The country’s competition regulator is planning to initiate an investigation next week to find whether the practices for which it fined DLF Rs.630 crore on Tuesday are the norm at other real estate companies too.
“We are considering suo motu action (acting without a complaint) against other real estate companies. We will meet next week and decide,” “a source in the Competition Commission of India (CCI) said.
Under the Competition Act, as per this source, the CCI can initiate action by itself, as opposed to acting on a complaint, if it comes across an “industry practice” that harms consumer interests. If the regulator does initiate action and finds more companies guilty, it could levy penalties similar to that imposed on DLF — 7% of average turnover for the last three years.
However, the real estate fraternity believes the Rs.630-crore penalty imposed by the Competition Commission of India (CCI) on DLF Ltd may open a Pandora’s Box for the real estate industry.
“There are so many projects where real estate developers have not delivered (as promised),” an industry representative reasoned.
“Since there is no regulator in the sector, everyone wants to regulate us, right from the local police to the government officials and the CCI,” said a realtor requesting anonymity.
Another industry representative said it would be speculative to comment on whether penalty should be imposed on other developers for similar violations. “The sentiment has been shaky in general and this would only add to the woes of the sector,” he said.
However, an industry source argued these practices (violations in realty projects) were rampant in India. “This (the CCI penalty on DLF) should be an example that customers should not be taken for a ride,” he said. “At least, someone has finally acted on these practices.”
An analyst emphasised the need for transparency to set things right in the real estate sector, which is already reeling under the pressure of high interest rates, soaring input prices and falling net profits.
CCI imposed the penalty on DLF, India’s largest real estate company, for unfair trade practices, abuse of market dominance and disregard to consumer rights. According to the complainant, the Belaire project in Gurgaon was to be completed by 2009. But it has not been handed over yet. Besides, there were structural changes in the building without informing the buyers, according to the complaint.
