Realty major DLF has filed a petition with the Competition Appellate Tribunal (COMPAT) against the August 16 order of the Competition Commission of India (CCI) that imposed a fine of Rs.630 crore on the company for “abuse of dominant market position”. The tribunal registered the appeal today and posted the matter for hearing on November 9.
Track2Realty was the first to report that DLF plans to challenge the CCI order before COMPAT. According to sources, the company has challenged the order questioning CCI’s jurisdiction over the issue and its incorrect interpretation of ‘market dominance’. “The transfer of real estate comes under the Transfer of Property Act and not under the Goods and Services Act and is out of CCI purview,” a source close to the company said.
In its 350-page appeal, DLF has sought to counter the competition watchdog’s observations regarding its ‘dominant position’ in Gurgaon. “Market share cannot be determined on the basis of all-India sales figures as reflected in the annual accounts of companies. Taking this as the basis for arriving at DLF’s market share in Gurgaon is flawed,” DLF is learnt to have submitted in its appeal.
The firm says that imposition of fine in relation to its Belaire projects in Gurgaon is a consumer grievance related matter which is not a threat for competition. DLF has also denied engaging in predatory pricing in Gurgaon projects.
The company has also questioned CCI’s definition of dominant position. It has also said that CCI did not issue any show-cause notice before imposing the fine.
The Competition Commission on August 16 this year fined realty major DLF for abusing its dominant position in a project in Gurgaon.
CCI imposed a fine of Rs.630 crore, amounting to 7 per cent of the company’s average turnover of the last 3 years, on a complaint filed by a group of buyers in Belaire, one of DLF’s upmarket residential projects in Gurgaon.
In its order, the CCI has said, “The abuse of dominant position in this case is in respect of the basic necessity of housing. The earlier deliberation on the elements and extent of abuse make it clear that DLF has been grossly abusing its dominant position, and that too against a vulnerable section of consumers, who have little ability to act or organise against such abuse.”
The case started when a group of buyers of DLF’s Belaire project at Gurgaon lodged a complaint with the CCI in 2010, mainly on these grounds.
First was that the company planned to build 19 floors when it entered contract with the buyers, but changed plan mid-way to 29 floors without adequate permissions.
The second was that the company planned to develop 384 units but arbitrarily raised this number to 564. All this resulted in delays. With the project yet to be completed, DLF is yet to pay any penalty to the consumers on account of delay in possession.
