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Competition Commission of India (CCI): The Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma (Member) and Bhagwant Singh Bishnoi (Member), analysed the dominance of Vatika Limited and held that it has no dominance in the relevant market.

Present information filed by “Informant” under Section 19(1)(a) of Competition Act, 2002 alleging contraventions of the provisions of Sections 3 and 4 of the Act.

Informant approached a property dealer in December, 2012, for the purchase of a residential flat in Gurugram. The property dealer arranged a meeting of the Informant with Vatika officials in the Vatika office. The informant has averred that the sales executive of Vatika informed that ‘Vatika Town Square’, would be situated at the entrance of a large number of residential and commercial complexes in new Gurugram.

Further, it has been stated that, the informant was told by Vatika that Block-D was under construction and would be completed by the end of June 2015. It was stated that by that time the entire Dwarka Express Highway Road would also be complete.

Informant was also told that possession of the property would be given after 2.5 years and in case of delay in construction or any other default by Vatika, the interest of 8% would be payable by Vatika. Along with this, the Informant was told that the stated terms and conditions would be incorporated in the Builder Buyer Agreement (BBA) to be executed by Vatika with the Informant.

Allegations of Informant

Informant alleged that in the BBA there was neither any mention of the construction /completion/ possession date nor of the payment of simple interest to the buyer, for the delay, if any, in completion of construction by Vatika.

On a later date, Informant in a meeting with Vatika was told that leasing / renting / of commercial units in ‘Vatika Town Square’ was already going on in a big way and property may be able to fetch some premium. It has been alleged that on a visit to ‘Vatika Town Square’ there was no activity of leasing/ renting at D Block and the construction was not complete. All floors had only bare columns and bare floors without any partitions for the individual units, except for some activity.

Informant on several occasions requested Vatika to inform him about the refund he would get on terminating the BBA along with deductions that would be involved, but no reply came along.

Informant alleged that Vatika was required to complete construction and offer possession by June 2015. Vatika neither informed about any delay due to force majeure event nor sought an extension of time. He further submitted that, construction activities in Block-D, ‘Vatika Town Square’ are still in progress, although Vatika issued intimation for possession and further kept demanding huge extra amount from buyers for delay in taking possession.

“…BBA was not only one-sided imposing unfair, discriminatory terms and conditions on the buyer, but also covered builder from all foreseeable or un-foreseeable events at the cost of buyers.”

“…there is selling of property through unfair means by nexus between Vatika and property dealers.”

“…Vatika is probably diverting funds collected from Block-D for other projects.”

Decision of the Commission

On perusal of the information stated above, provisions of Section 3 of the Act have no application to the present case as the Informant is a consumer and agreement with a consumer does not fall within the ambit of Section 3 of the Act.

In respect to Section 4 of the Act,

“What is of concern to the Commission in the present case is that the Informant booked a commercial space in Vatika Town Square project at Gurugram.”

Taking into account the factors such as physical characteristics or end-use of goods, price of goods or services, consumer preferences and nature of service offered, the relevant product market for the purposes of the present case is the “provision of services for development and sale of commercial space”.

Thus, the Commission keeping in view the factors held that Vatika has no dominance in the relevant market, no case to examine alleged abuse of dominance by Vatika in the matter, under the provisions of Section 4 of the Act, remains for determination by the Commission.

No prima facie case and the information filed is closed forthwith under Section 26(2) of the Act. [Suresh Chander Gupta v. Vatika Ltd., 2019 SCC OnLine CCI 34, decided on 03-10-2019]

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Competition Commission of India(CCI): A four-member bench comprising of Sudhir Mital, Chairperson and Augustine Peter, U.C. Nahata and Justice G.P. Mittal, Members closed a matter filed under Section 19(1)(a) of the Competition Act, 2002 against the U.P. Housing and Development Board (Opposite Party).

The informant was allotted one LIG flat developed by the Opposite Party (OP). The informant filed information under the abovesaid section alleging that the OP, in its project brochure, estimated the cost of the flat at Rs 11.75 lakhs. However, over a period of time, on one or the other pretext, the OP, with malafide intentions, increased the cost of the flat. Resultantly, the informant had to pay over Rs 15 lakhs. It was also alleged that the OP failed to deliver the possession of the flat within 2 years from the date of the allotment as per the terms of the project brochure. The informant claimed that such arbitrary conduct of the OP caused appreciable adverse effect on the competition within India in violation of Section 3(3)(a) read with Section 3(1). Violation of the provisions of Section 4 was also alleged.

The Commission perused the information and the documents filed therewith and also considered the material available in public domain. Looking at the nature of allegations, the Commission was of the view that provisions of Section 3(3)(a) read with Section 3(1) had no application to the present case. It was observed that the nature of the agreement entered into between the informant and the OP did not qualify as an agreement under Section 3(3) of the Act. The reason being that the two of them were not engaged in identical or similar trade of goods or provision of services. Thus, prima facie, no contravention of the Act was made out against the OP under the aforementioned sections. Regarding violation of Section 4, the Commision held that OP was not a dominant player in the relevant market. In view of the foregoing, the Commission was of the opinion that no case of contravention either under Section 3 or 4 was made out against the OP. Accordingly, the matter was ordered to be closed forthwith under Section 26(2) of the Act. [D.K. Srivastava v. U.P. Housing and Development Board,2018 SCC OnLine CCI 73, dated 14-08-2018]

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Competition Commission of India: The Commission recently passed an order under Section 26(2) of the Competition Act, 2002 wherein it held that for proving alleged abusive conduct under Section 4 of the Competition Act, on part of the opposite party, a prima facie case would need to exist wherein it would need to be established that the opposite party stood at a dominant position in the relevant market.

The informants filed a matter under Section 19(1)(a) of the Competition Act against a certain company through its Chairman and the Managing director (OP 1) along with one of its employees (OP 2) alleging contravention of the provisions of the Act. The informants had purchased a flat in a certain residential housing project developed by OP 1 under the down payment scheme which upon full payment, was followed by OP 1 issuing an allotment letter to the applicant’s name and then further an MoU in which it was agreed upon by both parties that OP 1 would pay a fixed assured amount of return every month until possession of the flat was handed over to the informants. The informants alleged that despite them having made full payment, the OPs had stopped making payment as was agreed upon in the MoU without any notice resulting in contravention of Section 4 of the Competition Act. The cheque that was provided by the OPs was dishonored due to unavailability of funds in the concerned bank. The informants alleged that not only did their seem to be an absence of any intention on the part of the OPs to honor the terms of the MoU but also an absence of intention on their part to handover possession of the flat to the informants. This, the informants alleged, amounts to unfair and restrictive trade practices as well as deficiency in the provision of services. It was also alleged by the informants that this sort of behavior amounted to cheating, criminal breach of trust, fraud and willful default under the provisions of Sections  420, 406, 34 and 120-B of the Penal Code, 1860.

The Commission noted that in order to prove that the alleged abusive conduct took place, it would need to be established that the OPs held dominance in the relevant market in the first place which then would lead to a prima facie case of contravention of Section 4 of the Competition Act. The Commission noted that the informants had not provided the Commission with any information regarding the dominance of the OPs in the relevant market. The Commission held that services for development and sale of residential apartments/flats is different from the services for development and sale of residential plots/commercial spaces and for the present case concluded that the relevant market would actually be provision of services for development and sale of residential apartments/ flats. It also determined the rules and regulations for development of the particular residential housing project keeping in mind various factors such as difference in price, level of urban development, local advantage, consumer preferences, transport services etc. Upon determination of these factors, the Commission acknowledged that from the information available in the public domain, it appeared that as if there were several other real estate developers in the given area who were much more established than the one in question with much bigger housing projects which in itself acts as a competitive constraint upon the OPs to operate independently. Hence, the Commission was of the view that the OPs did not possess enough market power to act independently of the competitive forces in the relevant market or to be able to affect its competitors or consumers in its favor. This in turn meant that it was not in a dominant position in the relevant market. [Wing Commander Jai Kishan v. Nikunj Sisondia, 2017 SCC OnLine CCI 44, decided on 06.09.2017]