CCI rejects Chennai housing association plea against DLF

| | Updated on: Nov 30, 2012

Competition Commission has rejected a complaint of alleged abuse of market dominance against real estate major DLF, related to a housing project in Chennai.

The fair trade regulator Competition Commission of India has said there is no prima facie evidence to show that DLF abused its market position regarding the Chennai project.

Chennai-based DGCOM Buyers & Owners Association had moved the Commission alleging abuse of dominant market position by DLF.

The complaint was filed against DLF Ltd, New Delhi (Opposition Party 1), and DLF Southern Homes Pvt Ltd, Chennai (Opposition Party 2).

The complaint related to the housing project, developed by DLF Southern Homes Pvt Ltd, is situated at Old Mahabalipuram Road (OMR), IT Express Corridor, Chennai.

Dismissing the plea, the Commission said proceedings have been closed under “Section 26(2) of the (Competition) Act“.

Under this Section, the regulator can close a case if it does not find any prima facie evidence to proceed further.

“ ...We find that no prima facie case was made out by informant to hold OP2 or the group of OP1 and OP2 as dominant in the relevant market of providing 2/3 BHK flats on OMR IT Corridor,” the order said in an order dated November 27.

The association had alleged that after nearly 18 months from bookings the flats and after paying crores of rupees, DLF “asked the allottees to sign an agreement which contained highly abusive clauses”.

DLF holds 51 per cent stake in DLF Southern Homes.

As per the informant, the developer scored an edge over other competitors by pegging the price at Rs 2,800 per sq ft against prevailing market rate of Rs 3,200 per sq ft for similar high rise premium apartments segment.

Slashing the rate, in 2009, DLF offered the apartments at the rate of Rs 2,500 per sq ft for initial customers and Rs 2,550 per sq ft for subsequent customers, according to the order.

The informant sought to establish that DLF Southern Homes was a dominant player in high rise premium apartments in the relevant market of OMR IT Corridor between two toll gates on this corridor.

However, the regulator said the relevant geographic market cannot be confined to the OMR IT corridor.

“ ...the informant’s contention of the geographic market being the OMR IT corridor is not acceptable. Based upon the factors of demand and supply substitutability, the relevant geographic area in this case would be the area comprising the entire geographic area of Chennai city,” the order said.

Data provided by the informant shows that within the OMR IT corridor itself, there were a number of other builders who had launched similar projects in that area, whereas DLF was involved in just one project, the Commission said.

Published on November 30, 2012

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