Competition Commission orders fresh probe against DLF

The Competition Commission has ordered a fresh probe against DLF Ltd with regard to alleged abuse of its dominant market position, after it found the realty major prima facie in violation of fair trade norms in a new case.

The case relates to development and sale of residential units in Gurgaon by the company's largest real estate player.

There were no immediate comments from the company on the CCI order directing a detailed probe by its Director General against DLF and DLF New Gurgaon Homes Developers, which has been amalgamated with another DLF subsidiary, DLF Home Developers Limited.

In the past also, DLF has come under the scanner of Competition Commission, which slapped a hefty penalty of Rs 630 crore on the realty firm for violating fair trade norms in 2011. The penalty was challenged by DLF before the Competition Appellate Tribunal, which upheld CCI order and the company has gone to the Supreme Court.

Ordering the fresh probe, the Commission said that "prima facie" the conduct of DLF and DLF New Gurgaon Homes Developers appeared to be in contravention of competition norms.

In case, violations are found, the Commission has also directed the DG to probe the "role (if any) of the persons who were in charge of and were responsible for the conduct of the businesses".

DG is the investigation arm of the fair trade watchdog. The case pertains to alleged one-sided clauses in the buyer's agreement with respect to apartments in the residential township 'Regal Gardens at DLF Garden City' in Gurgaon.

Noting that it has already held DLF to be dominant in the geographic market of Gurgaon, the Commission in its latest order said that such cases were related to agreement with buyers during the period from 2007 to 2010.

"Thus, opposite parties (DLF and DLF New Gurgaon Homes Developers) as a group, appears to be in a dominant position in the relevant market... Some of the terms of the 'Agreement' seems onerous and one-sided and clearly depicts how opposite party 2 (DLF New Gurgaon Homes Developers) has misused its dominant position to mould the impugned clauses of the 'Agreement' in its favour," the order, dated February 4, released today said.

The 'service of mid-tier residential accommodation in upscale self-contained township in Gurgaon' has been considered as the relevant market for the case.

"In any case, since the conclusion on dominance does not seem to change in the present case irrespective of delineation of alternative relevant market definitions, the Commission considers it inappropriate to segregate the market into high-end/middle end, mid-tier etc. at this prima facie stage," the order said.

DLF had over 94 per cent stake in DLF New Gurgaon Homes Developers. The latter was then amalgamated with DLF Home Developers Ltd, a wholly-owned subsidiary of the realty major.

According to the Commission, any reference to DLF New Gurgaon Homes Developers would necessarily be construed as referring to DLF Home Developers also.