CCI passes order against DLF for abusing dominant position

Competition watchdog CCI has found realty major DLF, which is facing a penalty of Rs 630 crore, guilty of abusing its dominant market position in one more housing project.

After scrutinising a complaint by flat owners of Magnolia in Gurgaon, the Competition Commission of India (CCI) has issued a "cease and desist" order against the company but did not impose any financial penalty.

On the order, a DLF spokesperson said, "This order is on the same lines as the earlier CCI order. No new penalty has been imposed on DLF."

"Our legal experts are studying the order and we will take requisite legal action. We continue to believe that we have a strong case," the spokesperson further said.

The Commission, according to an order posted on the website, directed DLF to stop imposing unfair conditions in its agreement with flat buyers. It also asked the company
"to suitably modify unfair conditions imposed on its buyers, within three months of the date of receipt of this order".

After examining the clauses in the agreement, the order said, the Director General Investigations concluded that DLF had imposed unfair conditions on apartment buyers on account of the market power it enjoys at present.

The Commission, however, refrained from imposing fine on the company saying the "nature of contravention" in the case was similar to an earlier one filed by Belaire's Owners Association in which DLF was asked to pay a penalty of Rs 630 crore.

"The nature of contravention is identical and its object and effect in the instant case emerges from the position of strength of DLF Limited in the same relevant market. The commission feels that it will not be appropriate to separately impose penalty again in the instant case," the order said.

In late August last year, the CCI had passed another order in a case filed by Park Place flat owners wherein it asked DLF to 'cease and desist' from misuse of dominant position but did not impose any penalty.

These orders followed inquiries into complaints filed by the flat buyer associations of two separate DLF projects in Gurgaon, in the National Capital Region alleging delay in the project and less penalty to buyers for delay in completion of the project and increase in the number of floors among others.

DLF has already approached Competition Appellate Tribunal (COMPAT) seeking relief from the orders of CCI.

The company has challenged the CCI directive on various grounds, including the jurisdiction of the case, the basis for determining relevant market and dominant position and the company not being served with show-cause notices before passing of the order.

The CCI, which became fully functional in May 2009, draws its power from the Competition Act 2002 to check anti-competitive practices and abuse of dominant market positions.