Raizada, a 4th year law student at Dr. Ram Manohar Lohiya National Law
subject matter of considerable debate with respect to the real estate sector.
The Competition Commission of India (“CCI”) has extensively dealt with the said
issue in a plethora of decisions. The recent decision of the CCI in Shri Sunil Bansal
& Ors v M/s Jaiprakash Associates Ltd has reignited this debate on
relevant market. The Commission dealt with the issue of relevant market by
comparing the features of integrated
townships with standalone residential apartments.
complaints alleging abuse of dominant position against the real estate
conglomerates Jaypee Group entities, Jaiprakash Associates Limited (“JAL”) and
Jaypee Infratech Limited (“JIL”) in the region of NOIDA and Greater NOIDA.
sales and financial resources of several real-estate players in the market,
opined, “Since JAL/ JIL is not in a
dominant position in the relevant market, the question of examining the alleged
abusive conduct does not arise.”
Jaypee Infratech have abused their dominant position through imposition of
highly arbitrary, unfair and unreasonable conditions in the agreements for
allotment of residential apartments thereby, constituting an infringement under
Section 4(2)(a) and 4(2)(e) of the Competition Act, 2002.
conduct an investigation into the matter. After consideration of a host of
issues, the DG in his report delineated the relevant product market as ‘the
provision of services for development and sale of residential apartments’.
DG, the CCI directed him to further investigate into the matter. In the
consolidated supplementary report submitted by the DG, the issue of relevant
product market was re-examined. The DG identified “integrated townships” as the
relevant product market after comparing integrated townships with standalone
residential apartments. It observed that integrated townships offers a
formidable infrastructure and such facilities/amenities which are otherwise
absent in standalone residential apartments. The DG identified that there is no
sufficient degree of interchangeability between integrated townships and
standalone residential towers which would allow the customers to switch from
one product to another. Hence, the two form separate and distinct products.
Jaypee enjoyed a dominant position. It observed that it had the highest market
share in the relevant market. It also stated that other advantages such as size
and resources, total land bank, assets and surplus and a cement manufacturing
plant allowed Jaypee to hold a dominant position.
complaint against the Jaypee Group and its subsidiaries, the DG concluded that
the terms and conditions imposed in the Provisional Allotment Agreement constituted
a violation under Section 4 (2) (a) (i) of the Competition Act.
having due regard to the relevant product and relevant geographic market.
the CCI observed that the concept of “integrated township” is a nebulous one
and is still in a state of evolution, while acknowledging the facilities an
integrated township may have to offer. At this juncture, it is very pertinent
to note the observation made by the CCI under paragraph 90 of its order. The CCI
observed that the question of whether integrated township constitutes a
different product market would depend on several factors; thus the
determination of the relevant product market would depend on the factual matrix
of particular case.
integrated township with that of standalone apartments, the CCI said that it is
not necessary that the residents of the projects under consideration will not
avail similar facilities/ amenities offered outside the said project. The
uniqueness of the integrated township under question was further diluted by the
close proximity of the integrated township with the developed urban areas. On
the basis of this reasoning, it observed that there existed sufficient degree
of interchangeability between residential apartments in a standalone
residential towers and integrated townships. Hence, the ‘provision of services
for development and sale of residential apartment’ was identified as the
relevant product market.
with the report of the DG. It stated that the supply of real estate development
in Noida and Greater Noida are clearly distinguishable from the conditions
prevalent in other NCR regions on the basis of the rules and regulation in
force, prices of property owing to the connectivity with the region.
that JAL did not enjoy a position of dominance, in the relevant market. It
reasoned that several players exist in the relevant market offering wide range
of residential apartments with world class amenities in the relevant geographic
market. Taking into consideration the market share, actual sales made and
financial resources held by other players in the market, it held that JAL did
not have the ability to influence the competition in the relevant market.
the CCI did not consider it relevant to make an observation on the issue of
abuse of dominance.
of integrated townships. With the expansion of cities, the development of
integrated townships has gained significance. Even though the concept of
integrated townships is in the nascent stages of its development, it has become
a potential solution to the decreasing future potential of development in the
“integrated townships” as the relevant product market, it did not reject the
plausibility of existence of an “integrated township” as a separate product
market. The central premise of the CCI’s decision with respect to relevant
market was based on a factual analysis of the case. It identified that uniqueness
of the product would depend on a host of issues. Hence, the definition of the
relevant product market in such cases would depend on facts and circumstances
in a given case. Therefore, the decision should not be interpreted as an
outright rejection of “integrated township” as a separate product market.
Hence, development of future townships and any exploitative practices adopted
by its developers, if any, maybe the determining factors in determining the
abuse of dominant position of such developers.