By: Ravi Sinha
Track2Realty Exclusive
In the wake of the Competition Commission of India (CCI) imposing a hefty penalty of Rs. 630 crore on DLF, the anti-monopoly regulator has been flooded with a host of real estate related consumer complaints which may not be in the ambit of CCI. CCI should draw a line that bifurcates between what falls in its domain and what is in the consumer protection ambit. However, in the absence of scientific economic analysis of the relevant market, both in product category and geographic category, the two legs of the relevant market, the sector is keeping its fingers crossed as there has been a clear anomaly in defining the relevant market by the CCI.
Facts speak for themselves (anomaly in determination of relevant market). The CCI dismissed the plea of two individuals against the realty company Unitech. While the conditions being similar to DLF Belaire case, CCI defined the product market to be ‘commercial space and residential units on sale’, while in case of DLF, the product market was defined as ‘high end residential market’.
Further, the CCI order stated that “numerous players active in this area which had come up and were still fast developing and plenty of commercial and residential space and offering the same for sale in competition with each other. These different players had even been offering discounts and other incentives to the public to attract customers.
It is apparent that there was no dependence of customers on any single enterprise much less Unitech”. However in the DLF Belaire case, CCI did not take into consideration that in Gurgaon apart from DLF, there are more than 70 other real estate players offering group housing projects with schemes & discounts at different locations, giving a customer varied choice of products available within the region.
In another, similar complaint against Unitech, CCI considers the relevant product market to be ‘residential apartment’ and gives no opinion on high end/ medium end/low end etc. thus vastly increasing the size of the market. Further, in the complaint filed by M/s Silarpuri Colonizers P Ltd vs Emaar Mgf Land Ltd, CCI failed to move forward in the case, as no material or data was placed on record. Additionally, the relevant market as being defined a ‘construction of residential accommodation’; this definition being in complete divergence to what CCI stated in the case of DLF & Unitech.
Sunil Dahiya, Senior Vice President of NAREDCO says most of the complaints dismissed by CCI were directed towards seeking compensation from the developer’ and actually concentrating to seek redressal of their personal interests. CCI is probably not the forum for this. Whereas, a complaint in the appropriate consumer forum would finally redress the grievance. Further, it is important to mention that such complaints pursued with CCI actually hurt the project as well as collective interest of other investors, says Dahiya.
Consumer rights advocate Lakhendra Singh is more candid when he says if CCI has to establish its credibility, it must make its economic analysis more scientific and more full-proof. There can’t be different parameters of defining relevant geographic market and product market for different real estate companies. According to him CCI instead of being seen as an anti-monopoly watchdog and inspiring confidence has, of late, been in the news for individual consumer grievances and there also defining the relevant market differently for different industry players.
“Even in the case of DLF, the CCI has faltered as it has not taken reference of its own judgment in dropping charges against another realty company, Tulip Infratech. Moreover, the absence of scientific economic analysis is making the CCI rely heavily on the scanty information available in the public domain judgements based on which would be out of perception than on facts. Moreover, despite of the housing shortage in the urban India I am not sure whether a home seeker is dependent on single realty project to buy a house when there are numerous choices both from builders and in the secondary market. In addition, better connectivity has greatly enhanced the relevant geographic market principles”, says Singh.
Realty analysts believe the defining of the relevant market on the basis of a differing parameters is fraught with the danger of arriving at wrong conclusions – something not in the interest of Competition Law. There is a general feeling that the CCI sets up a strong and scientific economic analysis team to define the relevant geographical market and product market and invites the sector representatives and experts to reach a well deliberated conclusion.
It is not clear whether the CCI would be open to such suggestions, but what can be vouchsafed is the fact that the different parameters of establishing relevant geographical market and product market in different cases is definitely creating confusion and not in line with the principles of natural justice at the cost of credibility of CCI.
