The Competition Commission of India (CCI) is reported to have zeroed in around 70 real estate developers around the country, including Unitech, Parsvnath Developers, and Omaxe for investigation against entering into one-sided agreements with buyers and for allegedly colluding with each other to arm-twist them.
The competition watchdog has over the past few months sent out notices to many of these builders, asking them to furnish details about their operations and their agreements with buyers.
The CCI has asked the Director-General to investigate a number of practices that real estate developers follow, such as announcing projects before getting all approvals from authorities and not revealing all applicable costs to buyers at the time of purchase, according to a CCI official who didn’t want to be quoted.
It will also look into one-sided clauses through which a developer can delay completion of projects, increase or decrease the size of apartments, and change building plans mid-way through projects.
If the Competition Commission finds the developers guilty of having framed unfair agreements, it can impose heavy fines on them. Last year, it had imposed a penalty of Rs 630 crore on DLF, the country’s largest real estate company, for misusing its dominant position in Gurgaon and forcing buyers to enter into one-sided contracts in three projects. DLF is contesting this fine at the Competition Appellate Tribunal.
The current round of investigations was kicked off when CCI got a complaint against NCR-based developer Tulip Infratech. The commission decided to expand the scope of the investigation to look at wider practices across the industry and has sent legal notices to developers in the NCR. It now plans to include developers in the western region in its scrutiny.
The CCI official said the commission has got close to 200 complaints against real estate developers in the last one year, with many of them pertaining to agreements and delays in delivery of properties.
