CCI drops charges against Unitech

By: Ravi Sinha

Track2Realty Exclusive

The anti-monopoly regulator Competition Commission of India (CCI) has dismissed the plea of two individuals against the realty company Unitech alleging that the developer failed to fulfill its obligation by not handing over the possession on time and therefore violated section 4 of the Competition Act (2002) by abusing its dominant position.

In two separate complaints filed by Poonam Gupta and Rohit Gupta against Unitech Limited had common facts and common issues and hence both these matters were clubbed by the CCI under Regulation 27 of the Competition Commission of India (General) Regulations, 2009.

The complaint filed by poonam Gupta related to the delay in possession of Unitech’s commercial complex, Unitech Habitat Corner at Greater Noida. It has also been alleged that the Unitech imposed onerous terms & conditions including steep penalty clause in case of default in payment.

In another complaint filed by Rohit Gupta, Unitech was alleged to abuse its dominant position with regard to its residential project Unitech Habitat.

The contention of the complainant was that since Unitech had market capitalisation of Rs. 7888.15 crore, which is more than the market capitalisation of competitors like Omaxe (Rs. 2655 crore) and Parsvnath (Rs. 2470 crore), Unitech had a dominant position. It was also contended that the major chunk of market was held by Unitech since other realtors like Parsvnath, Omaxe and Ansal API were relatively smaller players.

However, in order to consider dominance, the CCI has to identify first the relevant market and then identify different players in that market and see whether the opposite party was in a dominant position as envisaged under the Act. For identifying relevant market, one has to look at the product market and geographic market simultaneously. The CCI contention was that in this case, the product market seems to be a commercial space on sale and residential units on sale.

“In order to make a prima facie opinion, whether an enterprise enjoys a dominant position or not, the Commission has to look into the market share of the enterprise in question as compared to the other player, size and resources or other players, size and importance of the competitors, and dependence of the consumers on the enterprise, entry barriers, countervailing buying power, market structure, size of market, relative advantage etc as provided under Section 19 (4) of the Competition Act. The informant has failed to specify as to what was the share of Unitech in the market of Noida and Greater Noida (according to respondent Noida and Greater Noida was the geographic market). As per the information available in the public domain, there were numerous players active in this area which had come up and still fast developing and plenty of commercial and residential space offering the same for sale in competition with each other. These different players had even been offering discounts and other incentives to the public to attract customers. It is apparent that there was no dependence of customers on any single enterprise much less Unitech,” the CCI order said.

The CCI in its order categorically said that market capitalisation of an enterprise having all India operations cannot be a criteria for considering its dominance in a particular area. Saying that there were enough competitors in the market and the complainants had lots of choices at the time of booking of commercial and residential units, CCI said it was a fit case of closure under Section 26 (2) of the Act.