CCI | Whether Delhi Metro Rail Corporation (DMRC) is an enterprise under S. 2(h) of Competition Act? DMRC activities sovereign or economic? Read on

Competition Commission of India (CCI): The coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi, Members expressed that activities under which Delhi Metro Rail Corporation is engaged in are economic activities and are not sovereign functions, therefore OP will be covered within the definition of ‘enterprise’.

Factual Matrix

Instant information was filed by the informant under Section 19(1)(a) of the Competition Act against Delhi Metro Rail Corporation Limited (DMRC) (OP) alleging abuse of dominant position in contravention of Section 4 of the Competition Act.

Informant a sole proprietorship firm was run by the Proprietor. OP had invited bids for licensing of parking rights at Kashmere Gate, Kanhaiya Nagar and Shastri Nagar Metro Stations. After qualifying the technical bid and financial bid for the Contract, a Letter of Acceptance was issued by OP reminding the obligations of the Informant as per the terms of the Contract.

Allegation

It was alleged that illegal parking agents who operated nearby parking area with the help of corrupt officials of New Delhi Municipal Council (NDMC) and local Kashmere Gate Police Station, SHO were causing problems by way of complaints, threats and actions restricting the usage of 3183.47 square metres of proposed parking area of OP, by the informant.

Adding to the above allegations, it has also been stated that NDMC has been causing problems by imposing garbage fine on the Informant whereas it is workers of Municipal Corporation of Delhi who intensely dump the garbage near the unfenced parking area of the Informant and the garbage spreads due to various reasons.

OP also violated the basic conditions of the Contract by imposing a locking period clause so that the informant cannot find a way out of the Contract and suffer huge losses.

OP’s acts caused grave mental, physical and monetary harassment to the Informant which are likely cause pressure-related diseases leading up to death/suicide.

Analysis and Decision

Firstly, the Commission examined as to whether OP falls within the purview of the Act for the purposes of Section 4 i.e. Whether OP is an ‘enterprise’ within the meaning of Section 2(h) of the Competition Act?

Bench noted that from the information available in the public domain OP has been providing Mass Rapid Transport System (MRTS) in the National Capital Region (NCR) and is engaged in the development, maintenance and management of modern metro system for mass urban transportation.

Activities as stated above in which the OP is engaged will come under the ambit of economic activities and are not sovereign functions, therefore, OP is covered within the definition of ‘enterprise’ in terms of Section 2(h) of the Act.

Further, the Commission delineated the relevant market and the same to be taken as ‘Delhi’. Hence the relevant market defined by the Commission in the instant case was ‘procurement of services for provision of parking lot management in Delhi’.

Whether OP was a dominant procurer of parking lot management services in the aforesaid relevant market data of parking lots?

To answer the above question, data with regard to the owned but outsourced for management to third parties by Delhi Municipal Corporations (North, South, East), New Delhi Municipal Council and Delhi Cantonment Board was compiled and compared with OP.

Commission opined that OP didn’t have the ability to operate independently in the said relevant market. OP was not found to be the dominant procurer of parking lot management services in Delhi or even North Delhi area where the three stations operated by OP were located.

In light of the above analysis, Commission found no case of contravention of provisions of Section 4 of the Competition Act against the OP. [Dhiraj Gupta v. DMRC, 2020 SCC OnLine CCI 48, decided on 26-08-2020]

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