The Competition Appellate Tribunal (Compat) has set a 70-day deadline (till end-September) for the Competition Commission of India (CCI) to conclude all matters pertaining to the appeal filed by country?s largest real estate developer, DLF.
Compat has also urged CCI to give ‘top priority’ to the DLF matter. This means, as per the earlier directions given to CCI, the competition regulator has to finalise draft modifications and draft agreement compliant with the Competition Act. Also, Compat wants CCI to clearly spell out the methodology and rationale for determining the penalty on DLF.
In the last week’s final hearing on the matter, Compat stayed the R630-crore penalty imposed on DLF for abuse of dominance by CCI last year.
CCI has begun working out detailed guidelines and norms it follows while imposing financial penalties on companies found engaging in anti-competitive practices. ?The regulations will be worked out shortly and duly communicated,? a senior CCI official said.
On August 16, 2011, CCI had fined DLF R630 crore, citing abuse of dominant position and passed a ?cease-and-desist? order over unfair conditions imposed by the company on flat buyers. Subsequently, CCI passed a separate order, cautioning DLF not to misuse its dominant position, but it did not impose any penalty.
DLF challenged the order, questioning CCI?s jurisdiction and the basis for determining relevant market and dominant position. DLF reportedly also questioned CCI?s penalty, which it said was served without a show-cause notice.
CCI had imposed the penalty following an inquiry based on complaints filed by the flat buyer associations of two DLF projects in Gurgaon ? DLF Park Place and The Belaire. These associations had complained to CCI about delays and increase in the number of floors from what was initially planned, among other issues.
?The commission considers it appropriate to impose penalty at the rate of 7% (totalling R630.43 crore) of the average of the turnover for the last three preceding financial years,? CCI had said in its 237-page order on August 16, 2011.
As per the DLF advertisement, Belaire was to include five multi-storeyed residential buildings, each to have 19 floors. The total number of flats to be built was 368 and the construction was to be completed within 36 months.
However, in place of 19 floors with 368 apartments, 29 floors were constructed, CCI had said.
