DLF, India’s largest real estate company, experienced a temporary relief on 10th November, 2011, when the Competition Appellate Tribunal stayed the Rs. 630-crore penalty imposed upon it by the Competition Commission of India in August, pursuant to complaints regarding abuse of market position by the Company.
Abuse of dominant market position occurs where a firm holds a position of such economic strength that allows it to operate in a market without being significantly affected by competition and it engages in conduct that is likely to impede the development or maintenance of effective competition as well as negatively impact the consumers. The law in India, under section 4 of the Competition Act of 2002 clearly specifies that “no enterprise shall abuse its dominant position”. However, having a dominant position does not in itself breach competition law; it is only the abuse of that position that is prohibited. The section also states that there shall be an abuse of dominant position if an enterprise imposes unfair or discriminatory conditions or prices in the purchase or sale of goods or provision of services.
The DLF case relates to the complaint filed by the Belaire Owners’ Association in Gurgaon in May 2010, in response to DLF having extended the deadline by which the possession of the apartments was to be given to the consumers. They also alleged that the Company had unilaterally changed the building plans and imposed unfair and discriminatory conditions in the apartment agreements. Deciding in favour of consumers, the CCI was of the opinion that that the Apartment Agreements imposed conditions that were unfair and discriminatory towards the consumers and which were altered or included unilaterally by DLF for its own benefit and to the detriment of the allottees. It held that DLF, by placing the discriminatory and abusive clauses in the Apartment Agreements was guilty of abusing its dominant position. Imposing a penalty of Rs. 630 crore (the highest penalty ever imposed by it), the Commission stated that “The abuse of dominant position in this case is in respect of the basic necessity of housing. The earlier deliberation on the elements and extent of abuse make it clear that DLF has been grossly abusing its dominant position, and that too against a vulnerable section of consumers, who have little ability to act or organize against such abuse. The penalty, therefore, has to be commensurate with the severity of the violation through such blatant abuse of dominance”.
On appeal by the Company, the Competition Appellate Tribunal, granting a temporary relief to it, stayed the historic penalty, asking both sides to file their draft of the proposed modification to the contentious clauses that were part of the buyers' agreement (which made the agreement one-sided) within eight weeks, subsequent to which the Tribunal will finally hear the parties in February of next year and render a decision.
[This post has been authored by Payel Chatterjee, Student, 5th Year, B.A./B.Sc. LL.B., WBNUJS]
Abuse of dominant market position occurs where a firm holds a position of such economic strength that allows it to operate in a market without being significantly affected by competition and it engages in conduct that is likely to impede the development or maintenance of effective competition as well as negatively impact the consumers. The law in India, under section 4 of the Competition Act of 2002 clearly specifies that “no enterprise shall abuse its dominant position”. However, having a dominant position does not in itself breach competition law; it is only the abuse of that position that is prohibited. The section also states that there shall be an abuse of dominant position if an enterprise imposes unfair or discriminatory conditions or prices in the purchase or sale of goods or provision of services.
The DLF case relates to the complaint filed by the Belaire Owners’ Association in Gurgaon in May 2010, in response to DLF having extended the deadline by which the possession of the apartments was to be given to the consumers. They also alleged that the Company had unilaterally changed the building plans and imposed unfair and discriminatory conditions in the apartment agreements. Deciding in favour of consumers, the CCI was of the opinion that that the Apartment Agreements imposed conditions that were unfair and discriminatory towards the consumers and which were altered or included unilaterally by DLF for its own benefit and to the detriment of the allottees. It held that DLF, by placing the discriminatory and abusive clauses in the Apartment Agreements was guilty of abusing its dominant position. Imposing a penalty of Rs. 630 crore (the highest penalty ever imposed by it), the Commission stated that “The abuse of dominant position in this case is in respect of the basic necessity of housing. The earlier deliberation on the elements and extent of abuse make it clear that DLF has been grossly abusing its dominant position, and that too against a vulnerable section of consumers, who have little ability to act or organize against such abuse. The penalty, therefore, has to be commensurate with the severity of the violation through such blatant abuse of dominance”.
On appeal by the Company, the Competition Appellate Tribunal, granting a temporary relief to it, stayed the historic penalty, asking both sides to file their draft of the proposed modification to the contentious clauses that were part of the buyers' agreement (which made the agreement one-sided) within eight weeks, subsequent to which the Tribunal will finally hear the parties in February of next year and render a decision.
[This post has been authored by Payel Chatterjee, Student, 5th Year, B.A./B.Sc. LL.B., WBNUJS]
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