CCI rejects complaint against Larsen & Toubro in realty case

The Competition Commission has rejected allegations of anti-competitive ways against diversified group Larsen & Toubro with regard to a housing project in Bangalore as it found no evidence of unfair practices in the case.

The Competition Commission of India (CCI) keeps a check on unfair trade practices at market place.

The complaint was filed by South City Group Housing Apartment Owners Association, which represent members of that housing complex located in Bangalore.

The Opposite Parties in the case are Larsen & Toubro and Dinesh P Ranka, the erstwhile owner of the land on which the South City Complex has been developed.

Disposing of the case, the watchdog in its order said there exists no anti-competitive agreement between the enterprises in the present case.

Relevant market considered for this case were two segments -- 'provision of services for development of residential units in Bangalore' and 'services of estate management and maintenance in Bangalore'.

"The Commission is also of the opinion that the Opposite Parties are not in a dominant position in either of the relevant markets...

"Since the Opposite Parties are not in a dominant position in any of the relevant markets, the question of abuse of dominant position does not arise," the order said.

Further, the Commission said there exists no anti-competitive agreement between the enterprises in the present case.

According to the regulator, there is no violation of Section 3 (pertaining to anti-competitive pacts) or Section 4 (relating to abuse of dominant position) of the Competition Act.

CCI had directed its Director General (DG) to probe the matter in January 2012. Cases where the Commission prima facie finds violations of competition norms are referred for detailed investigation. The DG submitted its report in February 2013.

As per the DG, L&T is one of the largest private sector technology, engineering, manufacturing and construction company with 118 subsidiaries, 18 associates and 12 joint venture companies.

"In spite of its size and resources, it has only one project in the relevant market and is not in position to affect its competitors and consumers in its favour and cannot operate independently of the competitive forces in the relevant market," as per the order citing DG report.

The DG had concluded that since Opposite Parties are not in a position of dominance in the relevant markets, there is no case of abuse of dominant position.

Meanwhile, Commission Member Geeta Gouri in a supplementary order said the relevant market considered for the present case should be re-defined.

She noted that in this case current definition of relevant market does not capture the dynamics of realty sector.

"The case requires further investigation and under section 26(7) the case be sent back to Director General to re-define the relevant product/service market by taking into consideration the factors prevailing during the commencement of the South City Project... And then assess the dominance of the Opposite Parties in the relevant market to reach at a conclusion", Gouri said in her order.