CCI Rules Advance India Projects Limited Not Dominant in Gurugram Commercial Real Estate Market

The Competition Commission of India on Monday closed proceedings against real estate developer Advance India Projects Limited (AIPL), holding that the company does not prima facie appear to be dominant in the market for organised commercial real estate in Gurugram. The Commission therefore found that no case of abuse of dominant position was made out.

A coram of Chairperson Ravneet Kaur and Members Anil Agrawal, Sweta Kakkad, and Deepak Anurag observed that AIPL had only seven projects registered in Gurugram.

Several larger developers were operating in the city. Referring to data available on the Haryana Real Estate Regulatory Authority website, the Commission held:

"OP does not prima facie appear to be a dominant enterprise in the delineated relevant market given that there are other leading players in the said market."

The case was filed by Jaya Pandey and Prakash C. Pandey, who own commercial units in AIPL Joy Central, AIPL Joy Street and AIPL Joy Square in Gurugram. They claimed to have invested several crores in the projects based on representations regarding commercial viability, premium positioning, expected footfall, tenant mix and projected rental returns.

According to them, AIPL collected substantial consideration from investors and thereafter retained centralised control over leasing, tenant selection, rental structuring, security deposits, tenant mix and operational decisions affecting the earning potential of unit owners.

The investors contended that AIPL enjoyed significant economic strength in Gurugram's organised commercial real estate market. They alleged that the company imposed unilateral and non-negotiable Buyer Builder Agreements that conferred excessive powers on the developer while restricting the commercial autonomy of allottees.

They further claimed that AIPL artificially suppressed rentals through its control over leasing strategy and rental benchmarks. They also alleged delays in the disbursal of rental income and security deposit dues, causing financial prejudice to investors. The informants sought an investigation by the Director General, interim directions relating to possession and payment of dues, and orders restraining the continuation of the alleged practices.

The Commission declined to examine the allegation relating to anti-competitive agreements. It noted that no material had been placed on record indicating the existence of any agreement capable of restricting competition.

The Commission observed, "There is no allegation or evidence of any agreement between the OP and its competitors or suppliers that may restrict competition in the present case. The OP appears to be acting independently, without any form of horizontal or vertical agreement."

While delineating the relevant market, the Commission observed that commercial real estate is distinct from residential property because it is intended to generate income through business activity and leasing.

It therefore defined the relevant market as the "market for organised commercial real estate in Gurugram".

The Commission also noted that the investors were already pursuing proceedings before the Delhi Consumer Redressal Commission, the Haryana Real Estate Regulatory Authority, and a district court. Those proceedings related to possession, calculation of dues, and other grievances arising from the projects.

Concluding that neither the allegations relating to anti-competitive agreements nor those concerning abuse of dominance disclosed a prima facie contravention of the Competition Act, the Commission closed the information. It also rejected the request for interim relief.