Inside CCI’s Relevant Market Analysis in the AIPL Case

The Competition Commission of India (CCI) recently closed proceedings against Advance India Projects Limited (AIPL), a Gurugram-based real estate developer. CCI found no prima faciecase of anti-competitive conduct under Sections 3 or 4 of the Competition Act, 2002. The order was passed by a bench comprising Chairperson Ravneet Kaur and Members Anil Agrawal, Sweta Kakkad, and Deepak Anurag under Section 26(2) of the 2002 Act. 

Background: Complaint Against AIPL 

The information was filed by Jaya Pandey and Prakash C. Pandey, buyers of three commercial retail units developed by AIPL across three projects in Gurugram: AIPL Joy Central (Sector 65), AIPL Joy Street (Sector 66), and AIPL Joy Square (Sector 63A). The informants alleged that they had invested several crores based on representations by AIPL regarding rental returns, commercial viability, premium positioning, and assured footfall. 

The informants raised two broad sets of allegations. First, they claimed that the Buyer Builder Agreements (BBAs) executed by AIPL were unilateral and non-negotiable, conferring excessive discretionary powers on the developer, imposing disproportionate financial liabilities on buyers, and providing no effective remedies against the developer. They alleged these agreements fell short of fairness standards under the Real Estate (Regulation and Development) Act, 2016 (RERA) and the Consumer Protection Act, 2019. 

Second, the informants alleged that AIPL exercised centralized control over critical commercial operations, including leasing, tenant selection, rental structuring, security deposit management, and zoning, resulting in artificial rental suppression, delayed disbursement of rental income, and reduced commercial autonomy for allottees.  

On the basis of these allegations, the informants contended that AIPL had abused its dominance under Section 4(2)(a)(i) of the Act by imposing unfair and discriminatory conditions on buyers. 

CCI Analysis of Relevant Market in Competition Law 

The Competition Commission of India first delineated the relevant market under competition law. It noted that commercial real estate (CRE) is distinct from residential property, characterised by longer lease terms of three to ten years, higher rental yields, professional management, and valuation based on income generation rather than personal use. Accordingly, the relevant product market was defined as the "market for organised commercial real estate." 

On relevant geographic market in Competition Law, CCI noted that Gurugram has emerged as a preferred commercial destination due to the presence of multinational companies and higher rental returns compared to adjoining areas. The relevant geographic market was accordingly delineated as Gurugram. 

No Relevant Dominant Market 

Having defined the relevant market as "organised commercial real estate in Gurugram," the Commission examined whether AIPL held a dominant position within it. Referring to data from the website of HRERA (Haryana Real Estate Regulatory Authority), Gurugram bench, the Commission noted that the leading developers in the jurisdiction, by number of registered projects, included Signature (61 projects), DLF (43), Emaar (41), Vatika (19), and Godrej (18), among others. AIPL had only 7 registered projects in Gurugram, comprising 1 residential and 6 commercial projects, placing it tenth on this list. 

On this basis, the Competition Commission of India held that AIPL did not prima facie appear to be an enterprise as per relevant dominant market, given the presence of multiple larger players. 

Anti-Competitive Allegations 

On the allegation of violation of Section 3 of the Act, which prohibits anti-competitive agreements, the Commission found that the informants had neither adduced evidence nor advanced any argument in support of it. CCI noted there was no agreement between AIPL and its competitors or suppliers that could restrict competition. AIPL appeared to be acting independently, without any horizontal or vertical arrangement.  

Parallel Litigation  

The Competition Commission of India further observed that the informants had already initiated proceedings before multiple forums, the Delhi Consumer Redressal Commission, THRERA (The Haryana Real Estate Regulation and Development Rules, 2017 bench at Gurugram), and the District Court, Saket, seeking possession of the properties, redressal for wrong calculation of final dues, and criminal action against AIPL. 

Case Closed; No Interim Relief  

Finding no prima facie contravention of Sections 3 or 4 of the Competition Act, 2002, CCI directed the information to be closed under Section 26(2) of the Act. Consequently, the application for interim relief filed under Section 33 of the Act, seeking handover of physical possession, timely disbursement of dues, and a restraint on unfair practices, was also rejected.