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

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Lack of Transparency Though the sector was said to be booming with all favorable policies and developments, it had its own share of troubles. Lack of transparency was the main hurdle for the development of the real estate sector in India. Transparency was a key factor in any real estate market as it was believed to improve the efficiencies in the system and benefit the stakeholders, mainly buyers... History of DLF DLF Limited, a public limited Company, was founded in 1946 through the incorporation of Raisina Cold Storage and Ice Company Private Limited and Delhi Land and Finance Private Limited.

Delhi Land and Finance Private Limited and Raisina Cold Storage and Ice Company Private Limited along with another DLF Group company, DLF Housing and Construction Private Limited, merged with DLF United Private Limited on September 30, 1970. DLF United Limited merged with another company, then known as American Universal Electric (India) Limited, on October 1, 1978, under a scheme of amalgamation sanctioned by the Delhi High Court and the Punjab and Haryana High Court...

The BOA represented the buyers of the residential flats in 'The Belaire Housing Complex' project situated in DLF City, Phase-V, Gurgaon, 14 km from the Indira Gandhi International Airport, New Delhi. 'The Belaire', consisting of a total of 368 apartments, was begun in 2006 with five multi-storied residential buildings each containing 19-20 floors. When the project began, DLF announced that it would be completed in 36 months i.e., by 2009..

DLF denied the BOA's allegations and said that it did not have a dominant position in the market and that there were also competitors existing in the market. It argued that the clauses in the agreement were not unusual and that these were the common practices in the industry...

On investigating, the DG found that DLF had the highest market share among all companies in the relevant market and for 2007-08 and 2008-09, it was 70% and 65% respectively. DLF enjoyed about 50% of share in the relevant market in the year 2009-10. Along with highest market share, DLF also enjoyed a clear advantage over other players in terms of size, resources, and economic power, the DG stated...

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