Competition Commission orders probe against DDA
In a preliminary view, CCI says DDA is abusing its dominant position by formulating unfair terms of agreement, through disproportionate pricing, and delaying allotment of flats.
New Delhi: The Competition Commission of India (CCI) has ordered an investigation against the Delhi Development Authority (DDA) for alleged abuse of its dominant position in the market for the development and sale of residential plots in Delhi.
The commission, in a preliminary view, said the DDA was found to be abusing its dominant position by formulating unfair terms of agreement, through disproportionate pricing, and delaying the allotment of flats.
In an order dated 12 January that was made public on Tuesday, the CCI said, “there exists a prima facie case of contravention of the provisions of Section 4 of the Act” and that it found the case fit for investigation by the director general (DG) of the commission. Section 4 of the Competition Act, 2002 pertains to abuse of dominant position by a party.
The commission observed that the issue requires an examination of the overall conduct of the DDA in dealing with the buyers under the scheme. Considering that DDA is a public body, the commission noted that “public bodies need to ensure that their conduct is compliant with competition law”.
CCI directed the DG to initiate an investigation into the matter and file a report within 60 days from the date of receipt of the order. It also said the director general shall also investigate the role of officials or persons who were in charge and responsible for the conduct of business.
The informant had applied for a residential plot under a DDA plot scheme in 1981. The allotment of plots was to be done in a phased manner, spread over a period of 5 years through draw of lots amongst the eligible applicants. DDA did not conduct the draw of lots and no allotment was done for a period of 31 years.
DDA held draws for allotment lots (after 31 years) in 2012 which too was conducted only after the direction of the Delhi High Court. In 2014, it issued letters of allotment to some applicants under the scheme but failed to handover possession. DDA had also revised the price of the plots, asking for “an arbitrary price for the allotted plot which is 116 times higher than the price given in the initial brochure”.
The commission noted that “there is no parity in the rate of escalation of the price to be paid by the allottees and the compensation being offered to them owing to the delay caused by the opposite party (DDA) although both relate to the same period”.
Editor's Picks »
- Motherson Sumi continues to face margin pressure in foreign markets
- What the Warren Buffett indicator tells us about market valuations today
- Jet Airways lands with a thud in Q4 as fuel costs increase
- IBC amendments: Some dilutions, and a lot more speed
- Patanjali’s gambit is paying off in toothpaste wars