Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): While observing that Magicbricks.com along with four other real estate websites is not dominant in the market of “services of real estate brokers/ agents in India”, CCI dismissed the allegations of monopolization of real estate broking business in India by the said websites. CCI was hearing an information filed by Confederation of Real Estate Brokers’ Association of India having combined membership of approximately 20,000 real estate brokers, against Magicbricks.com, Housing.com, 99acres.com, Commonfloor.com and Nobroker.in. It was alleged in the information that these online real estate listing portals have abused their dominant position by advertising ‘No Brokerage Policy’ (NBP) on their websites, mobile applications, newspapers etc. and imposed unfair and discriminatory conditions on the traditional real estate brokers who are doing real estate business on the basis of commission. It was further alleged that the websites were practicing ‘No NBP’ either through auction of properties or through the offer of ‘buy directly from owners’ on their websites and newspaper advertisements in order to eliminate competition and real estate brokers from the market. It was also averred in the information that due to conduct of said online real estate listing portals in indulging NBP or charging much less as brokerage fee compared to the traditional brokerage fee of 2% of the sale/ purchase value of a property while undertaking a real estate transaction or public auctioning of properties, traditional real estate brokers are getting eliminated from the market. After hearing both the parties and perusal of material on record, CCI observed that in India, no licence or registration is required to undertake the brokerage business in real estate sector, thus, the presence of a large number of listing sites and traditional brokers in the said relevant market pose competitive restraint on each other and hence, no specific player can act independently of the market forces and affect the consumers or other players in its favour. The Commission also perused the website ranking figures of Alexa.com submitted by the Association and noted that based on the said figures it was not possible to gauge the dominance of any of the five real estate websites in the relevant market because the ranking was limited to only the websites/ portals and does not include the off-line brokers. CCI further noted that in absence of dominance of any of the five real estate websites in the relevant market, there can be no case of contravention of the provisions of Section 4 of the Competition Act against any of the five real estate websites. [Confederation of Real Estate Brokers’ Association of India v. Magicbricks.com, [2016] CCI 19, decided on May 3, 2016]

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India: The fair play watchdog has closed two cases against GAIL (India) Ltd. for abuse of dominant position. The Commission received information from the informant companies that GAIL imposed arbitrary and one-sided conditions on its consumers through the Gas Supply Agreement (GSA).  It was alleged that by way of these conditions GAIL is trying to force the Informants to purchase a specified quantity of natural gas from it each year for a period of twenty years, failing which GAIL is raising arbitrary demand for shortfall by way of off-take under the ‘Pay For If Not Taken’ /‘take or pay’ clause introduced in the GSA.

The Commission referring its own decisions in Faridabad Industries Association (FIA) v. Adani Gas Limited  and Saint Gobain Glass India Limited v.  Gujarat Gas Company Limited examined that relevant product market of natural gas (a distinct and distinguishable source from other sources of energy in terms of product’s characteristics) can be divided into two relevant markets based on the nature of use by consumers i.e. domestic consumers and industrial consumers. With respect to relevant geographical market, the Commission opined that the Petroleum and Natural Gas Regulatory Board (PNGRB) regulates the gas energy supply and distribution on City/State basis and not India as whole.  Therefore, from the point of view of plausibility of intake and supply of the natural gas a city or region will the relevant geographical market. The Commission viewed that the relevant market in the present case would be market for ‘supply and distribution of natural gas (RLNG) to industrial consumers in Vadodara.’ In this relevant market GAIL is enjoying dominant position.

The Commission considering the material on record found that liability of the informants was substantially reduced by GAIL when they showed inability to take supply of minimum prescribed gas, which shows that the behaviour of GAIL was rational and not arbitrary. It observed that the GSAs, when they were entered into appears to have been entered into after thorough negotiations and discussions. The Commission ruled that safeguarding commercial interest or invoking contractual clauses, which are not unfair per se, cannot be termed as unfair just because they are invoked by one of the parties to the contract.  Gujarat Industries Power Company Limited v.  Gail (India) Limited, decided on 08/09/2015

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India: In its series orders against the film industry players, the competition regulator in the country imposed penalty at the rate of 10% of average incomes on Kerala Film Exhibitors Federation (KFEF) and two of its key personals associated with its affairs, including administration, management and governance. This penalty is imposed after KFEF is found guilty of violation of S. 3(1); read with S. 3(3)(b) of the Competition Act, 2002 i.e. for indulging into controlling and restricting supply and exhibition of films in State of Kerala. KFEF was forcing the movie distributors and other players for not to distribute films to the informant theater which had left the membership of the Federation. The informant left the membership of KFEF against its dictates to strike against certain policies of State Government as strike could affect informant’s business to exhibit English and Hindi movies. Thereafter, KFEF started directing its members to boycott the informant from the business and the members and other players followed the direction in apprehension of financial repressions.

The Commission noted that KFEF is already facing an ongoing investigation under the Competition Act even then it did not stop its anti-competitive behaviors.  In its order under S. 27, the Commission directed the Federation and its office bearers to immediately cease and desist from indulging in anti-competitive conducts. KFEF is directed not to associate two office bearers found guilty for their conducts with its affairs, including administration, management and governance, in any manner for a period of two years. The Federation is directed to organize in letter and spirit, at least five competition awareness and compliance programmes over next six months in the State of Kerala for its members. In Re: Crown Theatre v. Kerala Film Exhibitors Federation, Case No. 16/2014; decided on   08.09.2015

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India:  In a sigh of relief to DLF, a building giant already facing fair play litigations, the market competition regulator CCI closed a case alleging abuse of dominant position. The informants in the present case alleged that DLF compelled them to enter into one-sided and unfair Apartment Buyers’ Agreement and made them pay an unreasonable penal interest @ 18% p.a. for delay in making payments.

Considering the facts of the present case, CCI declared the market of ‘provision of services relating to development and sale of residential apartment in Delhi’ as the relevant market in the case. The Commission further 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 apartment. There are many other real estate developers operating in Delhi who are engaged in the provision of services relating to the development and sale of similar residential dwelling units. Some of such developers include Delhi Development Authority, Ansal API, Umang Realtech, Emaar Group, CGHS Group, Parsvnath, etc. These developers appear to pose competitive constraints to DLF in the relevant market. Also, presence of these real estate developers in the relevant market indicates that the Informants were not dependent upon DLF for purchasing residential apartments.

The Commission was of the opinion that DLF prima facie does not appear to be dominant in the relevant market defined. Since DLF is not in a dominant position, the question of its conduct being abusive could not arise. Accordingly, no prima facie case of contravention of the provisions of section 4 of the Competition Act, 2002 appeared against DLF and the matter stands closed under the provisions of section 26(2) of the Act. Ess Cee Securities Pvt. Ltd. v. DLF Universal Limited, 2015 CCI 22, decided on 26.08.2015

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): While observing that real estate developer Vatika Group does not appear to be in a dominant position in the relevant market, CCI rejected charges against the Company alleging abuse of dominant market position in market of services for development and sale of its commercial units in Gurgaon. The Commission was hearing complaint filed by a person who had purchased a commercial unit in Vatika Professional Point Sector in Sector 66 of Gurgaon, Haryana. It was alleged in the complaint that Vatika Group delayed construction of the project for more than a year from date of booking and even before starting of construction, took payment of Rs. 35,25,000/- i.e. more than 33% of the total consideration under the threat of forfeiture of amount already paid and further demanded payment of Rs.8,43,750/- i.e., around 42.5% of the total consideration. It was further alleged that the Company committed to complete the project within three years of booking but the project was not completed on time and subsequently allotment of the Informant was terminated unilaterally by the Company. After perusal of relevant documents, CCI observed that there are a number of real estate developers in the relevant market offering commercial projects such as Raheja, DLF, Unitech, Vatika, Ansal, Emaar MGF, etc. which indicates that the buyers have the option to choose developer of their choice in the relevant geographic market. CCI further noted, “Since there is no information available on record and in the public domain to show the position of strength of the Opposite Party (Vatika Group) which enables it to operate independently of competitive forces prevailing in the relevant market, prima facie, the Opposite Party does not appear to be in a dominant position in the relevant market. In the absence of dominance of the Opposite Party in the relevant market, its conduct cannot be examined under the provisions of Section 4 of the Act.” While observing that, “no prima facie case of contravention of the provisions of the Competition Act, 2002 is made out against the Opposite Party (Vatika Group) in the instant matter,” CCI closed the matter under the provisions of Section 26(2) of the Act. Dominic Da’Silva v. Vatika Group, 2015 CCI 6, decided on April 1, 2015

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): While holding Verifone India Sales Pvt. Ltd. guilty of indulging in unfair trade practices and abuse of dominant market position in POS terminal market, CCI imposed a penalty of approximately Rs 4.5 crore on the Company. Verifone India Sales Pvt. Ltd. is a wholly-owned subsidiary of Verifone System Inc., headquartered in USA and has been engaged in the business of manufacturing, development and selling of hardware and software solutions such as mobile Electronic Ticketing Machines (ETMs), Point of Sale (POS) terminals, and related services and expertise that enable electronic payment transactions at POS terminals. POS machines are supplied along with core applications and Software Development Kits (SDKs). These are sold directly to the customers like banks and retail outlets or to the third party processors (TPPs) who act on behalf of acquiring banks and also render value added services (VAS) to develop and integrate applications into POS terminals. Complaint in this case was filed by Three D Integrated Solutions Ltd. against Verifone India Sales Pvt. Ltd. alleging contravention of provisions of Sections 3 and 4 of the Competition Act, 2002. It was alleged in the complaint that for the provision of VAS, it is important for third party processors like informants to have access to the core POS Terminal applications and their crucial updates along with SDKs but Verifone India Sales Pvt. Ltd. was imposing restrictive and unfair conditions on the usage of SDKs as well as abused its dominant position in POS terminal market to control VAS space. An investigation was conducted by the director general in the matter. After perusing the report of director general, CCI observed that, “From the DG investigation it is revealed that no other POS terminal vendor in India or outside India has been found to be imposing restrictions on development of applications or putting restrictive clauses similar to those found present in the SDK agreement of the Opposite Party (Verifone India Sales Pvt. Ltd.). The intent of the Opposite Party seems to be to exploit the VAS players by either restricting them or sharing their revenue because VAS market is highly profitable. Being in a dominant position in the relevant market, the Opposite Party appears to enhance its position in the downstream market by imposing restrictive clause in the SDK agreement and by refusing the VAS providers’ access to development tools like SDK on reasonable terms and conditions.” While noting that, “Through the SDK agreement, the Opposite Party has imposed unfair conditions on the Informant which are in contravention of Section 4(2)(a)(i) of the Act; restricted the provision of VAS services as well as limited/restricted the technical and scientific development of VAS services used in POS terminals in India which is in contravention of Section 4(2)(b)(i) and (ii) of the Act, ” CCI imposed penalty of over Rs 4.48 crore upon the Company which represents 5 per cent of the company’s average turnover. The Commission also directed the Company “to cease and desist” from anti-competitive activites. Three D Integrated Solutions Ltd. v. Verifone India Sales Pvt. Ltd., 2015 CCI 5, decided on 10.04.2015

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): While imposing a penalty of Rs.14.24 lakh on All India Motor Transport Congress (AIMTC) for indulging in anti-competitive practices with respect to truck freight rates, CCI directed AIMTC to cease and desist from indulging in the act/ conduct which have been found to be in contravention of the provisions of the Competition Act. The verdict came upon an information filed by Indian Foundation of Transport Research and Training, in which it was alleged that AIMTC has uniformly increased the truck freight by 15% across the country on account of diesel price hike of Rs. 5/-per litre w.e.f. 14.09.2012 and such action by AIMTC is clear violation of the provisions of the Act and restricts the free and fair play of the market forces in the country. CCI ordered an investigation in the matter and after considering the evidences from both the parties, CCI noted, “AIMTC through its press releases/ media briefings/ telephone calls was instrumental in persuading its member associations to fix freight rates. It is also apparent that members associations were in touch with each other to discuss the issue of increase of freight rates and also directed their respective member to act accordingly. Such collusive and concerted practices distorted the market dynamics and led the truckers to increase the prices through the decisions of associations instead of pricing the services through the market forces of demand and supply.” While holding AIMTC guilty of anti-competitive practices, CCI observed that the activities of AIMTC are in conflict with the objects of the competition law as they have cascading and inflationary impact upon the goods and services consumed by common man. CCI imposed penalty upon AIMTC and also directed it to seize and desist from indulging in practices found to be anticompetitive in terms of the provisions of the Act and in particular to refrain from issuing any announcements/ directions/ circulars etc. to its members which may contravene the provisions of the Act. (Indian Foundation of Transport Research and Training v. All India Motor Transport Congress, 2015 CCI 2, decided on February 16, 2015).

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): India’s competition watchdog, CCI had rejected a complaint filed by Delhi-NCR based Bhasin Motors alleging that Volkswagen Group Sales India Pvt. Ltd. was abusing its dominant market position with regard to dealership agreements. Bhasin Motors had alleged in the complaint that by virtue of its dominant position in the market, Volkswagen Group has exploited the complainant by forcing it to sign a dealership agreement having unilateral terms and conditions, Bank Guarantee, high penal interest, higher sales target to another dealer etc. It was further alleged that clauses in the agreement were unfair and one sided and have excluded Volkswagen Group from any obligation and liability thereunder. After perusing the material on record, CCI noted that the issues arising out of and related to the dealership agreement does not disclose any competition concern. CCI further observed that Volkswagen Group has a very negligible share in the passenger car segment in India which is dominated by a number of players and in such a market construct, Volkswagen Group cannot be said to be a dominant player and as such the question of abuse of dominance will not arise. (Bhasin Motors (India) Pvt. Ltd. v. Volkswagen Group Sales India Pvt. Ltd., 2015 CCI 1, decided on February 11, 2015)

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): CCI has dismissed a complaint filed against Samsung India, alleging unfair business practices with respect to sale and supply of spare parts and equipments for its mobile phones. The grievance of the Informant primarily pertained to the alleged conduct of the Authorised Service Centre for not providing satisfactory services i.e., charging excessive amount for repair of his faulty mobile phone. He had alleged that such restrictive practices adopted by the Opposite Parties in conjunction with their respective Authorised Service Centres results in denial of market access to independent repair workshops which is in contravention of the provisions of Section 3 and 4 of the Competition Act, 2002. It was further submitted that by restricting sale and supply of genuine spare parts, diagnostic tools, equipments, technical information and know-how etc., Samsung has created a monopoly over supply of such genuine spare parts, diagnostic tools etc. and indirectly determining the sale price of the spare parts and repair and maintenance service charges. After perusal of the information, CCI observed that no prima facie case of contravention of the provisions of the Competition Act, made out against Samsung in the matter. While terming the dispute as “consumer dispute”, CCI further noted that, “the Informant has submitted that like other Samsung Customer Care Centres, the Authorised Service Centre is situated in the residential area which is in violation of the Consumer Protection Act and that the Opposite Parties are not taking due care of its customers and are thus allowed to be exploited by their Authorised Service Centre by overcharging for repair of the mobiles. Thus, it is basically a dispute between a consumer and its service provider where consumer alleges deficiency in service being provided by the service provider. The Commission is of the opinion that it does not involve any issue relating to competition which attracts the provisions of the Act.” (Rajender Kumar Gupta v. Samsung India, 2014 CCI 76, decided on December 5, 2014)

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): CCI has rejected a complaint filed against 11 cement companies of Andhra Pradesh alleging that the said manufacturers increased the price of cement per bag by Rs. 75/- within a short span of time. It was averred in the complaint that rise in prices  from Rs. 230- Rs. 250 per bag to Rs. 300 – Rs. 330 per bag had adversely affected the construction activity in the new State besides inconveniencing the general public. It was further alleged that, had the hike been on account of increase in the raw material cost, it would have been increased gradually but, there is sudden spurt in the price within a short period and thereby clearly indicating cartelization. The companies involved in the case were named as Penna Cements, India Cements, Bharathi Cements, Dalmia (Bharat) Cements, Bhavya Cements, Zuari Cements, Ultratech Cements, Jaypee Cements, Ramco Cements, KCP Cements and My Home Cements. After perusing the records, CCI observed that, “no document or other details whatsoever have been filed alongwith the reference by the Informant in support of the allegations. Save and except alleging an increase in price of cement bag by the named cement companies, no other allegation or averment has been laid in the reference wherefrom even a prima facie satisfaction may be recorded about the existence of a cartel.” While holding that, “no case, whatsoever, of contravention of the provisions of Section 3 of the Competition Act, 2002 has been made out”, against the cement companies, CIC dismissed the complaint. (XYZ v. Penna Cements, 2014 CCI 75, decided on November 19, 2014)