CCI introduces Leniency “Plus” regime in India- Will it suffice?
CCI by its order dated January 12, 2017 has initiated an investigation against Delhi Development Authority for abuse of
dominant position in relation to delayed allotment of flats in the Middle Income Group category under the Rohini Residential Plot Scheme, 1981.
In a case filed by the Mr. Sudarshan Kumar Kapur, it was alleged that even though the residential allotment scheme of DDA was floated in 1981, the draw of lots were held only in the year 2012 and the Allotment Letter was issued again after a delay of 2 years in 2014.
The CCI considered that the DDA is a government department constituted under the Delhi Development Act, 1957 with an objective to promote and secure the development of Delhi according to plan. Even though the DDA is a statutory authority, its functions are neither sovereign nor are identical with inalienable functions of State. Thus, DDA falls within the definition of “enterprise” and its conduct can be scrutinised for abuse of dominance under Section 4 of the Competition Act, 2002(the Act).
The CCI noted that in the market for provision of services of development and sale of residential plots in the National Capital Territory of Delhi, DDA is the biggest real estate developer in Delhi and no other developer can match/reach the size and structure of the DDA. There are no comparable alternatives available in Delhi for a buyer of residential plot in Delhi and as such the DDA was prima-facie considered dominant in the market.
The CCI took cognizance of the inordinate delay of 31 years by DDA qua the applicant like the Informant and wife in the instant case. Given the dependence of buyers on the DDA in the relevant market, they have little choice but to abide by the terms and conditions stipulated by the latter. The CCI also took note of the unfair clauses in the agreement, such as the penalty for buyer/allottees for delay in payment, but no corresponding penalty on DDA for delay in allotment/delivery of possession. The Allotment Letter itself stated that electricity, street lights and domestic connection were not available as on that date. Yet, the DDA made it mandatory for the recipient to pay around 80% of the total consideration amount failing which the allotment would stand cancelled. Further, DDA revised the price of the plots from INR 200 sq. mtr. in 1981 to INR 23252 per sq. mtr. in 2014.
The CCI is of the view that the conduct of DDA is prima-facie an abuse of its dominant position in violation of Section 4 of the Act. The Director General has been asked to investigate the conduct and submit his report within 60 days of the receipt of the CCI order.
Comment: The present order is the third investigation by CCI into alleged abuse of dominance by the DDA in the market for residential plots and/or apartments in Delhi. This follows the earlier investigations in the case of Sunrise Resident Welfare Association vs DDA (CCI Case 88/2014) and Dr. Adla Satya Narayan Rao. vs DDA(06/2013). Final orders in all cases are awaited.
(Source: CCI Order dated 12 January, 2017. For details, see CCI website www.cci.gov.in)
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