Brief Summary. (To read the full post click here).
In BELAIRE OWNERS’ ASSOCIATION VS DLF LIMITED, HUDA & ORS a “relevant market” is delineated on the basis of a distinct product or service market and a distinct geographic market. These terms have been defined in section 2(r) of the Act read with subsections (s) and (t) of section 2. Furthermore, while examining facts of a particular case, the Commission must give due regard to all or any factors mentioned in section 19 (6) with respect to “relevant geographic market” and section 19(7) with respect to “relevant product market”. The Commission has, therefore, kept the above provisions of the Act in mind in the ensuing discussion on the delineation of the relevant market in this case. It is observed that the instant information involves dynamics in a market where the informant and the Opposite Parties are participants either in a capacity of a consumer, a seller or as regulatory bodies that influence the market environment. The informant, Belaire Owner’s Association obviously represents the consumers in this market, while DLF Ltd. is selling or supplying some product or service. The relevant market is the market for services of developer/builder in respect of high-end residential accommodation in Gurgaon.
The Court defined Relevant Market on the following ground:
Relevant product market: With respect to the issue of relevant product market, CCI referred to the DG report, which described the nature of service provided by DLF in the instant case as services by developer / builder in respect of ‘high-end’ residential building in Gurgaon and held that although there can be no hard and fast rule to determine what constitutes ‘high-end’, the same needs to be determined on the basis of facts and circumstances of each case. ‘High-end’ is not a function of size alone but includes a complex mix of factors such as size, the reputation of location, characteristics of neighbors, quality of construction and actual customers and their capacity to pay. Relevant geographic market: The CCI after considering several factors including local specification requirements and consumer preferences held that the relevant market is the market for services of developer/builder in respect of high-end residential accommodation in Gurgaon. A decision to purchase a high-end apartment in Gurgaon is not easily substitutable by a decision to purchase a similar apartment in any other geographical location. In M/s Silarpuri Colonizers P Ltd vs Emaar Mgf Land Ltd, CCI decided the relevant market as being defined as a ‘construction of residential accommodation.’
How adversely is the relevant market affected forms the fulcrum of competition analysis
Keeping the focus in delineating a “relevant market” is to make sure the boundaries of competition concerns or the anti-competitive practices and activities that are said to have an appreciable adverse effect on competition are duly considered. Only then can one get a realistic conclusion of what are the significant obstructions to free trade and consumer interest. Economic analysis plays a crucial role in the enforcement of competition law. Various jurisdictions around the world apply differing degrees of importance to the basic economic theories to suit competition law issues in their jurisdiction. In the US and the EU, economic analysis is a significant part of the evidence used to assess competition law matters.
Indian system will gradually evolve on similar lines
In the case of Emaar MGF, CCI looked at the relevant market as ‘residential accommodation’ in Gurgaon. For DLF (Park Place and Belaire), the relevant market was the ‘high-end residential’ segment in Gurgaon, since the cost of each flat was more than Rs 1.5 crore. In a case against Tulip Infratech case, CCI considered the relevant market as ‘multi-storeyed residential apartments’ in Gurgaon.
In Sanjay Kumar Gupta Vs DLF Ltd Relevant market under section 4 (Abuse of Dominance) is different from the Market under section 3 (Anti-competitive Agreements) of the Act. The market is a wider term where a large number of goods and services are transacted whereas the relevant market is the market which has to be determined by the Commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets. Relevant product market means a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of the characteristics of the products or services, their prices and intended use – thus, the relevant market means a market comprising the area in which the conditions of competition for provision of services or the services are distinctly homogeneous and can be distinguished from the conditions prevailing in the neighbouring areas. Further, the factors for determining the “relevant geographical market.” are several (section 19 (6) and even one factor is sufficient to define a relevant geographical market. However, CCI consider four factors, e.g., local specification requirements; transportation costs; consumer preferences and need for secure or regular or rapid after-sales services in order to define the geographical market in the present case.
In CREDAI Case the CCI defined the relevant market as “the market for services of developer/ builder in respect of high-end residential accommodation in Gurgaon”. As a “service”, the matter was covered by the Competition Act because high-end residential accommodation is equipped with better services and facilities. The CCI distinguished “high-end” residential flats from those of other categories (for example, low- or mid-income flats offered by HUDA, DDA, and GDA) keeping in mind the profile of buyers. The CCI also defined the relevant geographic market as the territory of Gurgaon, observing that it was a preferred destination for upwardly mobile classes, and was distinguishable from properties in places like Noida or Faridabad which were not substitutable options.