for provision of services of development and sale of residential flats in Gurgaon are clearly distinguishable from the neighbouring areas. Thus, the CCI observed that M3M did not enjoy dominant position in the delineated relevant market due to presence of several other developers in Gurgaon which imposed significant competitive constraints on M3M and therefore the issue of examination of alleged abusive conduct does not arise.
With regard to alleged contravention of Section 3 of the Act, the CCI held that the provisions of Section 3(4) of the Act have no application to the facts and circumstances of the case, as it requires an agreement between two or more enterprises operating at different levels of the same supply chain. Accordingly, the matter was closed by the CCI.
By: Competition Team at Chitale & Chitale Partners
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