CCI Dismisses Allegations of Anticompetitive Conduct and Abuse of Dominance Against UP Housing & Development Board

On August 14, 2018, CCI dismissed information filed by Mr. DK Srivastava (‘Informant’) against UP Housing & Development Board (‘UPHDB’). It was alleged that UPHDB arbitrarily charged higher prices for the sale of Lower Income Group (‘LIG’) residential flats after allotment and threatened to cancel allotment for failure to pay. Basis such threats, the Informant alleged that he was required to pay Goods and Services Tax (‘GST’) and restoration costs. Moreover, UPHDB had failed to deliver possession of the flat per the terms of the brochure. This, it was alleged, amounted to an abuse of dominance under Section 4 of the Act.

In order to define the relevant market, CCI noted that residential flat and commercial units were different in terms of end use and intent for which they are bought. CCI also distinguished between residential plots and residential flats in terms of end use. CCI observed that residential plots are purchased with intent to build and provide flexibility to purchasers with respect to floor plans, number of floors and space utilization. On the other hand, this kind of discretion is missing when it comes to purchasing a residential flat. In view of the above, CCI defined the relevant market as the market for “provision of services of development and sale of residential flat”.

While defining the geographic market, CCI noted that the consumer purchasing a residential flat in Ghaziabad may not prefer purchasing a residential flat anywhere else due to several factors such as price, availability of transport facilities, proximity to the places of frequent commute and locational preferences. Further, it was observed that conditions for demand and supply may change between Noida and Delhi and thus, may not be considered substitutable. However, as CCI found conditions within Ghaziabad to be homogenous, it identified the relevant geographic market as Ghaziabad. Accordingly, the relevant market was defined as the “market for provision of services of development and sale of residential flats in Ghaziabad”.

To determine whether UPHDB was dominant in the identified relevant market, CCI relied on its decision in Shri Masood Raza and Uttar Pradesh Avas Avam Vikas Parishadi.[1] In this decision, CCI recognized that while the Ghaziabad Development Authority (‘GDA’) also developed residential flats of varying size in Ghaziabad and allotted them to the public under various schemes; it had the exclusive power to undertake development work in Ghaziabad. It also noted that GDA was larger than UPHBD in size. Noting the presence of several large private developers of residential flats in Ghaziabad, CCI observed that consumers may not be said to be dependent on UPHDB alone for the provision of real estate services.

Absent dominance, CCI dismissed allegations pertaining abuse of dominance against UPHDB.

[1] Case No. 09 of 2018

Published In:Inter Alia Special Edition Competition Law October 2018 [ English
Date: October 30, 2018