CCI orders fresh probe against DLF; fears abuse in office business

Written by PTI | New Delhi | Updated: Jun 25 2014, 00:39am hrs
Fair trade regulator CCI has ordered a probe against a DLF group company for allegedly imposing unfair and unreasonable conditions on office buyers at one of its commercial projects in Gurgaon.

Some other group entities of the real estate major have already faced probe by the Competition Commission of India (CCI) with regard to various other cases of anti-competitive practices. CCI had also imposed a fine of Rs 630 crore against DLF for abuse of its dominant market position a residential real estate case, but the company had challenged the same.

The latest probe would be carried out against DLF Universal, upon a complaint that alleged the realty company of imposing certain anti-competitive clauses in the 'Commercial Office Space Buyers Agreements'.

The case pertains to the DLF's commercial office space in 'Corporate Greens project at Sector 74A' in Gurgaon and the CCI has asked its Director General (DG) to initiate an investigation against DLF Universal Limited.

After looking into the complaint, CCI said in a 11-page order that it is "of the prima facie opinion that despite the presence of other developer in commercial real estate space in Gurgaon such as, Emmar MGF Land Ltd, Unitech, Spaze Towers Pvt Ltd, Vatika Ltd, Bestech Indian Pvt Ltd, JMD Ltd, DLF Group appears to be dominant in the relevant market".

"Having examined the clauses of the agreement, it appears that some of them are unilateral, one sided and loaded in favour of the opposite party (DLF Universal)," CCI said in an order dated June 23.

The fair trade regulator added that "the conduct of DLF Group, emanating from its dominant position in the relevant market, prima facie, amounts to imposition of unfair terms and conditions on the commercial office buyers which is anti-competitive...".

Accordingly, CCI has directed its investigation arm, the Director General, to carry out an investigation into the matter and to complete the same within a period of 60 days.

The Director General has also been asked to investigate the role of the DLF Universal's offcials who were in charge and their involvement with respect to the firm's alleged conduct.

The complaint had alleged that DLF group being a dominant player in commercial and residential real estate sector in Gurgaon, had been abusing its dominant position by imposing unfair condition under buyers.

According to CCI, unfair clauses in the agreement include that DLF can unilaterally abandon of the project without giving any reason to the buyers and its liability is limited to refunding the deposited money with 9 per cent simple interest.

Besides, DLF can also modify the building plan without the consent of buyers; the buyers are required to pay an interest of 15-18 per cent annually for any delayed payment of instalment whereas the realty firm is to refund only the amounts received from them without interest or in some cases 9 per cent interest in the event of cancellation of the project.

Further, there is no provision in the agreement for adequate compensation to buyers in case of failure on the part of DLF to deliver the possession within the stipulated time, among others.

Last month, The Competition Appellate Tribunal had upheld a Rs 630 crore penalty imposed on DLF by the Competition Commission.

The penalty was imposed after it was found that DLF had imposed highly unfair conditions on allottees of apartments in The Belaire in Gurgaon, which had serious adverse effects and ramifications on the rights of the buyers.