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The Competition Commission of India's observations on DLF-Belaire dispute may be a scathing indictment of the anti-consumer practices followed by many real estate developers. But, at the same time, the order is unlikely to open the watchdog's doors wide enough for all aggrieved home buyers.
CCI's ambit is restricted to instances where any dominant market player uses his dominance to impose unfair terms and conditions on consumers, say competition law experts.
Terming the CCI's decision as “landmark”, Mr Vinod Dhall, former acting Chairman of CCI, said that the order demonstrated the commission's willingness to exercise its powers in the interest of maintaining competition and consumer welfare.
“Real estate sector was waiting to get some kind of discipline…But this does not mean that CCI has become a consumer court. Both have different roles. CCI's role comes in only where competition is affected,” he said. In the DLF case, for instance, CCI has established that the market of the builder's dominance was high-end apartments in Gurgaon.
Terms and conditions
Mr Samir R. Gandhi, partner at Economic Laws Practice, said “it is not as if every customer buying a house can rush to the CCI against unfair terms and conditions imposed by any developer…They can challenge such unfair conditions only if the party imposing the condition is a dominant player and if such terms and conditions constitute an abuse of a dominant position.”
But, the order is a scathing indictment of the anti-consumer practices prevailing in the property market, he pointed out. Specifically, CCI has flagged issues that ail the sector — of project launch advertisements that precede actual land acquisition and approvals, non-disclosure of total area of flats, carpet area and utility area to buyers, hidden costs, and delay in project execution, among others.
“…the commission makes a strong recommendation to Central and State Governments to come out with real estate regulation at the earliest…to discourage unfair practices that seem prevalent in the sector,” the DLF order said.
The former Director-General at CCI, Mr K.K. Sharma, said the fact that the commission had examined the case with regard to dominance of the player and went on to find an abuse, is likely to “send a strong signal to the real estate market”.
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