Competition Commission's Penalty on DLF and Likely Effects on Indian Real Estate Industry

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Case Details:

Case Code : BECG120
Case Length : 13 Pages
Period : 2011
Organization : DLF
Pub Date : 2012
Teaching Note : Available
Countries : India
Industry : Real Estate

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In what was expected to have a major impact on the Indian real estate industry, the Competition Commission of India (CCI)¹ imposed a penalty of Rs. 6300 million (US$1 equaled approximately Rs. 52 in late 2011) on DLF, the largest realty firm in the country, in August 2011 after finding it guilty of abusing its dominant position².

The Belaire Owners' Association (BOA), representing the apartment buyers of The Belaire Housing Complex, had filed a case against DLF, the builder of the complex with the CCI on May 5, 2010. BOA alleged that DLF had incorporated one-sided conditions in the sale agreement using its dominant position, and also that it had failed to complete the project within the promised time frame.³

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Though DLF appealed against the CCI order in the Competition Appellate Tribunal, analysts opined that the CCI verdict would have a major impact on the Indian real estate industry as this was the first instance of an owners' association approaching the CCI. A judgment in the BOA's favor would encourage many other owners' associations to approach the courts on similar grounds as dishonoring delivery schedules was a common practice among real estate companies in India.⁴

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1] The Competition Commission of India was established under the Competition Act, 2002, to ensure fair and healthy competition in economic activities and to implement the competition policies to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers, and to ensure freedom of trade carried on by other participants in markets in India.
2] Dilasha Seth and Nivedita Mookerji, "Verdict May Open Pandora's Box in Real Estate Sector," www.business-standard.com, August 18, 2011.
3] Dilasha Seth and Nivedita Mookerji, "Verdict May Open Pandora's Box in Real Estate Sector," www.business-standard.com, August 18, 2011.
4] Dilasha Seth and Nivedita Mookerji, "Verdict May Open Pandora's Box in Real Estate Sector," www.business-standard.com, August 18, 2011.

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