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CCI slaps penalty on Jaiprakash Associates for abusing dominant position

FE Bureau
The regulator imposed a penalty of Rs 13.82 crore on JAL.

The Competition Commission of India (CCI), in an order on Tuesday, said that Jaiprakash Associates (JAL) has been found to be in contravention of the Competition Act, 2002, for abuse of dominant position in the market of independent residential units like villas, estate homes, etc, in its integrated townships. The real estate developer imposed unfair and discriminatory conditions on consumers.

The order was passed on an information filed by a homebuyer who has alleged that JAL imposed conditions, which were heavily tilted in its favour. The informant alleged contravention of provisions of Section 4 of the Competition Act, which deals with abuse of dominant position.

"The Commission is of the considered opinion that the opposite party (OP) enjoys an undisputed dominant position in the relevant market of 'provision of services for development and sale of independent residential/dwelling units in integrated townships in the territory of Noida and Greater Noida'. Further, the Commission holds the OP to be in contravention of the provisions of Section 4(2) (a)(i) of the Act for imposing unfair/ discriminatory conditions," the order by the fair trade regulator said.

The regulator said that imposition of unfair and discriminatory condition by the JAL, which was a dominant player in the relevant market at the relevant time, has serious adverse effects on the market and on their consumers.

In the case under question, the regulator said adverse effects are clearly evident as customers have suffered due to lower common areas than what was envisaged. They were made to pay much more than what was originally agreed to and the timely completion of project was not achieved resulting in substantial consumer harm.

JAL perpetrated "undesirable industry practices causing substantial harm" to the competition and to consumers, ignoring its responsibility as a dominant player to set fair standards of industrial practices for other players in the market to emulate, CCI order said. "Therefore, the Commission finds it a fit case for imposition of penalty in terms of provisions contained in Section 27 of the Act, which shall not only reflect seriousness of the contravention committed by the OP, but also expected to act as a deterrent for the OP and other players in the real estate sector so as to result in a check on the anti-competitive practices perpetrated in the sector under the guise of standard industry practice," it added.

The regulator imposed a penalty of Rs 13.82 crore on JAL. "Considering the totality of the facts and the circumstances of the present case including the aggravating and mitigating factors, as discussed above, the Commission decides to impose penalty calculated at 5% of the relevant turnover earned by the OP from the relevant market delineated supra, that is turnover from sale of independent residential units in integrated township located in Noida and Greater Noida during the financial years from 2009-10 to 2011-12," the regulator said, awarding the penalty.

CCI also directed JAL to "cease and desist" from indulging in the conduct which has been found to be in contravention of the provisions of the Act and is also directed to pay penalty within a period of 60 days from the date of receipt of this order.