Is the CCI Thinking Too Much ??

The CCI in its recent Order dated 4th July, 2012 in the case of Owners and Occupants Welfare Association v. M/s DLF Commercial Developers Ltd. (Main Order/Separate Order/Dissenting Order) dismissed the complaint of the informant on the grounds and to quote:

“It is not alleged by applicant that Jasola District Centre had some particular significance to the allottees in comparison to other commercial space located in Delhi. The allottees who booked commercial space in Jasola could have booked commercial space anywhere in Delhi. The informant has not stated about the purpose of investment made by the allottees, whether the allottees had booked for the purpose of shifting their existing business in the nearby areas or they had booked for the purpose of investment.”

Granted, the first point is relevant. The issue at hand is the second point. On the second reason, the Commission has taken the logic that the booking of commercial space is done by two types of consumers. The first category are those are in the need of commercial space for the purpose of establishing a new business venture or for shifting their business place from one place to another place. The second category comprises of who invest in the commercial space for purpose of profits or future rental income.

No doubt such a category of consumers does exist but the question is exactly why such a distinction would be relevant in the present matter. Firstly, any such group of consumers, irrespective of their intentions, would without a doubt still be affected by any such abusive practices of DLF. Secondly, the argument of substitutability also may be hard to support in the present matter due to firstly that such investor would also take into account the fact that “Jasola being far away from the existing commercial centers, there was no nearby commercial complex within few hundred meters at the time when Jasola started developing.” For such investors, substitutability often stands reduced as a new commercial center would mean being able to buy a space for a better price than available in a developed area, and therefore, better profits from the rent revenue, especially in the long run. It must also be noted that any such consumer/buyer considers such an acquisition as a long term investment where the returns or profits shall only be recuperated with time.

Moreover, in conclusion, assuming (as this has not been confirmed in the order) that the consumers/buyers in this case have become “captive consumers” (as was the case in the previous DLF Order of the CCI), then such substitutability cannot be effectively measured.  (This is one of the faults which I find in the use of the SSNIP Test, but more on this later).