DLF is planning to move the Competition Appellate Tribunal by early next week, to appeal against the Competition Commission of India’s (CCI) order imposing Rs.630-crore penalty on the firm.
DLF, which is reportedly consulting law firms, is in the process of engaging its counsel. Confirming the company’s move DLF spokesperson Sanjey Roy said, “The company and its subsidiary will be filing an appeal with COMPAT shortly and the company continues to believe that it has a strong case.
Legal experts also believe DLF has got a strong case in hand. Consumer advocate Anand Pathak advices, DLF must challenge it and in all likelihood they will win by definition of market dominance. This is because in legal terms a dominant firm should also be in a position to practice indiscriminate behavior. But in this case DLF is well within its liberty of freedom of contract.”
Pathak feels CCI has used the rules of competition to achieve consumer protection. “I think there is a blurred vision because CCI jurisdiction is on competition whereas consumer protection is a separate subject. So, in the case of DLF, CCI has incorrectly defined real estate as a service with an objective in mind. Its not realistic and a very narrow definition of market. The CCI has done incredible work so far but in this case they have gone down a path of analysis that could be argued as common protection and not competition,” says Pathak.
DLF is expected to defend itself against the observation made by CCI that DLF was the market leader in Gurgaon. Some industry research reports, the company plans to highlight while placing its counter argument, have shown that several realtors had dominated the Gurgaon realty sector through the years.
One such research report has said DLF had the highest market share of overall residential development in Gurgaon in 2008 and 2009 at 11.8 per cent and 11.9 per cent, respectively, but not in 2007, where Unitech had topped the list with 14.71 per cent market share.
In 2010, Emaar MGF had the highest market share of eight per cent and DLF was ranked 20 with 1.64 per cent market share in Gurgaon.
In the luxury residential segment, DLF was the third largest market player in 2007, according to industry estimates for Gurgaon. In 2008, it did not figure anywhere in the list and in 2009, it was ranked fifth.
Belaire Owner’s Association had filed a petition against DLF alleging violations by the builder at the high-end residential complex (Belaire), based on which CCI had imposed a penalty of Rs 630 crore.
While the Belaire association had complained that DLF had increased the number of floors from 19 to 29, experts argued the application form had stated the company intended to increase the number of floors that were not sanctioned by the authority when the agreements with the home buyers were signed.
