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Competition Appeal (AT) No. 26 of 2018

33. The Respondent highlighted that even if there is a modest price increase in Ghaziabad, consumer preferences are influenced by external factors such as transportation costs when purchasing EWS flats. A consumer seeking EWS housing in Ghaziabad would not consider housing in Gurgaon or Faridabad as substitutes due to these differing conditions.

34. The Respondent submitted that CCI's approach in determining consumer preferences has been validated by COMPAT in prior rulings and as such is undisputed fact that GDA holds a dominant position within this market; however, its justification for tripling prices based on inflation and increased land costs is untenable. The Respondent elaborated that the initial price was clearly stated as Rs. 2 lakhs; thus, GDA's claims regarding non-inclusion of land costs in the initial price of Rs. 2 lakhs are inconsistent with its previous assertions.

53. We observe that only because of the reason that schemes of the Appellant are open for all residents of NCR, the relevant geographic market cannot be taken as NCR. It is noted that a relevant geographic market means an area where goods or services are sufficiently interchangeable or substitutable under similar conditions of competition and are distinct from the neighbouring areas and the Competition Appeal (AT) No. 26 of 2018 entire region of NCR cannot be said to be one market because there are considerable differences in the conditions of competition for EWS flats in the different cities in NCR.

(b) price of goods or service

(c) consumer preferences;

(d) exclusion of in-house production;

(e) existence of specialised producers;

(f) classification of industrial products."

(Emphasis Supplied)

57. We observe that on issue of dominance of the Appellant, the DG reported that during 2008 and 2009, there were only two entities offering flats under EWS schemes i.e. GDA and Uttar Pradesh Avas Evam Vikas Parishad (UPAVP). The DG also stated that Ansal API was the third enterprise which entered into the relevant market only in 2011. It was noted that, in terms of the total number of EWS flats offered, during 2008-2015, GDA was having 77.42% market share. Apart from this, on the basis of size and resources, GDA enjoyed exclusive powers to undertake development work in Ghaziabad. The DG also reported that the consumers in the relevant market were predominantly dependent upon GDA and after analysing the factors enumerated under Section 19(4) of the Act, the DG concluded that GDA is in a dominant position in the relevant market. It is also observed from the Impugned Order of CCI, which is based on DG's report and examination by CCI that GDA was dominant player Competition Appeal (AT) No. 26 of 2018 in relevant market and finally GDA has abused its dominant position by imposing unfair conditions and price on the allottees of the Scheme in contravention of the provisions of Section 4(2)(a)(i) and (ii) of the Competition Act, respectively. The absence of any enabling stipulation or clause in the allotment letter or Brochure, the conduct of GDA in revising the price from Rs. 2,00,000/- to Rs. 7,00,000/- could not be said to be fair especially when no new facilities were being provided. The DG held that conditions requiring the allottees to pay interest @ 10.5% per annum in case of delay in payment without any corresponding financial liability on GDA to compensate the allottees in case of delay in delivery the possession of the flats is also one-sided and seems unfair. We note that CCI, before passing the Impugned Order has gone through the DG's report and has accepted most of DG's report.

58. We have noted that the cost of EWS flats was increased by the Appellant without any valid justification and thus can be treated akin to an abuse of GDA's dominant position. The conduct of the Appellant in raising the price of the EWS flats from the initial price of Rs. 2 lakhs to Rs. 7 lakhs without any enabling provision (either in the Brochure of the Scheme or allotment letter) on the pretext of miscalculation of cost of the project and increase in the cost of the project over the years by the contractor can be construed as a case of abuse of dominant position by the Appellant in the relevant geographic market and the conduct of the Appellant tantamount to unilateral modification of the terms of Competition Appeal (AT) No. 26 of 2018 the allotment of the flat as well as imposition of unfair conditions in the sale of services provided by the Appellant in the relevant market in contravention of the provisions of Section 4(2)(a)(i) and Section 4(2)(a)(ii) of the Act. We also note that unilateral imposition of interest on alleged delayed payments by the allottees and no such corresponding obligation on the part of the Appellant for delayed handing over of flats is also abuse of dominant position in relevant geographic market. We agree to CCI's finding in the Impugned Order, on the account of the relevant geographic market as well as abuse as dominant player by the GDA.