Competition Commission of India
Dr. Deepa Narula C/O Mr. Prashant Narula vs Taneja Developers And Infrastructures ... on 6 September, 2012
COWiPET§Ti{§°i\§ C{3§\!tNiiSS§£)N OF INDEA
i\iQ..£.1'-3/2072
6" Sepia-n'iber, 201?
Dr. §.;;.t:,;;a hiaruia T infs.-"mant
C/'Q Mr». Prashant 'Naruia ~ ' ' '
E3~'i.f6Ci2 fix, Janait Puri
New Delhi-110 O58
Taneia D5~vei0pei's and im'ras'tm<:;'iure Ltd. Opposite Pam-
9, Kasturba Gandhi it/iarg
New Deii1i«~HO 001
Order under $'::sn:::ti::sn 26(1) art Eiormaetitiori Act RG32
As Der Rffirasad (Dissenting) The instant infornwaticn has been fiieci by Dr. Deepa Namia iirtiormant) uis 33(1) (a) of the Competition Act. 2002 ('the Aw) against M/s. Taneja Deveiopars and inirastmctures Ltd. (Opposite i3'a'rty}. The main gris~:vam:e at the iniormaiits is that the oppasite party faiied to fuiiiii its Qbiigation by not handing over posseasion as promised in time and the:w°3fo:'e., vioiated section 4 of Competition Act, 26302 (the Act) by.at:susing its dominant position, tité the
2.. As er the information, the informant is 9. Non Resitjeiwt intiian, cu:':'enti if residing in i'~'iew Deihi. 'i"tn3 Oppmiie Party is a ma! estate deveioper engaged in the business oi deveioping and sailing residential. and Qosmnerciai properties having its registered Qifice at New Deihi. The informant submitted that reiying upon the assurance of the «OP to deiiver that property within the time bound manner, im'm'm;.-mt an 12~D4--2£iO6, becsked a cor'nmerciai 'pint meeasuting '£04 yarcis at a price 02' rupees 29,5:90.x'«» per Sq. yards in an upcoming real estate prmjeci oi the GP nameti as Tiijii City ix/'iohaii. The intmrmant compiied with aii the ciemz-1nd netices from the GP and made a totai 'payment of F-is. 18,05,40i3¢'-- tiii May 2008 against the making at time piot. The OP had accegzzteci t3ooi;ings/advamte :3.rnr.3unts againat the said moietzt even though it was stiii on paper and the necessary appmvaia for the same i"i&1Ci net yet been received. Though an amount of Rs. ':2 Lakhs was taken from the imicnrmant. in Aprii 2006, it was Qniy in \ia.m,iary 2i;2ii3B, i:",{~3 ap_;:»rQvai at TEE City ixxiohaii from the Punjais Gavtammeni was i'eceiv£>.d. im'c>:'man'i had mt-t been aiiott-ed any piot by the Page :1 of £1 £3i;)3,ai-¢ 5;» \ a 'R', - av 35. ' M OP dewaiopeer tiii new even after six years irrgm rich-53 date oi booking.
3. informant aiieged that DP abused his dominarri position in the reie vars? mama?
oi iviohaii by withhzakiing iniorn'ianr'_s deposited money and mi prcwiding any information regarciing deveioprnen'; Di project. At the time at booking, OP was me soie devaioper with unique piarr sf deveioping a residianiiai cum commerciai praiecr in isfohaii. in Aprii 2006 it had assured the informant to handover' possession wgmgn 3 years and thereafter, gave a fresh commitment or ccampietion within ancsiher 2 years irorn the date of tmoomi poojan Le. 22"" January, 2068 but there was no sign of compierion of the proieci even afrer relapse of fume,-2' irgur years since men.
4. The iriformarii aiso averred that a person desimus of backing 3. pic: with the Opposite Party was rsaquired $0 accept me onerous and uniiaterai terms and conditions. OP had iiiegaiiy and arbiirariiy withheid the irfi»;>rmani's money and Thus, his right to access other buiiders fer 'purchase of commerciai plat in the reirwani marker had been viiiaied. The consequence oi the arbitrary action of CI?' resuiied in deniai of market access to the informant under Section 4(2';( C} of "the Compeiiition Act, 2002 and the same constituted abuse or daminani positien under section 4(1) 01' the Competitiun Act, 2002.
5. I have careiuiiy considered the above aiiegaticms and am of the View that prima facie it is a case of aitmse of dominance. i have aiready heid in the <::a:~3e of DU: that when a buyer >:$e::id«=3s in buy a flat 0r pmperiy he has the choice of going in 3. iarge number of buiiders for ibis purpase anti by and iarge there is a competition in the market. But when a consumer rnakes a ciwice and 'enters into an agreement with a builder he iaiis into his trap as there is in'fr.>rma*rion asymrrietry in this market and edge because aii the eiemems mi ihe agreement are neither undersiocrd by the consumer nor expiained by the buiider abgui its consequences. As a resuii if a consumer vxrams to swiich over is another buiitiry because of unfair and discrrinwinatory clauses in the agreement, he canrim. he has to pay high swirtching 2931. I have ai-so rieid that the buiidersfdeve'ioper's aummaiicaiiy acquire dominance the m0rne»rri agr'eeme3ni is signed wiih the ccmsumers.
6' My \!i$5'W was based an the US Suprem-3 Courrs decision in me case oi' Eastman Kod-air where 3. concept of 'aiier'rrrari<«3i' abuse' was given. Aczsmdirwg its 'me US Supreme Court, rm:-re were iw«:3 marireis :.3rim.:»:ry marizei where rhea Page :2 oi 4 GP may not be a significant pieyer and the seecmciary market where the OP becremee a ciemiriant player by virtue of eigning agreement with consumers for of the property or after eaiee or servirge in ihiel preeeni case also there are we markets. The first markei is the market of real eei.a'te where 'Tarieia Deveiopere and inji'asii'u<:iure» Ltd. {"l'{:>l} is operating iike any other buildere.»'cieveiepere. TDE may or may not be a oiemiriani piayer in that market which is a subieet mailer of investigation, but when the inisairmanie entered 1:i'ii:<;» agreements with TDi, TDi auiemaiicaily acquired dcaminance and by acqimirig cempeiiiors or ecineumere or the relevant m8.i"»'.'E'§i' in its favour as the Cueiomer becomes e 'captured c:ueiemei"
and he couid be dieeriminaieci and abused at the wiii es' the builder. Ccmeidering these facts, there is materiai in hold that prima facie there is contravention of 'tee ';3rm»'ieilerie of Seciion ~'i~{2}(a}{i'} 8!. (ii) of the Act.
dominance the TDE was in a _eoeii'i<::n to aiiecte its 'I'. i have aisc» heid in the ease cri DLF that mice the abuee ei derriineime is eetabiisheci and ii is also established that the deminance came due to the agreements whicii the iriioi'ma'iir3ri previciere had entered into with the OP, 'me cgiieetian which arises is to whether 'the action of the OP creates an adverse effect on competition in indie. in my view, whenever there is an abuse of dominance due to unfair cenciiiiene in the agreements, it creates an adverse effect on cempeiiiien in india. Further in this case, the ceritraeie entered into by the informaiicm proviciere were 'GORWELCTS of adhesion and the agreements erii.ered were between a very big ecenemir; eiayer and email time buyers. in 'iaei the agreements were signed in the ic:n'mai given by the DP and the eerieurriers had paid substantial same ef meney in me ifliil'. Time if a buyer wanted in shift is another buiider, he would have ieei. eiibsiairliai amount ef mcmey. in such a case where we number of buyers was 'limii_eci, a new entrant in the buiicling marlcet weiild have get no buyer even if the new buiicier was mere irmevaiive or riad betler prcvciucie. Thus, the high switching cest wouid ierecicsse the market for a new builder. The agreements emered into by the DP and the proeraective _i:>uyere, thereicwe, creaied en aciveree effect cm cempeiiiien in india. The egr'eeme.riie th.erc'iere eeritreverie Se-zziion 3{'l) of ihe Act read with Eieeiien 3(2) 0? the Act.
8. Again in the -zf' iviiie Tuiip iiwaiecii Pvt. Ltii. {case nr3.59 oi 2~'()'i'ii) the Cerrimieeien has hf-Bid viicie its Order ule 28(3) of the Compeiiiiori A-ct, daieiti '_,,........W ~~-' _ . ;:\\.
'(gm 3?} '*9 Page 3 cs?" :1
15.t2.20ii that "certain practices eerriect on by reai estate deveiopets buiiding reeiciei-itiai apari.rnei'it. contpiexes, inciudirig such practices as eiieegeci in the iritoirmatian are being csemmcmiy izarried on by rnar~.y reed estate rie\:eioper's buiiders of resitteritiai apartment" conipiexee in india. it seems that in ;3a:'iieuiar two termed practices viz., {.3} the pfectice of having a potentiai imyer Sign an agreement which is net the iinaii agreernent, however it iocks them their inma; gmieetmeni with the buiider withaut havimg' been presented the campiete terms and conciitiens of sate at agciarmient in 8. fair and tierisparent manner; and
(b) the practice of making c:hengee to the terms and CQHGHEQYWES, teciiities, structure of apai'tme:'it;'proiect after the customers are icickeci in, are beirig carried on by most of such teat estate cieveiepers and buiidere of resideittiei apartment Qomptexee in indie. Aiie=3a'iiierts at mist-epresentation amt cemseqiientiai actions; may relate te breech oi contract in individual cases} hewever, the me.nnes' in which such practices are carried on across the board, is indicative of absence of independent actitms at the deveiepers. i-iemze it necessary to consider whether such pra<:tir;:e.s wouici be subscribed to! named on by the teat estate developers or buiiciers of reeidentiei apartment cempiexes, if they were in fact operating in a competitive manner. On pi'€!§ii"¥ii¥'iB..t'y Ci)i'tSid€:':'i'a'tiDfl, it appears diffictiit that such practices couid be present across the board and be carried on cemmoniy by the reai eetate cieveiopere in e mmpetitive market. Prime iactie it aiecs appears that these pi'acti~.':.es Carried cm by the teat estate deveiepere er buiidere at i'eeidetitiai apartment compiexee are inciirectiy determining the saie izirices in the market of the services retating to reai estate providing by them and also itzmentiaiiy iimite the provision of such siervices. Thus, in view of the ebcwe and cm a caretui pemsai oi the intermaticme/' r.:om;::iairite, the various practices aciojgsied by the builders as essaiied in the intcsrmatiions! ceinpiaints prime iacrie appear to be entmompetitive.
9. 'i"hus5 i am at the epinion that there exists a prime tecie case to direct the ijiiiecter Gienetai {DEE} t0 Cause an investigaiien to be made into the matter.
':9.
Secretary is i:iirenii-->=ri in inicitm at certcemed accmdingiy.
.-2 ' 1-} ',,.i-"N .§:i'?§ fr"
i\fiemt3ez' Ii 2:»? it (FL Prasadjf