CCI Dismisses Allegations of Abuse of Dominance against Delhi Metro Rail Corporation

On August 26, 2020, CCI passed an order dismissing the information filed by M/s Dhiraj Gupta against the Delhi Metro Rail Corporation (‘DMRC’) alleging a contravention of provisions of Section 4 of the Act.[1]

The informant is a sole proprietorship firm that had secured the license for parking rights at certain stations of the metro services operated by the DMRC. It was alleged that the DMRC was abusing its dominant position by violating the terms and conditions of the licensing rights by (a) providing parking lots in slightly damaged conditions leading to the reduced usage of parking lots; (b) postponing its obligations under the contract while accepting the monthly license fee; (c) imposing a lock-in period clause that prevented the informant from exiting the contract; (d) forcing to follow obligations under the contract with the threat of blacklisting from future tenders and forfeiture of the security deposit; and (e) fixing predatory prices for parking, all of which has resulted in the informant having to incur significant losses.

CCI clarified that DMRC was providing a mass rapid transport system in the National Capital Region and is engaged in the development and management of the modern metro system for urban transportation. These activities of DMRC were economic activities and would not constitute a sovereign function and are accordingly covered within the definition of ‘enterprise’ under the Act.

CCI noted that in urban agglomerations, it is common for such parking facilities to be outsourced to third parties and the informant was one such procurer. Accordingly, the relevant product market was defined as the ‘market for procurement of services for provision of parking lot management’. The relevant geographical market was delineated as ‘Delhi’ because (a) the informant’s three parking lots were located in Delhi; and (b) the homogeneity of conditions of competition for the provision of parking lot services in Delhi was the same. Accordingly, the relevant market was delineated as the ‘market for procurement of services for provision of parking lot management in Delhi’.

CCI noted that DMRC owned only 84 parking lots of out of the 451 parking lots available under all the municipal corporations in Delhi. Apart from these, various parking lots were also operated at Railway Stations, Courts, Hospitals, Shopping Malls etc. Accordingly, DMRC was not a dominant procurer of parking lot management services in Delhi. Therefore, in the absence of a finding of dominance, CCI did not make any findings on abuse.

CCI accordingly passed a closure order under Section 26(2) of the Act dismissing all the allegations.

 

[1] Case No. 24 of 2020, Order dated August 26, 2020.

Published In:Inter Alia Special Edititon - Competition Law - October 2020 [ English
Date: October 19, 2020