CCI decision to modify DLF, buyers pact sparks debate

Jan 08 2013, 15:25 IST
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CCI decision to modify DLF, buyers pact sparks debate. (Reuters) CCI decision to modify DLF, buyers pact sparks debate. (Reuters)
SummaryThe CCI passed a supplementary order last week to modify the agreement.

CCI's decision to modify realty major DLF's apartment buyers agreement in relation to a case involving Rs 630 crore penalty on the firm has sparked a debate about the fair-trade regulator's jurisdiction and other matters concerning the real estate sector.

The Competition Commission of India (CCI) passed a supplementary order last week to modify the agreement between DLF and its apartment buyers, pursuant to a direction from Competition Appellate Tribunal (COMPAT) that is hearing the company's appeal against monetary penalty and other sanctions imposed on it by CCI for abuse of market dominance.

Legal experts and former CCI functionaries, however, are of the view that COMPAT needs to first decide on issues such as jurisdiction, relevant market, dominance and abuse of dominance before deciding on modifications in model agreement.

According to former CCI Chairman Vinod Dhall, competition authorities are usually not required to indicate how an agreement, held to be anti-competitive, should be modified as that exercise is to be undertaken by the parties concerned.

"This case therefore seems to be taking a strange course, and it is clear that the case still has a long journey ahead till it reaches a final conclusion," Dhall told PTI.

Senior lawyer and an eminent competition law expert Anand Pathak said that the CCI's supplementary order of January 3 in DLF case "interprets and applies the Competition Act incorrectly for at least three reasons among many others".

Pathak said the Competition Act does not give the CCI the liberty to redraft an entire agreement for the parties and its decision to modify the DLF buyers agreement is "internally inconsistent" with its own decisions.

He further said that CCI was asked by COMPAT to merely determine the "manner and extent of the modifications" and it was not required to re-write the entire agreement.

"In conclusion, antitrust intervention must be tempered and tailored to achieve competition goals. One such goal is freedom of negotiation and contract -- only then can parties achieve the efficiencies envisioned by the Act," Pathak said, while adding that DLF case was always in essence a consumer protection case and not a competition law case at all.

According to Dhall, CCI's supplementary order has been passed consequent to a COMPAT direction to specify the extent and manner in which the terms of the agreement between DLF and the buyers should be modified keeping in mind modifications suggested by the parties to COMPAT.

"Thus this supplementary order continues to be part of

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