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A PROJECT REPORT ON

A CASE STUDY ANALYSIS ON BELAIRE OWNERS' ASSOCIATION


VS. DLF LIMITED, HUDA & OTHERS

SUBMITTED TO
Miss. Tulika Shree
(FACULTY COMPETITION LAW)
SUBMITTED BY
GURPREET KAUR CHAWLA
SEMESTER IX, ROLL NO: 47
B.A. LL.B. (HONS.)

HIDAYATULLAH NATIONAL LAW UNIVERSITY, RAIPUR

ACKNOWLEDGEMENTS
I, Gurpreet Kaur Chawla, consider it my most humble privilege to have been able to
work on the demanding yet most interesting and enthralling of all issues, as one of A
Case Study Analysis On Belaire Owners' Association Vs. Dlf Limited, Huda &
Others. Working on this paper has been one of the most enriching experiences of my
life and has not only amassed bulk of highly relevant and extremely functional
information, but has also endowed me with an empirical, at the same time empathetic
perspective towards the subject. In this context, Id like to extend heartfelt thanks to
the people who have rendered this project as a reality. I would take this privilege to
thank my Faculty, Miss. Tulika Shree, for her unwavering and unconditional support,
incomparable and illuminating knowledge and guidance, without which this project
would not have been feasible. I would also like to express my earnest gratitude to the
HNLU library staff, I.T department, ever-so-helpful seniors and my friends and
colleagues and each and every person without whose help, support and guidance, and
in fact mere presence, this project would never have transformed from strands and
traces of mere thought into tangible black and white reality.

Gurpreet Kaur Chawla


Semester IX

LIST OF ABBREVIATIONS & ACRONYMS


1. CCI

Competition Commission of India

2. COMPAT

Competition Appellate Tribunal

3. CREDAI

Confederation of Real Estate Developers


Association of India

4. DG

Deputy General

5. DLF

Delhi Land & Finance

6. DTCP

Department of Town and Country Planning

8. DPA

Density Per Acre

9. FAR

Floor Area Ratio

10. HUDA

Haryana Urban Development Authority

11. INR

Indian Rupees

12. USD

United States Dollar

13. Anr.

Another

14. Govt.

Government

15. Ltd.

Limited

16. Ors.

Others

LIST OF CASES

Kingfisher Airline Ltd. & Anr. Vs. CCI & Ors,


Chandigarh Housing Board Vs. Avtar Singh and Ors,
Lucknow Development Authority Vs. M.K.Gupta,
Hoffmann- La Roche Case

LIST OF LEGISLATIONS:
4

Competition Act, 2002


1. Section 4(2) (a): abuse of dominant position when an enterprise or a group
directly or indirectly, imposes unfair or discriminatory condition of good and
services.
2. Section 19 (4): Inquiry into dominant position of enterprise.
3. Section 19 1 (a): The Commission may inquire into any alleged
contravention of the provisions on receipt of any information from any person,
consumer

or

their

association

or

trade

association.

4. Section 2 (u): Definition of service.


Consumer Protection Act, 1986
1. Section 2 (o) : Definition of service.
Monopolies and Restrictive Trade Practices Act, 1969 (Repealed and replaced
by the Competition Act, 2002)
1. Section 2 (r) : Definition of service.

TA BLE OF CONTENTS:
5

I
II
III
IV
V
VI
VII
VIII
IX
X
XI

Acknowledgements
List of Abbreviation
List of Cases
List of Legislations
Objective & Research Methodology.....7
Introduction8
Facts of the Case..9
Allegations of the Informant...........10
Submissions by DLF Ltd.13
Key Issues involved in the Case....14
Decision Of The Commission And Penalty Imposed..21
Appeal to the COMPAT.21
Analysis..22
Conclusion23
References.24

OBJECTIVE

To Analyse The Landmark Case Of Dlf Ltd.


To Determine The Impact Of Its Decision On Real Sector In India
To Find Out The Issues And Factors Involved In Carrying Out The
Order Of The Commission And The COMPAT.

RESEARCH METHODOLOGY
The methodology for the current research has been non doctrinal with an extensive
use of both primary and secondary sources of data being put to use.

INTRODUCTION
The Competition Act, 2002 which was enacted in order to provide India with a
modern competition law in keeping with internationally established antitrust
principles, seeks to effectively regulate competition in all economic sectors, including
the real estate sector and is enforceable through the Competition Commission of India
(CCI), which replaced the old Monopolies and Restrictive Trade Practices Act
Commission in October, 2009. The Indian Real Estate Sector is widely unregulated.
Though there is some regulation in the form of the various approvals mandated by the
law for the developers, there is specifically no regulator for the sector.
The DLF case began when the Owners Association of Belaire (a DLF building
complex in Gurgaon) filed a complaint against DLF for breaching provisions of the
Competition Act, 2002 dealing with abuse of dominance. On hearing the evidence, the

CCI pronounced DLF Limited (DLF) guilty for grossly abusing its dominant market
position in the relevant real estate market to impose unfair sale conditions for
apartments in the Belaire complex. DLF incurred a penalty of INR 6,300 million (7%
of DLFs average turnover for the last three financial years) and a cease and desist
order was issued against them as well.

1. FACTS OF THE CASE:


DLF announced the launch of a Housing Complex, named Belaire comprising five
multi-storied residential buildings to be constructed in DLF City, Gurgaon, Haryana.
In its initial plan, DLF designed five multi-storied buildings, which would consist of
only 19 floors with a total of 368 apartments to be constructed within a period of 36
months. However, in place of 19 floors with 368 apartments, which was the basis of
the apartment allottees booking their respective apartments, 29 floors had been
constructed. Also, DLF even imposed highly arbitrary, unfair and unreasonable
conditions on the owners of apartments in the complex in their buyer agreements.
These unfair conditions were brought to the notice of the CCI by the Belaire Owners
Association against DLF Ltd., And, with this unlawful authorization for the foregoing
construction was also brought to the notice of the CCI simultaneously against
Haryana Urban Development Authority and Department of Town and Country
Planning, State of Haryana.

The CCI analyzed this information, and on review held that a prima facie case of
abuse of dominance existed and requested the Director General (DG) to conduct
further investigation. DLF immediately challenged the CCIs jurisdiction, but dropped
the matter subsequently. The DG conducted an in-depth investigation and discovered
that the conditions imposed by DLF did indeed violate the Competition Act. So,
before analyzing the DGs report and the issues involved in this case in general, it is
imperative to have a glance of the allegations made against the defendants in the
present case by the Belaire Owners Association.

2. ALLEGATIONS OF THE INFORMANT:


2.1. AGAINST DLF LTD.
The informant (Belaire Owners Association) in this case contended that DLF
Ltd had abused its dominant position and inflicted several unfair, unreasonable
and arbitrary terms of contract on the apartment allottees of the Group
Housing Complex, the Belaire, which has serious adverse effects and
ramifications on the rights of the allottees. In specific, the informant has
pointed out the following points in support of the contention that DLF had
abused its dominant position:
A. In its initial plan, DLF designed five multi-storied buildings, consisting of
only 19 floors with a total of 368 apartments to be constructed within a
period of 36 months. However, in place of 19 floors with 368 apartments,
which was the basis of the apartment allottees booking their respective
apartments, 29 floors had been constructed, without consulting the

allottees. Consequently, resulting into abnormal delay of the project and


fall-out of the delay being huge financial losses that had to be bore by the
apartment allottees. Plus, on one hand, their hard earned money was
blocked and on the other hand, they had to wait indefinitely to get
occupancy of their apartments.
B. The informant has submitted that while payment schedule was revised
based upon the increase in the number of floors, there was no
proportionate reduction in the price to be paid by the existing allottees
whose rates were calculated purely on the basis of 19 floors and the land
beneath it although their rights/entitlements of the common areas and
facilities substantially got compressed due to increase in number of floors
and additional apartments, which is in violation of the provisions of the
Haryana Apartment Ownership Act, 1983, more particularly, Sections 6(2)
which says that the common areas and facilities expressed in the
declaration shall have a permanent character and without the express
consent of the apartment Owners, the common areas and facilities can
never be altered and Section 13 which makes it mandatory that the floor
plans of the building have to be registered under the Indian Registration
Act, 1908.
C. Further, neither before coming up with the Project nor after the Agreement,
it was mentioned that the Layout Plan for the Building was not
placed/gotten approved by the Department of Town and Country Planning,
State of Haryana (Opposite Party 3). Thus, the quintessential fact was
concealed by the DLF Ltd. and money was procured by keeping the buyers
under the garb of adorned agreement.
D. DLF had conferred on itself the exclusive right to reject and refuse to
execute any Apartment Buyers Agreement without assigning any reason,
cause or explanation to the intending allottee for doing so. It could further
carry out any changes in the layout plan for which the consent of the
allottee shall not be a necessity and if any amount is liable to be returned
in respect of preferential location charges to the allottees on account of
such change, it would not be refunded but adjusted in the last installment
without any interest. Plus, apartment allottee would not even be permitted
to carry out any investigation and would not be entitled to raise any
objection to the competency of DLF Ltd.
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E. Time is made of essence with respect to the payment obligations of the


allottee but not the performance of DLF, more particularly, handing over
the physical possession of the apartment to the apartment allottee.
F. In case of failure by DLF to deliver the possession, the allottee is obligated
to give a notice to terminate the agreement. DLF is not bound to refund the
money but gets the right to sell the apartment and only thereafter repay the
amount.
G. Theres serious encroachment on rights of the apartment allottees as
although both the land beneath the building and the super areas of the
building have been paid by the apartment allottees and for all practical
purposes these areas belong to the apartment allottees, yet DLF Ltd.
unilaterally has reserved to itself the right to mortgage/create lien and
thereby raise finance/loan. In case of non-payment, the allottee becomes
the direct sufferer.
H. It has further been submitted by the informant that clause 35 brings to the
fore the arbitrary mis-match between the buyer and seller, whereby the
apartment allottee has been foist with the liability to pay exorbitant rate of
interest in case the allottee fails to pay the instalment in due time i.e. 15%
for the first 90 days and 18% after 90 days. When this lop-sided provision
is compared to clause 11.4 the unfairness of the agreement is amply
demonstrated as DLF Ltd. would pay only Rs. 5/- sq. ft. to the allottee for
per month delay, i.e. 1% per annum.
I. Between the date of booking and the date of execution of the ABA, the
allotee had already paid amounts to the tune of Rs 85 lakhs without
knowledge of the unfair terms that would be included in the ABA.
Thereafter, there was delay in taking the necessary approvals by the
company and before the construction was even started, DLF had around
33% of the consideration in its pocket.
J. It has used its position of strength in dictating the terms by which while
on the one hand it has excluded itself from any obligations and liabilities,
on the other hand it has put the apartment allottees in extremely
disadvantageous conditions.
K. The informant has alleged that the various clauses of the agreement and
the action of DLF Ltd. pursuant thereto are ex-facie unfair and
discriminatory attracting the provisions of Section 4 (2)(a) of Competition

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Act, 2002 and per-se the acts and conduct of DLF are acts of abuse of
dominant position by DLF Ltd.
2.2. AGAINST GOVT. AGENCIES
The informant also alleged that various Government and statutory authorities
have allotted land and given licenses, permissions and clearances to DLF Ltd.
when it is ex-facie clear that DLF Ltd. has violated the provisions of various
Statutes including Haryana Apartment Ownership Act, 1983, the Punjab
Scheduled Roads and Controlled Areas (Restriction of Unregulated
Development) Act, 1963 and Haryana Development and Regulation of Urban
Areas Rules, 1976.

3. SUBMISSIONS BY DLF LTD.:


A. That the basic terms and conditions between the company; and allottees were
agreed to, prior to the coming in to force of Section 4 of the Competition Act
(20.05.2009). The said Act is prospective and not retrospective. Further, prior
to 20.05.2009, there was no legally recognized concept of a company having a
dominant position. This concept is introduced by Section 4 as defined in
Explanation (a) thereof. As such, even if a company can be said to have a
dominant position, such position would only be on or after 20.05.2009.
B. DLF contended that as sale of an apartment can neither be termed as sale of
goods nor sale of service, section 4(2)(a)(ii) is not relevant and applicable in
the present case because it can be invoked only when there is purchase or sale
of either goods or service.
C. The conditions included in the agreement are usual conditions as per
industry practice and thus cannot be said to have been imposed by abuse of
dominant position. It is necessary to incorporate such clauses in order to
remain competitive. Such agreement is fully protected under the explanation
to subsection 2(a) of Section 4 of the Act.
D. That mere mention in reports that a company is a leading company or that it

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enjoys a Dominant Position does not by itself prove that the enterprise
enjoys a dominant position in the alleged relevant market.
E. DLF Ltd. has further stated that since there are a large number of players in
Gurgaon, there is intense competition in the market and therefore no one
enterprise can be said to enjoy a dominant position within the meaning of
Explanation (a) to Section 4.
F. DLF Ltd. has also contended that the data relied upon by DG for determining
dominance while analyzing factors mentioned in Section 19(4) are incomplete,
not authentic and therefore not reliable. No conclusion can be drawn based
upon such data.
G. On the issue of exit option, DLF Ltd. has contended that DG has proceeded on
assumption that whenever an apartment is booked, an exit option must be
provided, although there is neither any such requirement of law nor is it the
industry practice.
4. KEY ISSUES INVOLVED IN THE CASE:
The DG conducted an in-depth investigation of various allegations made in the
information. Using the DGs report, the CCI framed the following four issues and
dealt with them as stated hereinafter:
4.1. Applicability of provisions of Competition Act, 2002 to the facts and
circumstances of the instant caseThe Commission held that section 4 of the Competition Act is relevant and
applicable in the present case. It said that if DLF acts under the clauses of the
agreement, which are now prohibited by the Act, such action can certainly be
examined under the relevant provisions of the Act even though the agreements
were entered between the DLF and the allottees before 20.05.2009 1. The
commission substantiated the above view by mentioning the clarifications
made under Kingfisher Airline Ltd. & Anr. Vs. CCI & Ors.2 as follows:
The question here is whether this agreement, which was valid until coming
1 Section 4 of the Act came into force.
2 W.P. No. 1785 of 2010, High Court of Bombay

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into force of the Act, would continue to be so valid even after the operation of
the law. The parties as on today certainly propose to act upon that agreement.
All acts done in pursuance of the agreement before the Act came into force
would be valid and cannot be questioned. But if the parties went to perform
certain things in pursuance of the agreement, which are now prohibited by
law, would certainly be an illegality and such an agreement by its nature,
therefore, would, from that time, be opposed to the public policy. We would
say that the Act could have been treated as operating retrospectively, had the
act rendered the agreement void ab initio and would render anything done
pursuant to it as invalid. The Act does not say so. It is because the parties still
want to act upon the agreement even after coming into force of the Act that
difficulty arises. If the parties treat the agreement as still continuing and
subsisting even after coming into force of the Act, which prohibits an
agreement of such nature, such an agreement cannot be said to be valid from
the date of the coming into force of the Act. If the law cannot be applied to the
existing agreement, the very purpose of the implementation of the public
policy would be defeated. Any and every person may set up an agreement said
to be entered into prior to the coming into force of the Act and then claim
immunity from the application of the Act, such thing would be absurd, illogical
and illegal. The moment the Act comes into force, it brings into its sweep all
existing agreements.
Thus, the Act applies to all the existing agreements and covers those also
which though entered into prior to the coming into force of section 4 but
sought to be acted upon afterwards.
Further, the commission held that sale of an apartment can be termed as sale
of service and therefore section 4(2)(a)(ii) is relevant and applicable in the
present case because it can be invoked purchase or sale of either goods or
service. It stated that dealing in real estate or housing construction has always
been taken as service whether it be MRTP Act3 or Consumer Protection Act4 or
Finance Act. Also, a plain reading of section 2(u) of the competition Act
makes it abundantly clear that the activities of DLF in context of the present
3 Section 2(r) of the MRTP Act.
4 Section 2(o) of the Consumer Protection Act.
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matter squarely falls within the ambit of term service. To substantiate on this
Commission relied upon several Supreme Court cases5.
In addition to this, in terms of the section 4 the responsibility of the dominant
player has been made more onerous so, the contention of the DLF that the
impugned clauses existing in the agreement entered between DLF and the
allottees are usual conditions as per industry practice does not hold any
validity. And if such practices are also adopted by a non-dominant player it
may not fall within the ambit of section 4.

4.2. Determination of Relevant MarketSection 4 states that there is an abuse of dominant position if an enterprise or a
group uses its dominant position in one relevant market to enter into, or
protect, other relevant market6. So, before ascertaining dominance or abuse of
dominance it is imperative to identify the Relevant Market in the instant
scenario. And, section 19(5) states that for determining whether a market
constitutes a relevant market, Commission shall pay a due regard to the
relevant geographic market and relevant product market.
Now, in the present case the commission held that a relevant market 7 is
delineated on the basis of a distinct product or service market8 and a distinct
geographic market9.
A. Relevant Service or Relevant Product MarketThe characteristics of a relevant product market has been given under
section 19(7) of the Act. In the instant case, the CCI referred to the DG report,
which described the DLFs services as services provided by real estate
developers for high-end residential building in Gurgaon to say that while
5 Chandigarh Housing Board Vs. Avtar Singh and Ors (III (2007) CPJ 387 NC); Lucknow
Development Authority Vs. M.K.Gupta (1994 SCC (1) 243)
6 Section 4(2) (e) of the Competition Act, 2002
7 Section 2(r) of the Competition Act, 2002
8 Section 2(t) of the Competition Act, 2002
9 Section 2(s) of the Competition Act, 2002

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no cast-iron rule can be applied to determine what constitutes high-end, it is


not a function of size alone but incorporates size, reputation of location,
characteristics of neighbors, quality of construction, customers capacity and
willingness to pay that go into considering a dwelling unit as high- end or
otherwise. It is also noted that the promotional brochures of the property
talked about innumerable additional facilities, like, schools, shops and
commercial spaces within the complex, club, dispensary, health centre, sports
and recreational facilities, etc. These features, along with the cost-range
mentioned earlier, may be broadly considered to define the characteristics of
high-end residential accommodation.

B. Relevant Geographical MarketOn the issue of relevant geographic market, In terms of section 2(s) of the Act,
condition of competition for the services provided by competitors should be
distinctly homogeneous and can be distinguished from the conditions
prevailing in neighbouring areas. The Commission took into consideration
factors such as local specification requirements and consumer preferences
given as determining factors in section 19(6) of the Act. Based on the facts of
the case, Gurgaon is seen to be the relevant geographic market. CCI also stated
that a decision to purchase a high- end apartment in Gurgaon is not easily
substitutable by a decision to purchase a similar apartment in any other
geographical location. Thus the Commission was of the view that Gurgaon is
known to posses certain unique geographical characteristics such as its
proximity to Delhi, proximity to airports and a distinct brand image as a
destination for upwardly mobile families.
Thus, it was held that high end residential apartments in Gurgaon constitute
the relevant market.
4.3. Determination of Dominant Position-

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The Explanation (a) to section 4 very clearly defines dominant position as a


position of strength. This strength should enable the enterprise to operate
independently of competitive forces prevailing in the relevant market or to
affect its competitors or consumers or the relevant market in its favour.10
The evaluation of this strength is to be done not merely on the basis of the
market share of the enterprise in the relevant market but on the basis of a host
of stipulated factors such as size and importance of competitors, economic
power of the enterprise, entry barriers etc. as mentioned in Section 19 (4) of
the Act. This wide spectrum of factors provided in the section indicates that
the Commission is required to take a very holistic and pragmatic approach
while inquiring whether an enterprise enjoys a dominant position before
arriving at a conclusion based upon such inquiry.
Consequently, the commission came to the finding that due to the sheer size
and resources, market share and economic advantage of DLF over its
competitors, DLF is not sufficiently constrained by other players operating on
the market and has got a significant position of strength by virtue of which it
can operate independently of competitive forces (restraints) and can also
influence consumers in its favour in the relevant market in terms of
explanation to Section 4 of the Act. Economies of scale, resources, and the fact
of it being in business since last sixty years in the relevant market is also
giving it a distinct advantage over the other players in the market. DLF has
built a brand over the years, which affects the consumers in its favour. It was
held that DLF had the highest market share (45%), vis-a-vis the market share
of the nearest competitor (19%) which was more than twice of its competitor,
leading to hardly any competitive constraints. Further, DLF had a clear early
mover's advantage and occupies a leadership position as real estate is a sector
with natural entry barriers due to high cost of land and brand value of
incumbent market leaders. Thus, it is established that DLF is the dominant
player in the market.
4.4. Determination of Abuse of Dominance10

HoffmannLa
uri=CELEX:61976CJ0085

Roche

Case,

http://eur-lex.europa.eu/legal-content/EN/TXT/?

17

After considering the various factors and replies from the parties
concerned, CCI held that DLF Ltd. has contravened the section 4 (2) (a)
(i) of the Act by directly or indirectly, imposing unfair or discriminatory
condition in sale of services, as mentioned below:

Commencement of project without sanction/ approval of the projects

Increase in number of floors mid-way

Increasing of Floor Area Ratio (FAR) and Density Per Acre (DPA)

Inordinate delay in completion and possession and forfeiture of amounts

Clauses of the agreements are heavily biased in favour of DLF Ltd. and
against the consumers.
The following are the sixteen clauses in the Apartment Buyers Agreement
which were considered to be unfair by the Commission:

A. Unilateral changes in agreement and supersession of terms by DLF without


any right to the allottees.
B. DLFs right to change the layout plan without consent of allottees.
C. Discretion of DLF to change inter se areas for different uses like residential,
commercial etc. without even informing allottees.
D. Preferential location charges paid up-front, but when the allottee does not get
the location, he only gets the refund/adjustment of amount at the time of last
installment, that too without any interest.
E. DLF enjoys unilateral right to increase / decrease super area at its sole
discretion without consulting allottees who nevertheless are bound to pay
additional amount or accept reduction in area.
F. Proportion of land on which apartment is situated on which allottees would
have ownership rights shall be decided by DLF at its sole discretion.
(evidently with no commitment to follow the established principles in this
regard)
G. DLF continues to enjoy full rights on the community buildings / sites /
recreational and sporting activities including maintenance, with the allottees
having no rights in this regard.
H. DLF has sole discretion to link one project to other projects, with consequent

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impact on ambience and quality of living, with the allottees having no right to
object.
I. Allottees liable to pay external development charges, without there being
disclosed in advance and even if these are enhanced.
J. Total discretion of DLF regarding arrangement for power supply and rates
levied for the same.
K. Arbitrary forfeiture of amounts paid by the allottees in many situations.
L. Allottees have no exit option except when DLF fails to deliver possession
within agreed time, but even in that event he gets his money refunded without
interest only after sale of said apartment by DLF to someone else.
M. DLF has sole authority to make additions / alterations in the buildings, with all
the benefits flowing to DLF, with the allottees having no say in this regard.
N. Third party rights created without allottees consent, to the detriment of
allottees interests.
O. Punitive penalty for default by allottees, insignificant penalty for DLFs
default.
P. DLFs exit clause gives them full discretion, including abandoning the project,
without any penalty.
Thus, clearly there was abuse of dominance by the DLF Ltd. in the present
case and that DLF Ltd. is in contravention of section 4 (2) (a) (i) of the
Competition Act.
5. DECISION OF THE COMMISSION AND PENALTY IMPOSEDCCI after considering the above alleged abuses by DLF Ltd. and coming to the
finality and conclusion of its validity imposed a penalty of a 630 Crores or INR
6.3 billion (USD 132 Million) on DLF, which is calculated on the basis of 7
percent of the average of the turnover of the Group for the last three years. CCI
has also directed DLF to 'cease and desist' from formulating and imposing such
unfair conditions in its agreements with buyers in Gurgaon and to suitably modify
unfair conditions imposed on its buyers within 3 months of the date of receipt of
the order.
6.

APPEAL

BEFORE

COMPETITION

APPELLATE

TRIBUNAL

(COMPAT)
DLF challenged the CCI order before COMPAT which granted stay order against
the CCI order of imposing penalty under section 27 (b) of the Act subject to DLF

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furnishing an undertaking to pay 9% interest on the amount of penalty to be


determined by COMPAT for the period from the date of order by CCI till the date
of payment by DLF. Further, COMPAT ordered that the directions of CCI for
modifications of terms of the Agreement shall remain in abeyance. However, the
direction of CCI to "cease and desist" with the implementation of the Agreement
was not stayed. As per the COMPAT remand, both the parties submitted the
modified terms and conditions before CCI. The CCI after hearing both the parties,
has modified the standard terms and conditions of the flat buyers agreement in its
simple meaning order with deleting nearly 16 clauses from the agreements. This
modified agreement order by CCI was again challenged by the DLF in COMPAT.
Accordingly, in January 2013, the CCI modified the standard terms and conditions
of the flat buyers agreement in a detailed order which raised a number of
legitimate concerns in the real estate sector as to whether the terms and conditions
suggested by the CCI would apply to all builders flats with regard to the
respective flat buyer agreements. On May 19, 2014, in a landmark order 11, the
COMPAT upheld the order of the CCI imposing a record penalty of INR 630
crores (USD 140 million) on DLF Limited for abusing its dominant position.
The COMPAT observed that the Competition Law must be read in the light of the
philosophy of the Constitution of India, which has concern for the consumers and
the dominant player in the market has a special duty to be within the four corners
of law.

7. ANALYSISThe Order sends a strong signal to both the real estate industry and the state-level
government authorities, and may even expedite the process of establishing a realestate regulator by the new government.
The COMPAT Order assumes significance because, firstly, it is one of the initial cases
of the CCI and COMPAT which dealt with exploitative nature of abuse (exploiting
customers) as the jurisprudence on abuse of dominant position mainly centered on the
11 http://compat.nic.in/upload/PDFs/mayordersApp2014/19_05_14.pdf

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exclusionary abuses like price predation or refusal to deal etc., resulting in the
exclusion of a competitor from the market. Secondly, the COMPAT recognizes the
principle of special responsibility of a dominant enterprise. This principle had been
laid down by European Court of Justice in the Michelin case12 in 1983. It means that a
firm in a dominant position has a special responsibility not to allow its conduct to
impair undistorted competition on the market. Thirdly, COMPAT confirmed the
approach of the CCI on penalty, unlike the cases in the past where COMPAT has
substantially reduced the penalty imposed by the CCI.
At present, the CCI is investigating more than 70 real-estate companies for alleged
cartelization. In the wake of the COMPAT Order, the real estate industry must agree to
voluntarily commit itself to ensuring the highest standards of competition law
compliance within the sector by adhering to the principles of fair competition in all of
its business practices. In this regard, Apex Builders Associations like CREDAI can
play a vital role in sensitizing their member builders on the benefits of competition
compliance. In many other countries, responsible builders associations prescribe
standard pro-forma contracts that are less skewed. It is time that real-estate developers
fastened their best practices to responsible compliance with the Competition Act13.

12 http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:61981CJ0322
13 http://indialawjournal.com/volume7/issue-1/article5.html
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CONCLUSION
The crucial point to be seen in this regard is the overlapping of the
jurisdictions of the CCI and consumer forums14. Mostly, the allegations that
the Apartment buyers are putting forward are in the nature of mere consumer
disputes. Though the preamble of the Competition Act, 2002 reads in its ambit
the protection of consumers interest also, it cannot overtake the role of the
consumer forums. Many consumers have regarded the DLF judgment as their
protector and have approached the CCI. It is further pertinent to point out that
the abuse of dominant position provisions can be applied against an enterprise
only when it is first dominant. It is due to these reasons that in a majority of
cases the CCI has held that there is no prima facie case and left the option
open to the consumers to approach an appropriate forum.
CREDAI must embark on the responsibility of ensuring that the developers do
not try to become larger than the competitive forces in the market. Specifically
after a case like DLF has come before everyone, it is expected that the
association must take a proactive step to ensure the code of conduct laid down
by it is followed and any violations should be seen strictly.
The practices in the real estate sector relating to the practice of making
standard form contracts containing unfair and discriminatory terms should be
checked so that competition in the market is not harmed. Delays in the projects
and changes in the layout without the consent of the buyer should be also
checked. It is hoped that most of the concerns will come to an end when the
Real Estate Regulator is brought in and starts functioning.

14 Emerging Trends in Real Estate, Grant Thornton-CII Report 2012.


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REFERENCES
ACTSCompetition Act, 2002
JOURNALS/ARTICLESMM Sharma and Vaibhav Choukse, Impact of Competition Law on
Indian Real Estate Sector: An analysis of Order against DLF, 2012
CompLR B-111.
Shobhit Ahuja and Nakul Bajpai, A Review of Competition Issues In
Real Estate Sector: An Analysis of Post Position DLF case, 2007 ILJ
7-5
WEBSITEScci.gov.in
nujssitc.wordpress.com

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