CCI Dismisses Complaint Against M3M India Private Limited, Concludes No Misuse Of Dominant Position

The Informant filed a complaint against the Developer and alleged that the Developer has misused its dominant position by constructing an additional tower in the Merlin project without obtaining prior approval from the residents.

Brief Facts:

The Developer of the M3M Merlin project in Gurugram where the Informant is a resident initiated the construction of an additional 11^th tower without obtaining consent from the residents. The original plan outlined a project area of 13.344 acres with 10 towers and an Economically Weaker Section (EWS) building. However, the layout was later revised changing the EWS area to a space for future development. Despite obtaining an occupation certificate from the Directorate of Town and Country Planning (DTCP) limiting the number of towers to 10, the Developer later submitted a deed of declaration mentioning 10 towers. Allegedly, the Developer did not seek the residents' consent before obtaining approval from the DTCP for the layout change and constructing the 11th tower.

The Informant filed a complaint against the Developer alleging misuse of the dominant position and involvement in illegal activities. He requested CCI to take action under Section 26(1) of the Act and instruct the Director General to investigate the matter. Additionally, he urged CCI to impose the maximum penalty on the Developer under Section 27 of the Act.

Contentions of the Informant:

The Informant argued that the Developer started construction without the necessary prior approval and in complete violation of the initial sanctioned plan on the basis of which the projects were initially sold to the residents. He contended that CCI has the jurisdiction to decide authority and reliance was placed on the cases of Bellaire Owner’s Association v. DLF Limited and Naveen Kataria v. Jaiprakash Associates Limited, to support the claim. Additionally, he contended that the Developer qualifies as an 'enterprise' according to Section 2(h) of the Act and does not engage in sovereign government functions, making them subject to the jurisdiction of the Commission.

The Informant argued that residential units and commercial units in the real estate sector are fundamentally different as the services provided for the development and sale of standalone houses are distinct from those for residential flats. Unlike standalone houses, residential flats do not offer buyers the flexibility to customize floor plans and structures. Hence, residential flats are considered a separate product. The Informant identified the relevant market as the "market for the provision of services of development and sale of residential flats" and the relevant geographic area as 'Sector 67, Gurgaon.'

Furthermore, the Informant substantiated that the Developer holds a dominant position, citing a significant gross sales figure of Rs. 10,500 crore in the financial year 2021-22. It submitted that the Developer is a leading player in retail, residential, and commercial projects, with approximately 40 projects in Gurugram with one of the largest real estate conglomerates in the country, with a land bank of 2400 acres. The ongoing development of around 11.23 million square feet is primarily focused in Sectors 65 and 67 of Gurgaon, Haryana.

Observations of the Commission:

CCI examined the relevant market for the residential project M3M Merlin and highlighted that residential flats and independent residential units, such as villas and row houses, are distinct and separate products. It ascertained the relevant product market as the "market for the provision of services of development and sale of residential flats". The relevant geographic market is determined to be 'Gurgaon' because conditions for providing these services in Gurgaon are different from neighboring areas. Therefore, the relevant market is the "market for the provision of services of development and sale of residential flats in Gurgaon".

CCI pointed out that the Developer does not hold a dominant position in the relevant market, as there are several other prominent developers operating in Gurgaon like DLF, Emaar India, Godrej Properties, Ansal API, Vatika Group, Unitech Limited, Sobha Limited, Adani Group, Eldeco Group, Ashiana Housing Limited, Raheja Developers Limited which imposes significant competitive constraints on the Developer.

In conclusion, the Commission held that there was no prima facie evidence of a contravention of Section 4 and Section 3(4) of the Act against the Developer since Section 3(4) requires an agreement between two or more enterprises operating at different levels of the same supply chain, which was not applicable in this case.

Case Title: Devendra Nath vs M3M India Private Limited

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