Anti-competitive practices top complaints against realty players

Anti-competitive practices and abuse of dominance top the list of complaints filed by consumers against real estate players with the Competition Commission of India (CCI).

As much as 150 cases have so far come to the fair trade regulator pertaining to the same, say sources.

While competition lawyers say the practice is on the rise due to rising consumer rights awareness, real estate players say such cases stem largely from consumer dissatisfaction.

Some of the key real estate players taken to the regulator are DLF, BPTP, Ansal, Eldeco, DDA, Jai Prakash Associates, Supertech, Hiranadani and Omaxe.

In the past six months alone, the CCI has dismissed over 10 complaints against real estate companies. In some cases, it has also ordered a Director-General probe.

While ‘biased’ builder-buyer agreement topped the list of complaints, delay in execution and delivery came a close second.

A DLF official said such complaints largely stem from dissatisfaction of consumers rather than biased buyer-seller agreements. Incidentally, DLF was once imposed a penalty of ₹630 crore by the CCI for anti-competitive practice. “Till now, the real estate market was biased in favour of the realtors. There was no effective redress mechanism for the aggrieved consumers. With the DLF matter, the CCI has demonstrated that it has the power and the willingness to provide relief to the consumers. Consequently, more and more consumers are approaching it to redress their alleged grievances,” says Gautam Shahi, senior associate at J Sagar Associates.

While an escrow account is mandatory for most real estate players before starting a project, only a handful of them actually open such an account.

The CCI is still working on the model framework for commercial agreements between real estate developers and property buyers. The regulator expects the framework to be a benchmark for the industry. But Shahi says agreement may have limited impact on the real estate market.

“The real estate market in India is characterised by ‘collective dominance’, with almost all realtors incorporating biased abusive clauses in their builder-buyer agreements. However, the CCI’s model agreement can be enforced only on a single dominant player in any relevant market,” he said.

“This is because the Competition Act, 2002, as interpreted by the CCI and COMPAT (Competition Appellate Tribunal), does not recognise the concept of ‘collective dominance’ which is widely accepted in other jurisdictions. One may see a significant change in the real estate environment if the concept of ‘collective dominance’ is either incorporated into the Competition Act, 2002 by an amendment, or read into it by interpretation,” he added.

COMMENT NOW