No proof that DLF abused position in Chennai project: CCI

Written by fe Bureau | Chennai | Updated: Dec 2 2012, 04:41am hrs
The Competition Commission of India (CCI) has dismissed a complaint of alleged abuse of market dominance by real estate developer DLF for a housing project in Chennai. Rejecting the complaint, the fair trade watchdog said there was no prima facie proof to show that DLF abused its position.

Chennai-based DGCOM Buyers & Owners Association, the association of the flat owners, had moved the commission alleging abuse of dominant market position by DLF.

Dismissing the plea, the CCI said proceedings have been closed under section 26(2) of the Competition Act. Under this section, the regulator can close a case if it does not find any evidence.

The association had filed the complaint against DLF, New Delhi (as opposition party 1) and DLF Southern Homes, Chennai (as opposition party2). The complaint related to the housing project, developed by DLF Southern Homes, is situated at Old Mahabalipuram Road (OMR), IT Express Corridor, Chennai.

We find that no prima facie case was made out by informant to hold OP2 or the group of OP1 and OP2 as dominant in the relevant market of providing 2/3 BHK flats on OMR IT Corridor, the CCI said in a statement. The association had alleged that after nearly 18 months from bookings the flats and after paying crores of rupees, DLF asked the allottees to sign an agreement that contained highly abusive clauses. Abusive sweep of agreement was so deeply entrenched that the buyers could not whisper a word proposing changes in the agreement and were forced to sign on the dotted lines or to lose a hefty amount. OP2 rejected the representations against this one-sided agreement and throttled the voice of the buyers by arrogating to itself unbridled discretion to change the layout plan/building plan without consent of the allottees, the association said in its complaint.

DLF holds 51% stake in DLF Southern Homes.

As per the informant, the developer scored an edge over other competitors by pegging the price of R2,800 per sq ft as against prevailing market rate of R3,200 per sq ft for similar high-rise premium apartments segment. Slashing the rate in 2009, DLF offered the apartments at the rate of R2,500 per sq ft for initial customers and R2,550 per sq ft for subsequent customers, according to the order.

The informant sought to establish that DLF Southern Homes was a dominant player in high-rise premium apartments in the relevant market of OMR IT Corridor between two toll gates on this corridor. However, the regulator said the relevant geographic market cannot be confined to the OMR IT corridor.

The CCI said the informants contention of the geographic market being the OMR IT corridor is not acceptable.