Concept Of Relevant Market – Realty Sector

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A “relevant market” is delineated on the basis of a distinct product or service market[2]  and a distinct  geographic market[3] . These terms have been de­fined in section 2(r) of the Act read with sub sections(s) and (t) of section 2. Furthermore, while examining facts of a particular case, the Commission must give due regard to all or any factors mentioned in section 19 (6) with respect to “relevant geographic market” and section 19(7) with respect to “relevant product market”. The Commission has, therefore, kept the above provisions of the Act in mind in the ensuing discussion on delineation of the relevant market in this case. It is observed that the instant information involves dynamics in a market where the informant and the Opposite Parties are participants either in capacity of a consumer, a seller or as regulatory bodies that influence the market environment. The informant, Belaire Owner’s Association obviously represents the consumers in this market, while DLF Ltd. is selling or supplying some product or service. The relevant market is the market for services of developer / builder in respect of high-end residential accommodation in Gurgaon.


Relevant product market: With respect to the issue of relevant product market, CCI referred to the DG report, which described the nature of service provided by DLF in the instant case as services by developer / builder in respect of ‘high-end’ residential building in Gurgaon and held that although there can be no hard and fast rule to determine what constitutes ‘high-end’, the same needs to be determined on the basis of facts and circumstances of each case. ‘High-end’ is not a function of size alone but includes a complex mix of factors such as size, reputation of location, characteristics of neighbors, quality of construction and actual customers and their capacity to pay.

Relevant geographic market: The CCI after considering several factors including local specification requirements and consumer preferences held that the relevant market is the market for services of developer/builder in respect of high-end residential accommodation in Gurgaon. A decision to purchase a high-end apartment in Gurgaon is not easily substitutable by a decision to purchase a similar apartment in any other geographical location.

M/s Silarpuri Colonizers P Ltd vs Emaar Mgf Land Ltd [4], CCI decided the relevant market as being  defi­ned as a ‘construction of residential accommodation’

The Indian Competition Act, 2002 (as amended) aims to prevent anti-competitive practices by  enterprises that cause an “appreciable adverse e­ffect on competition” in India (AAEC).

How adversely is the relevant market a­ffected forms the fulcrum of competition analysis

Keeping the focus in delineating a “relevant market” is to make sure the boundaries of competition concerns or the anti-competitive practices and activities that are said to have an appreciable adverse effect on competition are duly considered. Only then can one get a realistic conclusion of what are the signifi­cant obstructions to free trade and consumer interest.

Economic analysis plays a crucial role in the enforcement of competition law. Various jurisdictions around the world apply differing degrees of importance to the basic economic theories to suit competition law issues in their jurisdiction. In the US and the EU, economic analysis is a signifi­cant part of the evidence used to assess competition law matters.

Indian system will gradually evolve on similar lines.

In the case of Emaar MGF, CCI looked at the relevant market as ‘residential accommodation’ in Gurgaon. For DLF (Park Place and Belaire), the relevant market was the ‘high-end residential’ segment in Gurgaon, since the cost of each ‑at was more than Rs 1.5 crore.

In a case against Tulip Infratech case, CCI considered the relevant market as ‘multi-storeyed residential apartments’ in Gurgaon.

Sanjay Kumar Gupta Vs DLF Ltd [5] Relevant market under section 4 ( Abuse of Dominance ) is  different from the Market under section 3 ( Anti-competitive Agreements ) of the Act. Market is a wider term where large number of goods and services are transacted whereas relevant market is the market which has to be determined by the Commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets. Relevant product market means a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of the characteristics of the products or services, their prices and intended use – thus, the relevant market means a market comprising the area in which the conditions of competition for provision of services or the services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighboring areas.

Further, the factors for determining the “relevant geographical market.” are several (section 19 (6) and even one factor is sufficient to defi­ne a relevant geographical market. However, CCI consider four factors, e.g., local specification requirements; transportation costs; consumer preferences and need for secure or regular or rapid after- sales services in order to de­fine the geographical market in the present case.

In CREDAI Case [6] the CCI de­fined the relevant market as “the market for services of developer/ builder in respect of high-end residential accommodation in Gurgaon”. As a “service”, the matter was covered by the Competition Act because high end residential accommodation is equipped with better services and facilities. The CCI distinguished “high-end” residential flats from those of other categories (for example, low- or mid-income fats offered by HUDA, DDA, and GDA) keeping in mind the pro­file of buyers. The CCI also de­fined the relevant geographic market as the territory of Gurgaon, observing that it was a preferred destination for upwardly mobile classes, and was distinguishable from properties in places like Noida or Faridabad which were not substitutable options.


While competition law lays out the acts and practices that are deemed to be anticompetitive. Economic analysis is a tool that is used by both the competition authority and the parties who it seeks to regulate to determine – on a case-by-case basis – if these acts and practices would have had an adverse impact on competition and consumer welfare. In cases where an act prohibited or deemed illegal by the competition authority is committed by the market participants, then economic analysis is used to estimate the extent of damage caused to the consumers as result of these acts.

Economic theory provides the framework within which the problem is analyzed.

  • For instance, in an analysis to define the relevant product market for competition law purposes, one of the steps is to assess if consumers can readily switch to other similar products if the price of the product in question increases (a signifi­cant and non-transitory increase).
  • In order to answer this question, the economic theory of demand has to be used. Based on certain assumptions relating to the objectives and constraints faced by consumers, the economic theory of demand provides the relationship between quantity demanded of a product and various factors that influence demand such as the price of the product, income of the consumer, seasonal factors, price of substitute goods, price of complement goods, etc.
  • From this economic theory of demand, the hypothesis that tests the relationship between the demand for the product in question and the price of its substitutes is framed. In this case, the hypothesis would state that there is no relationship between the price of the substitute product and the demand for the product in question.
  • This hypothesis is tested by collecting data about price of the product, quantity demanded of the product, income levels, price of substitute and complements, and all other variables that are de­fined in the framework or the model.
  • Once the data and the model is in place, econometric techniques (a statistical technique used to estimate the relationship between a variable and host of other variables that influence it) are used to estimate the model and test whether there is statistical evidence to reject or accept this hypothesis.


Swarnmala Singh, Final year law student at Amity Law School, Noida.


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[2] means a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use.

[3] Relevant geographic market” means a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the Condition prevailing in the neighboring areas.



[6] visited on :12-10-2013

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