Competition Commission of India rejects abuse of dominance charge against real estate firm

Competition Commission of India rejects abuse of dominance charge against real estate firm

The Commission noted that PP Buildwell was just one of the real estate developers in Delhi and that there were many other real estate developers in Delhi offering similar services

The Competition Commission of India (CCI) on 1 February 2021 held that no case to examine the alleged abuse of dominance by PP Buildwell Private Limited and others, remains for determination.

Herein, the information was filed by Bhushan Girdhar (Informant) under Section 19(1)(a) of the Competition Act, 2002 (Act) against PP Buildwell Private Limited (PP Buildwell/OP-1), and Classic Care Utilities Private Limited (Classic Care Utilities/OP-2), alleging contravention of provisions of Section 4 of the Act.

The Informant was primarily aggrieved by the conduct of PP Buildwell which was allegedly charging an exorbitant amount in the name of maintenance of common area, fixed cost of electricity, per unit electricity charges, parking charges, etc. It was alleged that PP Buildwell did not allow any other maintenance agency to enter into the service providing contract which had created a situation of monopoly wherein the consumers had no option except to get services from PP Buildwell.

As per the Informant, PP Buildwell was also charging exorbitant maintenance charges at the rate of Rs 23 per square feet (for AC units) without consultation of 492 unit holders. It had also been alleged that PP Buildwell had got a sanction load of 1000 KW from Electricity Distribution Company for maintenance of common area and for further distribution to 492 unit holders.

The load of common area equipment was 400 KW (approx.) after which the net load attributable for further distribution remained only 600 KW. Against the available load for 600 KW, PP Buildwell was recovering fixed charges for 2000 KW-3800 KW which was unfair and caused financial loss to 492 unit holders.

The Commission observed that the matter related to sale of commercial units in a project developed by PP Buildwell which was purchased by the Informant. The Commission noted that the first step in the assessment of a case for alleged violation of Section 4 is to define the relevant market.

The transaction between the Informant and PP Buildwell was with regard to sale of a commercial space. The Commission further noted that the requirement, scope and prospect of a commercial space would be different from that of a residential space since the motive of buying and other factors considered are different in both the cases.

Accordingly, the Commission was of the view that the relevant product market for the purpose of competition assessment in the present case was 'the market for provision of services for development and sale of commercial/office space'.

With regard to the relevant geographic market, the Commission was of the view that the relevant geographic market for the purpose of competition assessment in the present case would be considered as 'Delhi' as the conditions of competition in Delhi are distinct and cannot be regarded as inter-changeable or substitutable with the neighbouring areas of Gurgaon, Noida, and Faridabad. In view of the foregoing, the Commission held that the relevant market would be 'the market for provision of services for development and sale of commercial/office space in Delhi'.

As regards the allegation of dominant position enjoyed by PP Buildwell, the Commission noted that PP Buildwell was just one of the real estate developers in Delhi and that there were many other real estate developers in Delhi offering similar services for development and sale of commercial/office space.

For instance, DLF Limited, Delhi Development Authority, Omaxe Limited, Parsvnath Developers Limited, Ansal API, TDI Infrastructure Ltd., etc. offer similar services and pose competitive constraints to PP Buildwell. Owing to the presence of other real estate developers offering commercial office space, the buyers were not dependent upon PP Buildwell for provisioning of commercial/office space.

Further, none of the factors stated under Section 19(4) of the Act supported Informant's claim of dominant position enjoyed by PP Buildwell. Accordingly, the Commission was of the view that PP Buildwell did not enjoy dominant position in the market for provision of services for development and sale of commercial/office space in Delhi.