CCI Rules M3M Does Not Enjoy Dominance in Relevant Market: No Abuse of Competition Act, 2002

CCI Rules M3M Does Not Enjoy Dominance in Relevant Market: No Abuse of Competition Act, 2002

The Competition Commission of India (CCI) while dismissing an abuse of dominance plea against real estate company M3M India, held that the company does not enjoy dominant position in Gurugram market due to presence of other developers such as DLF, Emaar India, Godrej Properties, Ansal API, Vatika Group and Unitech Limited among others.

The CCI held that the presence of such developers seemed to impose significant competitive constraints of M3M and hence it cannot be called a dominant player.

The case pertained to a project called M3M Merlin, located at sector 67 in Gurugram. The informant alleged that M3M was abusing its dominant position in the real estate market in sector 67 of Gurugram. He alleged that the company added an additional 11th tower to M3M Merlin, without taking prior consent of its residents.

According to the informant, M3M Merlin was announced in 2011 and the brochure mentioned that the project area would be 13.344 acres with 10 towers to be constructed. The initial plan also included a low-rise Economically Weaker Section (EWS) building on one corner.

However, informant alleged that the layout was revised 2014 and the area designated for EWS building was changed to an area for future development. Nath alleged that the M3M obtained the occupation certificate (OC) in March 2017 and the OC issued by Directorate of Town and Country Planning (DTCP) the number of towers was limited to 10.

Informant alleged that M3M started construction of the additional 11th tower in M3M Merlin without the necessary prior approval and in complete violation of the initial sanctioned plan on the basis of which the project was sold to the homebuyers.

To determine the relevant market, informant argued that the real estate sector, a residential unit is different from commercial unit.

Furthermore, services for development and sale of standalone house, villa is also distinct product compared to services for development and sale of residential flats or apartments. Hence, the informant argued that the commission should consider the market for residential flats in Gurugram's sector 67 as the relevant market.

The commission noted that M3M Merlin, Gurgaon offers residential flats/ multi-storey apartments, which were altogether different products when compared with independent residential units such as villas, estate homes, and row-houses.

According to the CCI, the relevant market to determine whether a company is a dominant player, would be the market for development and sale of residential flats in Gurgaon.

In this context, the CCI observed that, “With respect to relevant geographic market, the Commission, in line with its previous decisions in similar matters, is of the view that the relevant geographic market in the instant case may be delineated as ‘Gurgaon’, as the conditions for provision of services of development and sale of residential flats in Gurgaon are clearly distinguishable from the conditions prevalent in other neighboring areas. Accordingly, the relevant market in the instant case could be delineated as the market for provision of services of development and sale of residential flats in Gurgaon.”

The CCI thus noted that M3M is not a dominant player in the relevant market due to the presence of other companies such as DLF, Godrej, Ansal API etc.

In conclusion, the Commission held that there was no prima facie evidence of a contravention of Section 4 and Section 3(4) of the Act against the Developer since Section 3(4) requires an agreement between two or more enterprises operating at different levels of the same supply chain, which was not applicable in this case.