Competition Law is in an evolutionary stage in India having completed a little over five years in India. The orders in the initial stage of enforcement have a huge impact on the progress of this law in the country. Here, K K Sharma ex Director General, CCI discusses the 3:2 order of CCI in Jaypee case. In this case by a slender majority of one, the Commission decided not to impose any fine on Jaypee group holding it not to be dominant in the relevant market. The Market definition itself was changed. Earlier DG was asked to investigate according to a particular market definition but when the report of DG was submitted , the majority did not agree and went back to earlier definition in which the group was not dominant. The author who , now, is Chairman, KK Sharma Law Offices discusses in detail this case in this article.

1. Importance of Being a Member of CCI : Order in Jypee Group
Case
Summary:
Recently, the Competition Commission of India(Commission or CCI) came with, perhaps, its
first very closly contested order wherein a majority of 3 members held that the Jaypee Group
was not in a dominant position in the relevant market of ‘residential units’ in Noida and
Greater Noida and , therefore, was not to be imposed any penalty upon. On the other hand, a
minority of 2 Members imposed a penalty of Rs. 666 crores on the group from abusing its
dominant position in the relevant market of ‘integrated townships’ in Noida nad Greater
Noida.This was a case wherein the DG was asked to submit a supplementary report after
carrying out further investigations. The DG submitted his supplementary report which
substantially differed from the earlier finding by the DG as far as the dominant position was
considered. It was this aspect of the matter which dramitacally changed the contours of the
case. After the new recommendations of the DG pointed to considerably changes position
and held Jaypee group to be dominat in the newly defined relevant markey as suggested by
the Commission, the majority opinion differed from this new finding and went back to the
earlier finding of DG and thus not imposing penalty on the group but the minority went ahead
and imposed a penalty. The author who headed the Antitrust Division of CCI when now
wellknown case of DLF was being examined within CCI and was the first Director General of
the functional Competition Commission of India and made the architecture for the competition
law investigation in the country looks at this interesting order in this write up.
Main Article:
‘Importance of Being Earnest’ - a hilarious drama written
in 1895 by Oscar Wilde – read about three decades back
had left a indelible impression on me. It is only my
fascination with the title of that drama which is some
where behind the heading of this article and no other
particular reason. It is a different matter if that also serves
, to some extent , the purpose of carrying forward the
necessary mission of competition advocacy in this country
in a dramatic way all the better.

2. It is not uncommon whether in friendly intellectual debates
or even in dialogue amongst nations to hear the phrase
“we agree to disgaree”. It was a similar small
disagreement of just one member of Competition
Commission of India ( CCI) where difference between
‘agreement’ and ‘disagreement’ meant either an
imposition or not an imposition of a penalty of Rs. 665.94 ,
or say Rs. 666 Crores , in addition to substantial legal
fees. An amount of Rs. 666 Crores is significant enough
to make a substantial difference to the bottomline of a
company. In some cases, it may also mean a question of
very survival of an enterprise as a corporate entity.
This brings out , in quite bold relief, the importance of the
views of a single Member of CCI and also the
Commission. At the cost of repetition , it can safely be said
that the Commission has huge mandate and matching
powers under the Competition Act,2002 (Act) to really
make or mar the economy of the country depending of
how it enforces the competuition law in India. This ,
perhaps, is the first time that such a closely contested
decision has come out of the Indian competition agency .
Such decisions are not uncommon in Federal Trade
Commission (FTC), United States of America (USA).
Including Chairman, FTC has 5 members.There have

3. been numerous instances in USA when 3:2 decisions
have come to survive.
I recall an interesting anecdote. Some five years back one
former Chairman of the FTC had a little after laying down
the office , following the revolving door policy quite
common in USA , taken an assignment in private sector.
It so happened that this corporation with which she has
engaged herself happened to have a significant presence
in India and one of her foreign travels brought her to India.
She expressed a desire to visit and see the offices of the
CCI. The then Chairman was kind enough to permit such
a visit. She had a small meeting with the Members and
officers of the Commission. After understanding the
functiong of the Commission, when I had an opportunity to
benefit from her vast experience, I wanted to know from
her how she managed to take along the members with her
in a multi member agency. It may be mentioned that her
tenure was relatively a period when such vertical divisions
in the decision making of FTC were not that common. She
confided that managing members was not only equally but
more important work than running FTC. To my surprise , I
discovered from her , that in addition to delve into
technical details she spent considerable time in
harmonisation amongst the thinking of different mambers
of the agency. Perhaps, that applies to all the multi

4. member competition agencies where the decisions are
taken by majority members present and voting as is the
case with CCI under the Act. One vote in the collegium , in
this case , is making all the difference to the enterprise
involved and the economy as a whole. To a question as to
what difference does the thinking of a single Member of
the CCI make? Even overlooking the huge ripple effects in
the economy because of this order, a neat dent of Rs. 666
Crores in addition to substantial legal fees to the
enterprise is the cost of that ‘nodding’ or ‘not nodding’ of a
single Member of the Commission. The bottom line of an
enterprise can be set back by a cool Rs. 666 crores easily
over a period of one year or a little more. If the people
have not yet understood the importance of the competition
law for themselves and the economy , here is one more
opportunity to understand this new animal in town before it
has to manisfest itself in all its glory to their own detriment.
May be they would realise to their dismay that their
disinterest cost them heavy.
A look at the website of the CCI over a period of last one a
half year would have indicated that the Jaypee Group was
going the DLF way. What was DLF to Gurgaon , Jaypee
group appears to have been headed in the area of Noida
and Greater Noida. In cases after cases, the Commission
took the stand that the Jaypee group was a dominant

5. enterprise in Noida and Greater Noida region. That was
not to be – going by the final outcome of the closely
contested order. The order either way hinges on the
thinking of only one Member. It would have been a real
cliff hanger for both the Commission and the concerned
enterprise and economy which looks silent but gets deeply
affected but all such deliberations. If one Member were to
change side, the penalty on the group would have been
real and formidable.
To fully grasp the import of the order of CCI, let us have a
quick look at the facts involved. Different informations
came before the Commission at different points of time.
These involved cases Nos. 72 of 2011, 16, 34 & 53 of
2012 and 45 of 2013. They related to various residential
apartments/dwelling units in different enterprises of
Jaypee group such as Jaypraksh Associates Limited
(JAL), Jaype Infratech Ltd.(JIL) etc.. In Case Nos. 16 of
2012 and 45 of 2013, the Informants were the allottees of
residential units in JAL’s project named ‘Jaypee Aman’ at
Noida, whereas , in Case Nos. 34, 72 and 53 of 2012, the
Informants are allottees of residential units in ‘Jaypee Sun
Court and Jaypee Sea Court Apartments’ at Greater
Noida. Thus the informations clubbed together acually
related to allotments of different residential units, without
any identification , in the order of the Commission , with

6. reference to either their sizes or prices, in different
projects of Jaypee Group. The obvious implication is that
the Commission has treated all the residential units
whrther one room units or villas having a sprawling 6000
square feet area as totally substitutable.
As referred to in the preceding paragraphs, these cases ,
at different points of time were referred the Director
Genearl(DG) for investigation after the Commission
formed a prima facie opinion about the existence of case
befitting investigation by DG.
DG, in his various reports submitted to the Commission,
considered the relevant market as “ the provision of
services for development and sale of residential
apartments in Noida and Greater Noida”. DG examined
the position of dominant position of Jaypee group in the
relevant market so defined and reached the conclusion
that Jaypee group is not dominant withing the relevant
market so defined.
The Commission records the the exercise done by DG in
the following words :
“The top market share on the basis of dwelling units was that of Amrapali Group with 28.30%
share and Jaypee Group came second with 25.99%. M/s Supertech Limited came at third
position with 16.76% and was still close with Jaypee Group whereas 3C Company and M/s
Unitech were there with 8.63% and 7.06% respectively.”

7. “The land reserve was also analyzed and it was concluded that though Jaypee Group had the
largest land reserves along the Yamuna Expressway, the use of land was of different nature
and not comparable with the land allotted to other builders. Other aspects like entry barrier,
consumer dependence and countervailing buying power were also taken into consideration.
In view of the above, the DG opined that Jaypee Group did not have the position of strength
that could enable it to operate independently of competitive forces prevailing in the relevant
market or to affect its competitors or consumers in its favour. Therefore, it was not dominant
in the relevant market in terms of section 4 of the Act.”
After having done the job assigned to him and given his
finding, the DG was given direction by the Commission to
cause further investigation as per the directions given by
the Commission under section 26(6) of the Act. These
directions , enumerated in paragrapg 81 of the order of the
Commission, were as under:
“The Commission had also directed the DG to consider the followings while
investigating the matter:
a) The entire land bank and resources of JAL.
b) Obtain necessary information from NOIDA and other sources with respect
to land banks allotted to other competitors of JAL in Noida region and
consider such data in its analysis.
c) The nature and dwelling units and the fact that integrated township should
be considered while comparing those with other builders/ developers in the
market.
d) Any other issues/ matter which the DG deemed that were essential to
effectively analyze the position of strength, if any, of JAL in the relevant
market.”
Going by the directions of the Commission to DG for a
supplementary report, there were improvements needed
in the report of the DG on the aspect of relevant product
market. That , apparently, could have been the reason for

8. asking a supplementary report from DG by the
Commission. If the issue was only analysis of relevant
product market consisting of residential apartments,
nothing more was needed to be done as this analysis was
already done by DG in his main report.
Not only this, but the issue of treating the integrated
township as a separate relevant product market had also
been dealt with by the Commission on earlier occasions
and an opinion already formed on the issue. In those
earlier instances, the Commission reached the conlusion ‘
integrated townships’ can not be treated as a separate
and distinct relevant product market.
Against this backdrop, reading paragraph 81 and 91 of the
order of the Commission dated 26.10.2015 together brings
out a very interesting point. Whereas in paragraph 81 , the
Commission , after perusing the report of DG directs the
DG to consider, inter alia, “the nature and dwelling units
and the fact that integrated township should be considered
while comparing those with other builders/developers in
the market”, in paragraph 91, the Commission notes that
the issue of integrated township being a separate product
market had come before the Commission earlier as well
and the Commission had formed a view on this issue. For
a ready reference paragraph 91 of the order is being

9. quoted below:
“ 91. Further, it may be noted that the issue of
integrated township being a separate product market also
came up before the Commission in Shri Sunil Chowdhary
v. M/s TDI Infrastructure Ltd., Case No. 27 of 2014
decided on 23.09.2014 where it was noted by the
Commission categorically that though the concept of
integrated township has become popular where all
facilities are provided within one township but even in
those cases, ordinarily the market would be of residential
units. Accordingly, in that case the market of services of
development and sale of residential apartments was taken
as the relevant product market. A similar view was also
taken by the Commission in Shri Deepak Kumar Jain &
Anr. v.M/s TDI Infrastructure Ltd., Case No. 40 of 2014
decided on 24.09.2014 wherein it was also observed that
though integrated township do offer some different
characteristics than other forms of plotted residential
units, the same cannot be considered as the separate
relevant product market.”
If the issue was an old and settled one, the reasons for asking the
DG to carry out additional investigation on the same point look
unclear. This was a non-starter to begin with. It was an
investigation whose fate was already known. Whichever way
the investigation was conducted, the Commission was not going
to accept it as it already had a view. What purpose this
additional/supplementary investigation served in the whole
scheme of things is also not emerging from the order of the
Commission.
The two minority Members did not go along with the majority
of the three Members and held that the ‘integrated townships’
did indeed constitute a separate and distinct relevant product
group. That having been held , the dominant position of the

10. Jaypee group was a foregone conclusion as recommended in the
supplementary report of the Commission.
This order can be analysed on many dimensions. Some of
these dimensions can be as under:
1. Clubbing of Informations pertaining to different
segments of dwelling unit segments- having a wide
variations amongst themselves and catering to different
economic groupings as potential customers- solely on the
basis of the opposite parties being from the same group.
This is a substantially different approach to what was
witnessed in DLF matter where the ‘high end apartments’
was considered as a different product grouping.
2. Directing additional investigation by DG by the
Commission after specifically telling as to what constituent
product units are to be taken as relevant product market.
3. Ignoring the finding of the Supplementary Investigation
report almost tailor made to the directions of the
Commission and deciding the case on the basis of the
earlier investigation report which was based on a different
product grouping. This is quite significant in the
background of the fact that frequently , in the dissenting
orders of Member (R Prasad) , it was held that after having
held that prima facie a case exists and on receiving a report
of DG confirming such a prima facie view, the Commission
can not close a case under the provisions of the Act. In
circumstances such as are obtained in this case , it becomes
case of ‘double trouble’. The Commission itself suggests a
particular way and then, for reasons which are not new,
ignores the findings so arrived at after following this

11. particular way and goes back to the original finding of the
DG. Can or should the Commission really do this ?
4. Taking note of the existing anticompetitive practices in
the reality sector, in order after order, is the Commission
really helpless under the Act and can not take any action
under the Act or can take suitable action within its powers
without waiting for Parliament to put in place any new
regulatory mechanism in place.
5. Are the residential units within integrated townships are
really fully substitutable with the residential units in
standalone apartments being made by all the small time
builders across the country including National Capital
Region(NCR) to which this case pertains ?
Out of all the dimensions , it is the last one which
differentiates the majority order from minority order.
Minority order states that these two are not substitutable
whereas the majority order says that they are substitutable.
All the four dimensions need and and can be dealt
separately in a detailed manner. This will be taken some
time in future.
For the moment suffice it to say that even such a small
variation in differing thinking of even one Member of the
Commission can make such a big difference to the
evolution of the competition law in India, enterprise
concerned,credibility of the institution and the economy as
a whole. Thus, the competition law is important and so is
the Commission and its each and every Member.